2014 (4) TMI 255 - HC - VAT and Sales Tax

Rate of tax - declared goods under central sales tax - animal feeds - Whether the revisional authority is correct in holding that Section 6(2) of the CST Act is inapplicable to the case of assessee Goods not covered under Form C - Held that - Revisional Authority has arrived at a conclusion that the same is not justified, but on the other hand has held that, the appropriate provision applicable to the case on hand would be Section 8(2)(b) of the Act - The reason assigned by the Revisional Authority would clearly disclose that in the circumstance where the goods are not covered by C forms, the provisions contained in Section 8(2)(b) of the Act would be applicable - The animal feed which is the goods in question in the instant case is not a declared goods - The applicable provision would be Section 8(2)(b) - The rate as provided therein should be either @ 10% or at the rate applicable in the appropriate State - Admittedly, in Karnataka, the rate is lesser as provided u/s 6(2) is to be made applicable - If that be the position, the Revisional Authority was justified in arriving at a conclusion that the rate as provided u/s 8(2)(b) at 10% would be applicable to the instant case - Decided against the assessee.

Summary

Issues:
Interpretation of Section 6(2) and Section 8(2)(b) of the Central Sales Tax Act in relation to the tax rate applicable to animal feed sales in the absence of 'C' forms.

Analysis:
The High Court of Karnataka considered the appeal to determine whether the revisional authority was correct in holding that Section 6(2) of the Central Sales Tax Act was not applicable to the appellant-assessee's case. The First Appellate Authority accepted the assessee's argument that Section 6(2) should apply, but the Revisional Authority disagreed, citing Section 8(2)(b) as the relevant provision. The appellant argued that since 'C' forms were not required for animal feed sales, the lower tax rate of 2% under Section 6(2) should apply.

The Government Advocate contended that for inter-state sales of goods other than declared goods like animal feed, Section 8(2)(b) should be applied, which mandates a tax rate of 10% or the rate applicable in the appropriate state, whichever is higher. Both authorities referred to Sections 6(2) and 8(2)(b) in their orders. The Revisional Authority concluded that in the absence of 'C' forms, Section 8(2)(b) would be applicable.

Since animal feed is not a declared good, Section 8(2)(b) should apply, requiring a tax rate of 10% or the higher state rate. As the rate in Karnataka was lower than 10%, the Revisional Authority's decision to apply the 10% rate was deemed justified. Consequently, the Court ruled in favor of the revenue, upholding the Revisional Authority's decision and dismissing the appeal.