2024 (11) TMI 1277 - HC - VAT / Sales Tax

Imposition of condition relating to 'C' form over and above what has been contained in the Notification - Whether the Notification under Section 8(5) would run in parimeteria with the rates of tax stipulated in the Schedule and whether the conditions stipulated in Section 8(4) have to be read into the Notification itself? - HELD THAT - Reference may be made to the decision of the Jharkhand High Court in TATA MOTORS LIMITED VERSUS STATE OF JHARKHAND AND OTHERS 2012 (9) TMI 911 - JHARKHAND HIGH COURT . In that case, the benefit of reduced rate of tax per a Notification issued under Section 8(5) of the CST Act had been refused on the ground that the parties were unregistered dealers - In that case as well, the assessee has unfortunately not brought to the notice of the Bench the judgment in the case of DEPUTY COMMISSIONER OF SALES TAX VERSUS AYSHA HOSIERY FACTORY (P.) LTD. (AND OTHER APPEALS) 1992 (1) TMI 303 - SUPREME COURT and what has been cited are the judgements STATE OF RAJASTHAN AND ANOTHER VERSUS SARVOTAM VEGETABLES PRODUCTS (AND OTHER APPEALS) 1996 (4) TMI 405 - SUPREME COURT and several other judgments. However, and fortuitously for the assessee in that case, the High Court has been persuaded to make distinction between the applicability of a Section 8(5) Notification in the case of a transaction under Section 8(1) of the CST Act vis-a-vis a transaction under Section 8(2) of the CST Act. In the former, the rate of tax stipulated is qua the registered dealer, whereas in the latter, the rate of tax stipulated is qua the unregistered dealer. In our respectful opinion, this distinction is one without a difference as Section 8(5) makes no distinction between its applicability qua a situation falling either in Section 8(1) or 8(2), unless the Notification under Section 8(5) itself makes such distinction, stipulating that the reduced rate is applicable only on transactions falling either under Section 8(1) or 8(2). In the Notification in question, it is an omnibus reduction of rate and there is no denial of rate to any specific category of transaction. The impugned order of assessment is quashed and this Writ Petition is allowed.

Summary

Issues:
Assessment under TNGST Act for the period 2001-02 based on Notification for reduced tax rate of 2% for sale of polyester fibre yarn. Interpretation of Notification conditions and applicability vis-a-vis Section 8 of CST Act.

Analysis:
The petitioner, a manufacturer and dealer in polyester fibre yarn, claimed a reduced tax rate of 2% for the relevant period under a Notification dated 07.04.1998 issued under Section 8(5) of the CST Act. The assessing officer, however, assessed the turnover at 10% due to non-filing of 'C' forms. The main issue was whether the conditions of Section 8(4) need to be read into the Notification or if the Notification stands alone. The petitioner argued that the Notification should run parallel to the rates in the Schedule, citing relevant judgments.

The Court analyzed Section 8 of the CST Act, noting that Section 8(5) allows the State to extend beneficial terms and conditions via Notification. The Court emphasized the self-contained nature of Section 8 and the non-obstante clause in Section 8(5). It clarified that the interplay between Section 8(4) and Section 8(5) commenced only from 11.05.2002, as per the Finance Act. Referring to the judgment in Aysha Hosiery Factory case, the Court held that benefits under Section 8(5) are standalone and not dependent on other provisions of Section 8.

The Court also discussed the Sarvotam Vegetables Products case and the Tata Motors case, highlighting the importance of the Aysha Hosiery Factory judgment by a coram of 3 Judges. The Court rejected the distinction made in the Tata Motors case regarding the applicability of Section 8(5) Notification based on dealer registration status under Section 8(1) or 8(2) of the CST Act. It concluded that the Notification in question provided an overall reduction without specific categorization.

In light of the above analysis, the Court quashed the impugned assessment order and allowed the Writ Petition, emphasizing the standalone nature of benefits under Section 8(5) of the CST Act.