2008 (3) TMI 758 - HC - VAT and Sales Tax

Summary

Issues involved:
The interpretation of Section 5-A of the H.P. General Sales Tax Act, 1968 and the constitutional validity of the same.

Interpretation of Section 5-A:
The petitioner firm challenged the levy of sales tax under Section 5-A of the Act, contending that it does not apply to goods specified in Schedule B. The court held that Section 5-A only applies to goods not listed in Schedule B, and no tax can be imposed on goods falling under Schedule B. The court emphasized that the language of the section is clear and unambiguous, and any goods used to manufacture those listed in Schedule B would be liable to tax under specific conditions mentioned in the section itself.

Application of Section 5-A to the case:
The petitioner argued that there was no sale involved as they purchased maize from farmers on behalf of another company. The court found that the petitioner acted as an agent for the other company, purchasing maize directly from farmers, which is exempt from tax under Section 7 of the Act. Even if the transaction was considered a sale, the court held that it would be an inter-State sale, and the State lacked the authority to levy tax. The court also dismissed the State's argument that the petitioner evaded Central Sales Tax, stating that it was the Central Sales Tax Authority's responsibility to verify declarations.

Decision and Conclusion:
The court allowed the writ petition, quashing the assessment order that levied sales tax on the petitioner. The court found in favor of the petitioner, stating that the maize was purchased on behalf of another company and was exempt from tax under the relevant provisions of the Act. The court emphasized that the petitioner's role as an agent precluded the imposition of tax by the State.