2013 (8) TMI 120 - HC - VAT and Sales Tax

Validity of amendment to Central Sales Tax Act by Finance Act No.20 of 2002 - Violation of principle of promissory estoppel - Held that - amendment to the Central Sales Tax Act by Finance Act No.20 of 2002 published on 13.5.2002, are valid and do not suffer from any vice of discrimination, and also do not violate principle of promissory estoppel qua the petitioner, the higher rate of tax payable for non compliance of the amended provisions of Section 8 (5) namely non production of Form C/D, cannot be taken to be a ground to deny the set off of such higher rate of tax from the limits prescribed in the eligibility certificate under Section 4-A of the Trade Tax Act, subject to other conditions namely the maximum limit for particular year or period and maximum amount for which such exemption is provided - Following decision of M/s Yamaha Motor Excorts Limited v. State of U.P. & Ors. 2010 (1) TMI 1060 - ALLAHABAD HIGH COURT - Decided in favour of assessee. Benefit of exemption of Central Sales Tax is not allowed in respect of Item Nos.16 and 19 on the aforesaid items and for which no adjustment was given.

Summary

Issues:
- Denial of set off under Section 22 of the Act for want of Form C
- Denial of set off for inter-state sales against the maximum monetary limit
- Refraining from realizing the assessed amount under Central Sales Tax Act
- Interpretation of the validity and implications of the amendment to the Central Sales Tax Act by Finance Act No.20 of 2002

Analysis:

1. Denial of Set Off under Section 22 of the Act for Want of Form C:
The petitioner sought a writ to quash the order denying set off under Section 22 of the Act due to the absence of Form C. The court referred to a previous judgment where it was held that the rate of tax does not affect the tax benefit under the Eligibility Certificate. Non-production of Form C/D may result in the denial of the reduced tax rate benefit but does not render the interstate transaction illegal. The court emphasized that the requirement of producing Form C/D post-amendment should not violate the Constitution. Consequently, the court partly allowed the writ petition, directing the authorities to modify the assessment orders to grant the set off denied earlier.

2. Denial of Set Off for Inter-State Sales Against the Maximum Monetary Limit:
The petitioner also challenged the denial of set off for inter-state sales against the maximum monetary limit. The court, following the reasoning from a previous case, held that the denial of set off for non-compliance with amended provisions of Section 8(5) (non-production of Form C/D) cannot be a ground to deny the set off from the limits prescribed in the eligibility certificate under Section 4-A of the Trade Tax Act. The court directed the assessing authorities to modify the assessment orders to allow the set off to the petitioner within a specified timeframe.

3. Refraining from Realizing the Assessed Amount under Central Sales Tax Act:
The petitioner further sought a writ to command the respondent to refrain from realizing the assessed amount under the Central Sales Tax Act. The court's decision to partly allow the writ petition and direct the authorities to modify the assessment orders would address this issue as well, ensuring that the petitioner is not required to pay the amount assessed for the year 2002-03 under the Central Sales Tax Act.

4. Interpretation of the Validity and Implications of the Amendment to the Central Sales Tax Act:
The judgment also delved into the interpretation of the validity and implications of the amendment to the Central Sales Tax Act by Finance Act No.20 of 2002. It was held that the amendment was valid and did not violate the principle of promissory estoppel. The court clarified that the higher rate of tax due to non-compliance with amended provisions should not be a reason to deny set off under the eligibility certificate, subject to specified conditions. This interpretation provided a framework for resolving the issues raised in the writ petition effectively.