2013 (6) TMI 231 - HC - VAT and Sales Tax

Tendu leaves versus minor forest produce - Levy of purchase tax @25% versus 4% (5%) - held that - There is no taxable entry separately for minor forest produce. The exemption notifications provide for granting exemption to minor forest produce partly so as to reduce the rate of tax to 5%. This tax exemption is available to all the minor forest produce. The issue asto whether exemption would be available to such goods, which are not exigible to tax came up for consideration before the Supreme Court in the matter of Reliance Trading Company v. State of Kerala 2006 (3) TMI 320 - SUPREME COURT OF INDIA , it was observed that there could be nothing like exemption of goods from tax unless goods are exigible to tax. There is no dispute that minor forest produce as such, is not exigible to tax. Forest produce like Bamboo, Tendu leaves etc. are exigible to tax under different entries. Thus, the exemption is applicable to all the forest produce which are eixigible to tax. The exemption will certainly be applicable to only those minor forest produce, which are exigible to tax. Since these petitions involve mixed question of facts and law, liberty is reserved to the respective petitioners to prefer an application before the Commissioner, VAT Act, if so advised, for exemption under the above stated notification. - Decided in favor of assessee.

Summary

Issues:
1. Interpretation of tax rates on Tendu Leaves under the Chhattisgarh Value Added Tax Act, 2005.
2. Applicability of exemption notifications to Tendu Leaves.
3. Definition of minor forest produce and its tax implications.

Detailed Analysis:

1. The judgment addresses the interpretation of tax rates on Tendu Leaves under the Chhattisgarh Value Added Tax Act, 2005. The petitioners argued that the Act does not define minor forest produce, but other laws do, including the Chhattisgarh State Forest Policy, 2001, and the Forest Rights Act, 2006. They claimed that Tendu Leaves should be taxed at 5% based on a notification. However, the State contended that a specific rate of 25% was set for Tendu Leaves transactions. The court examined the amendments to the Act and concluded that the tax rate was properly amended and aligned with the charging section, rejecting the petitioners' argument against the validity of the amendment.

2. The issue of the applicability of exemption notifications to Tendu Leaves was also discussed. The State argued that the exemption only applied to goods listed in Schedule II of the Act. The court noted that minor forest produce, including Tendu Leaves, were not separately listed for taxation. However, the exemption was deemed applicable to forest produce subject to tax, and the court reserved the petitioners' right to seek exemption through proper channels.

3. The judgment delved into the definition of minor forest produce and its tax implications. Various laws defined minor forest produce, including the Policy, 2001, and the Forest Rights Act, 2006. The court highlighted that the exemption applied to forest produce subject to tax and emphasized that goods must be taxable to be eligible for exemption. The judgment allowed the petitioners to apply for exemption through the Commissioner, VAT Act, and reserved the right to seek a stay on tax payments if advised.

In conclusion, the judgment addressed the complex issues surrounding the taxation of Tendu Leaves, the applicability of exemption notifications, and the definition of minor forest produce, providing guidance on seeking exemptions and potential stay on tax payments.