2016 (7) TMI 1426 - HC - VAT and Sales Tax

Interpretation of Notification dated 4th September 1995 - Whether the Notification dated 4th September 1995 issued under Section 8(5) of the Central Sales Tax Act 1956 is relatable to the exemption of goods or the person selling it? Held that - An identical issue came up for consideration before Hon ble the Supreme Court in M/s CASIO India Co. Pvt. Ltd. Versus State of Haryana 2016 (4) TMI 7 - SUPREME COURT wherein considering the same notification under similar circumstance it was opined that at all subsequent stages the goods manufactured by an exempted unit shall be exempted. The exemption as envisaged vide notification dated 4.9.1995 is relatable to goods and not the dealer. The reference is answered in favour of the petitioner.

Summary

Issues:
Interpretation of a notification under the Central Sales Tax Act, 1956 regarding exemption of goods or the person selling it.

Analysis:
The case involved a question of law regarding the interpretation of a notification issued under Section 8(5) of the Central Sales Tax Act, 1956, specifically whether the exemption provided in the notification was related to the goods themselves or the person selling them. The petitioner, a registered dealer engaged in trading electronic push button telephones, purchased goods as exempted and sold them both within the State of Haryana and in interstate trade. The assessing authority treated the sales as exempted based on a declaration form, but the revisional authority imposed tax on interstate transactions, leading to an appeal before the Sales Tax Tribunal, which was dismissed.

An identical issue was considered by the Supreme Court in a previous case, where it was held that goods manufactured by an exempted unit shall remain exempted at all subsequent stages, emphasizing the language of the exemption notification. The Court analyzed the proviso to the notification, clarifying that the exemption was not limited to the first sale by the manufacturer-dealer but extended to subsequent sales as well. The Court highlighted that the proviso should be seen as an exception and not used to restrict the general exemption provided in the main notification. Rule 28A(4)(c) supported this interpretation by exempting all intra-state sales, including subsequent sales, without payment of tax.

The Court further explained that the intention behind the exemption was to allow multiple sales within the state without tax payment, while interstate sales were treated differently. The Court emphasized that the exemption was meant to provide a competitive edge to manufacturers in the state and should not be nullified by imposing tax on subsequent sales. Ultimately, the Court allowed the appeals, set aside the impugned orders, and held that the assesses would benefit from the notification dated 4.9.1995 as interpreted by the Court, ruling in favor of the petitioner that the exemption related to goods and not the dealer. The question referred to the Court was answered following the Supreme Court's decision, concluding the reference in favor of the petitioner.

In conclusion, the Court's judgment clarified the interpretation of the notification under the Central Sales Tax Act, affirming that the exemption provided pertained to the goods themselves and not the dealer, ensuring that the goods remained exempted at all stages, including subsequent sales.