2016 (10) TMI 77 - HC - VAT / Sales Tax

Partial exemption of sales tax - sales tax rate reduced to 3% on sale of All types of four wheeler and three wheeler, Commercial Motor Vehicles, that is to say Trucks, Buses, Mini Buses and pickup vans and their chassis but excluding Auto rickshaws - notification dated 13.6.1989 issued by the State Government in exercise of powers under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 - sale of A.P.I. three wheeler chasis complete with the speedometer, spare wheel rims without tyre and tube with wind screen glass by the respondent - Whether the chasis of three wheeler vehicle sold by the respondent falls within the purview of notification dated 6.4.1989 issued by the State Government in exercise of powers under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958? Held that - the Board itself has found that the respondent has not sold auto rickshaw but has sold the chasis of three wheeler and, therefore, the Board itself has answered the aforesaid question in favour of the respondent. If the respondent has sold the chassis of three wheeler vehicle, the same would fall within the purview of notification dated 13.6.1989 - appeal dismissed - decided in favor of respondent.

Summary

Issues: Interpretation of notification for sales tax exemption on three-wheeler chasis.

In this case, the main issue revolves around the interpretation of a notification issued by the State Government regarding the exemption of sales tax on specific goods, including the chasis of three-wheeler vehicles. The question at hand is whether the chasis of a three-wheeler vehicle sold by the respondent falls within the scope of the notification dated 6.4.1989. The respondent, a registered dealer, sold an A.P.I. three-wheeler chasis and claimed the benefit of the notification to avail a reduced sales tax rate of 3%. However, the Assessing Authority later imposed a sales tax rate of 12% on the respondent, leading to a series of appeals and reassessments.

The Assessing Authority initially imposed the higher tax rate after an audit objection was raised regarding the reduced tax rate on the three-wheeler chasis. Despite the respondent's appeal, the Assessing Authority upheld the higher tax rate, stating that the chasis did not qualify for the exemption under the notification. Subsequent appeals by the respondent led to conflicting decisions, with the Commercial Tax Appellate Board ultimately ruling in favor of the respondent, stating that the chasis sold was not that of an auto rickshaw and therefore eligible for the lower tax rate under the notification.

The core argument presented by the State Government, through the Deputy Advocate General, was that the respondent was not entitled to the benefit of the notification and that the chasis sold did not meet the criteria outlined in the notification. Conversely, the respondent's counsel contended that the chasis sold could be used for various purposes beyond just auto rickshaws and that there was no conclusive evidence to restrict its use solely to auto rickshaws.

Upon reviewing the submissions and the record, the Court concluded that the question referred for reconsideration was not purely a legal question but a combination of law and fact. By referencing the Board's own findings that the respondent sold a three-wheeler chasis and not an auto rickshaw, the Court determined that the chasis fell within the scope of the notification dated 13.6.1989. Therefore, the Court ruled in favor of the respondent, affirming their entitlement to the benefit of the notification and the reduced sales tax rate of 3%.