2019 (12) TMI 224 - HC - VAT and Sales Tax

Rate of tax - sale of coal without Form-C - Whether tribunal was justified in law to impose tax @ 10 % on sale of coal against the provisions of section 8 (2) of CST Act? - HELD THAT - Bare perusal of Sections clearly shows that the declared goods sold without Form -C can be subjected to tax twice as the rate of tax applicable in the appropriate State. Section 14 (ia) of the Act also declared coal as a special importance goods i.e. coal is a declared goods - By Notification- TIF-2-2372/XI-9 (251)/97-UP Act 15/48-order 98, dated 23.11.1998 the State of Uttar Pradesh has prescribed the rate of tax on the sale of coal @ 4 %. The aforesaid notification has been amended from time to time but the rate of tax on the sale of coal has remained unchanged. The records reveals that the dispute in relation to sale of coal has admittedly been made without requisite Form -C as prescribed under the Act and it is not disputed that the coal is a declared commodity under Section 14 (ia) of the Act and rate of tax as per the above notification is only @ 4 % which is leviable in the State of Uttar Pradesh - the tax on the sale of coal within the said limit was @ 4 %. In view of Section 8 (2) (a) of the Act, sale of coal made by the revisionist without Form-C can be taxed at twice as the rate applicable in State i.e. @ 4 4 8 % and not above that. The Tribunal was not justified in imposing the tax on the sale of coal without Form-C @ 10 % treating the same under Section 8 (2-b) as undeclared goods - question of law is answered accordingly in favour of the assessee and against the department - revision allowed.

Summary

Issues:
Assessment of tax on sale of coal without Form-C under Central Sales Tax Act.

Analysis:
The revisionist, engaged in manufacturing and sale of veneer and trading of coal, challenged the tax imposed on coal sales without Form-C by the Commercial Tax Tribunal. The Tribunal confirmed the tax @ 10%, leading to the revision filed against the order. The revisionist raised a legal question regarding the justification of imposing tax on coal sales at 10% under Section 8(2) of the CST Act. The counsel for the revisionist argued that coal being a declared commodity under Section 14(ia) of the Act, the tax rate cannot exceed twice the rate applicable in the State. On the other hand, the Standing Counsel supported the Tribunal's decision.

Upon examining the relevant sections of the Act, the Court noted that declared goods sold without Form-C can be taxed at twice the rate applicable in the State. Coal, declared as a special importance good under Section 14(ia), falls under this provision. The State of Uttar Pradesh had prescribed a tax rate of 4% on coal sales through a notification, which remained unchanged. The Court observed that the tax rate on coal sales without Form-C should not exceed 8% (4% + 4%) as per Section 8(2)(a) of the Act, considering the applicable rate in the State.

The Court found that the imposition of tax at 10% on coal sales without Form-C was unjustified by the Tribunal, as coal was a declared commodity and the applicable tax rate in Uttar Pradesh was 4%. Therefore, the Court modified the impugned order, ruling in favor of the assessee and against the department. Consequently, the revision was allowed, and the legal question raised by the revisionist was answered in their favor.