2013 (11) TMI 654 - HC - VAT and Sales Tax

Reduced rate of tax - Section 3-D(7) - the plea that the assessee was entitled to the benefits of reduced rate of tax i.e. at the rate of 2% on sale of oil seeds to a purchaser having recognition certificate against Form 3-B and for exemption from tax in respect of the sales made against Form 3-C(1) has been reduced. - Held that - Tribunal has clearly loss sight of Clause (3) of the notification dated 29th August, 1987 while holding that in view of the fact that earlier notifications issued under Section 4-B have been superseded the assessee was not entitled to the reduced rate of tax. In like manner the exemption from tax qua the sale effected against Form 3-C(1) has also to be considered as per section 3-D(7) afresh - Decided in favour of assessee.

Summary

Issues:
Challenge to Trade Tax Tribunal's order denying reduced rate of tax and exemption from tax on sales of oil seeds against specific forms.

Analysis:
The assessee challenged the Trade Tax Tribunal's order denying the benefits of reduced tax rate and exemption from tax on sales of oil seeds against Form 3-B and Form 3-C(1). The counsel for the assessee argued that the Tribunal overlooked the specific provisions of the notification dated 29th August, 1987. Regarding sales against Form 3-B, it was contended that the tax rate of 2% applied as per Clause (3) of the said notification, irrespective of earlier notifications being superseded. The counsel also emphasized that exemption from tax on sales against Form 3-C(1) was governed by Section 3-D(7) of the Act, which the Tribunal failed to consider.

The department's counsel acknowledged that sales to a dealer with a recognition certificate of goods for manufacturing notified goods attracted a tax rate of 2% as per the notification dated 29th August, 1987. It was conceded that the exemption claimed by the assessee for sales against Form 3-C(1) under Section 3-D(7) remained unaffected by the said notification. The High Court observed that the Tribunal erred in disregarding Clause (3) of the 1987 notification while denying the reduced tax rate to the assessee. The Court also noted that the exemption from tax on sales against Form 3-C(1) needed fresh consideration in light of Section 3-D(7).

Consequently, the High Court held that the Tribunal's order was legally unsustainable and quashed it. The second appeal by the assessee was restored for re-examination. The Court directed the Tribunal to review the assessee's claim within three months from the date of filing a certified copy of the order. The revision was allowed with the specified observations.