2023 (3) TMI 60 - HC - VAT and Sales Tax

Entitlement to avail reduced CSA @ 2% on the interstate sales of yarn, against submission of D Forms to the Government Departments, by taking recourse of Notification dated 13.07.2001 - Declaration in Form C were submitted as specified in the Central Sales Tax) Registration Turn Over) Rules, 1957 at the time of assessment - HELD THAT - A perusal of the notifications shows that intention of the Legislator was to provide benefit of 2% tax on the inter-state sales to all the dealers outside State of Punjab and this included the Government dealers as well. However, at the time of issuing final notification, words declaration in Form D could not be mentioned. This omission in itself cannot alter the meaning of the notification as a whole, whereby it is clearly mentioned that benefit of this notification is to be given to any dealer having his place of business outside the State of Punjab. Any dealer would include private as well as Government dealer. Only declarations in Form C and Form D were to be provided by the private and Government dealers respectively. Guidelines for presenting Form C and D by the private as well as Government dealers have also been laid down separately. This is only a procedural declaration and omission of mentioning the words Form D cannot be made a ground to deny the benefit of this notification to the Government dealers outside the State of Punjab. The present appeal was admitted way back in the year 2012. Learned counsel for the petitioner-State has not been able to cite any instance, where even after 2012, the State has not extended this benefit to any dealer outside State of Punjab being a Government department - Petition dismissed.

Summary

Issues:
Interpretation of notification dated 13.07.2001 regarding reduced CST rate on inter-state sales of yarn against 'D' Forms to Government Departments.
Validity of Revisional Authority's assessment under Section 21 of the PGST Act.
Applicability of notification No.S.O.33/CA-74/56/S.8/2001 dated 13.07.2001 on sales of yarn by any dealer in Punjab in inter-state trade.
Comparison of judgment in State of Punjab vs. M/s Shreyans Industries Ltd. with the current case.
Benefit of reduced CST rate on inter-state sales of yarn to Government dealers based on Form 'C' or 'D'.
Impact of notifications and representations on the tax rate for yarn sales.
Correct application of the Shreyans Industries judgment by the Tribunal.

Analysis:
The High Court dealt with a VAT revision against an order passed by the Value Added Tax Tribunal, Punjab, regarding the assessment of inter-state sales of yarn against 'D' Forms to Government Departments. The Revisional Authority initiated proceedings, contesting the original assessment's application of a concessional CST rate of 2% for yarn sales. The respondent argued that the original assessment was time-barred, but the Revisional Authority rejected this claim. The Tribunal accepted the respondent's revision, setting aside the Revisional Authority's order and leading to the present appeal.

The Tribunal interpreted notification No.S.O.33/CA-74/56/S.8/2001 dated 13.07.2001, stating that the reduced CST rate of 2% applied to yarn sales to Government dealers against 'D' Forms. The State counsel argued against this interpretation, citing a judgment involving a different scenario. However, the Court found the Shreyans Industries judgment directly applicable to the current case, emphasizing the reduction in CST rate to 1% for inter-state sales to Government departments.

The respondent's counsel highlighted representations and notifications advocating for reduced tax rates on yarn sales, emphasizing the requirement of Forms 'C' and 'D'. The Court analyzed the notifications and concluded that the Legislator's intention was to provide the 2% tax benefit on inter-state sales to all dealers outside Punjab, including Government dealers. The omission of 'Form D' in the final notification did not negate this benefit for Government dealers. The Tribunal correctly applied the Shreyans Industries judgment.

The Court dismissed the petition, noting the lack of grounds to interfere with the Tribunal's order. The State failed to provide evidence of denying the benefit to Government dealers post-2012. Consequently, the petition was rejected, upholding the Tribunal's decision.