2013 (8) TMI 150 - 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.2, 4, 5 on the aforesaid items and for which no adjustment was given.

Summary

Issues:
1. Denial of set off for inter-state sales without Form-C/D
2. Validity of assessment order for the assessment year 2003-04
3. Interpretation of Central Sales Tax Act provisions
4. Compliance with eligibility certificate under Section 4-A of the U.P. Trade Tax Act
5. Modification of assessment orders for tax exemption benefits

Issue 1: Denial of set off for inter-state sales without Form-C/D
The petitioner sought a writ to quash the assessment order denying set off for an amount in inter-state sales without Form-C/D against the maximum monetary limit. The court referred to a previous judgment where it was held that non-production of Form C/D does not render the interstate transaction illegal but only results in denying the reduced rate of tax benefit. The court ruled that the higher rate of tax payable for non-compliance with the amended provisions cannot be a ground to deny set off from the limits prescribed in the eligibility certificate under Section 4-A of the Trade Tax Act. The court partly allowed the writ petition, directing the assessing authorities to modify the assessment orders and allow set off to the petitioner within two months.

Issue 2: Validity of assessment order for the assessment year 2003-04
The court examined the assessment order and found that the benefit of exemption of Central Sales Tax was not allowed for certain items due to tax deposits made without adjustment. Following the reasoning from a previous judgment, the court directed the assessing authorities to modify the assessment orders to rectify the denial of set off to the petitioner on the rate of tax for interstate transactions where Form C/D was not produced.

Issue 3: Interpretation of Central Sales Tax Act provisions
The court analyzed the provisions of the Central Sales Tax Act in light of the petitioner's case and the arguments presented. It emphasized that the rate of tax does not affect the tax benefit under the Eligibility Certificate and that non-production of Form C/D should not make the interstate transaction illegal. The court clarified that the requirement of producing Form C/D for a reduced rate of tax should not violate the Constitution and held that the amendment to the Central Sales Tax Act was valid and did not violate the principle of promissory estoppel.

Issue 4: Compliance with eligibility certificate under Section 4-A of the U.P. Trade Tax Act
The court addressed the issue of compliance with the eligibility certificate under Section 4-A of the U.P. Trade Tax Act in relation to the denial of set off for the petitioner. It held that the denial of set off based on non-compliance with the amended provisions of Section 8(5) regarding Form C/D should not prevent the set off from the limits prescribed in the eligibility certificate.

Issue 5: Modification of assessment orders for tax exemption benefits
The court ordered the assessing authorities to modify the assessment orders within two months to rectify the denial of tax exemption benefits to the petitioner for certain items where the set off was earlier denied due to non-production of Form C/D for interstate transactions. The modification was required to align with the principles established in previous judgments and ensure compliance with the provisions of the Central Sales Tax Act and the U.P. Trade Tax Act.