2018 (5) TMI 5 - HC - VAT and Sales Tax

Rate of tax - inter-state sales - exemption of CST on inter state sales - absence of C/D declaration forms - Held that - the Tribunal does not appear to have applied its mind to the distinction between the rate of tax applicable on the inter-state sales made by the Assessee in the absence of furnishing of declaration in C/D forms and the availment of the incentive under the Incentive Scheme announced by the State Government. The incentive available to the Assessee on the basis of eligible investment made by it is different from the rate of tax chargeable in the absence of prescribed declaration forms - The claim of the Assessee-petitioner of the higher tax liability on account of increased rate of tax admitted by them in the absence of declaration forms, deserves to be independently considered by the authorities under the Act including the learned Tribunal under the provisions of the Incentive Scheme for which the Assessee-petitioner held a proper Eligibility Certificate during the relevant Assessment period. Revision petition allowed by way of remand.

Summary

Issues:
1. Interpretation of notification regarding exemption of CST.
2. Applicability of conditions for exemption of CST.
3. Consideration of incentive scheme for tax liability.

Issue 1: Interpretation of notification regarding exemption of CST
The High Court analyzed the case where the Assessee-petitioner's exemption of CST was denied due to the condition of furnishing 'C/D' declaration forms. The Court referred to a similar case involving M/s. Volvo India Pvt. Ltd., where the High Court upheld the re-opening of assessment due to non-compliance with new conditions post-amendment. The Court emphasized that the grant of sales tax exemption is a benefit and not a right, and compliance with new conditions is mandatory post-amendment.

Issue 2: Applicability of conditions for exemption of CST
The Assessee argued that despite a higher tax rate due to non-furnishing of C/D forms, the tax liability should be set off under the Incentive Scheme based on eligible investments. The Court noted that the Tribunal did not differentiate between the tax rate and the incentive scheme, failing to consider the Assessee's claim separately. It was highlighted that the incentive available based on investments is distinct from the tax rate applicable without the required forms, necessitating independent consideration by the authorities.

Issue 3: Consideration of incentive scheme for tax liability
The Court found that the Tribunal did not adequately assess the distinction between the tax rate and the incentive scheme available to the Assessee. Consequently, the Court remanded the case back to the Tribunal for a fresh decision, emphasizing the need for a thorough review considering the Assessee's claim under the Incentive Scheme. The Court allowed the Revision Petition, setting aside the Tribunal's order and instructing a reevaluation with proper consideration of the Assessee's claims and the relevant provisions.