2016 (7) TMI 1422 - HC - VAT and Sales Tax

Whether on the facts and in the circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in holding that the Notification dated 12.09.1995, is treated as repealed and revoked by virtue of amendment of Section 8(5) of the Central Sales Tax Act, 1956 w.e.f. 11.05.2002? Held that - the amendment does not affect the Notifications issued prior to amendment. It is settled position of law that Notifications hold the field unless they are specifically rescinded and the Notification in question, has been rescinded w.e.f. 31.02.2006 and so, it holds the field till then. Hence, the authorities are bound to follow the same. The very fact that the Legislature even after the 2002 amendment has retained in Section 8(5), the words that relate to the power of the State Government to grant total / partial exemption from tax payable u/s. 8(2) , clearly show that the said amendment was not intended to affect the power of the State Governments to grant total / partial exemption from the tax payable in respect of the transactions covered u/s.8(2). The dealers, whether registered or unregistered, are entitled for the benefits of Notification, until the same is in force - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Interpretation of Notification dated 12.09.1995 in relation to amendment of Section 8(5) of the Central Sales Tax Act, 1956.
2. Continuation of Notification dated 18.5.1992 under the Gujarat Sales Tax Act, 1969 after the amendment in Section 8(5) of the Central Sales Tax Act, 1956.
3. Effect of the amendment dated 11.05.2002 under The Central Sales Tax Act, 1956 on the interpretation of the impugned order dated 17.08.2009 passed by the Tribunal in Revision Application Nos.146/2007 & 147/2007.

Analysis:
1. The first issue revolves around the interpretation of the Notification dated 12.09.1995 in light of the amendment to Section 8(5) of the Central Sales Tax Act, 1956. The Tribunal held that the Notification was repealed and revoked post the amendment. However, the High Court analyzed the legislative intent and held that the amendment did not affect the powers of the State Government to issue Notifications under Section 8(5) for transactions falling under Section 8(2).

2. The second issue pertains to the continuation of the Notification dated 18.5.1992 under the Gujarat Sales Tax Act, 1969 post the amendment in Section 8(5) of the Central Sales Tax Act, 1956. The High Court observed that the Notification remained in force until 30.03.2006, and even without 'C Forms', the applicable tax rate would be 4% as per the Notification.

3. The third issue involves the effect of the amendment dated 11.05.2002 under The Central Sales Tax Act, 1956 on the interpretation of the impugned order dated 17.08.2009 passed by the Tribunal. The High Court emphasized that the amendment did not restrict the power of the State Government to grant exemptions under Section 8(2), as evidenced by the legislative language post-amendment. Referring to a judgment of the Bombay High Court, the High Court concluded that dealers were entitled to benefits until the Notification was in force.

In conclusion, the High Court ruled in favor of the assessee, holding that the Notifications remained valid until specifically rescinded, and dealers were entitled to benefits until the Notification was in force. The Tribunal's orders were modified accordingly, and the Tax Appeals and writ petitions were disposed of with no order as to costs.