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2024 (6) TMI 997 - HC - VAT and Sales TaxIssues Involved: 1. Competence of the State Government to issue notifications u/s 8(5)(b) of the CST Act post the 2007 amendment. 2. Validity and consistency of the notification dated 30.6.2005 with the legislative amendments. 3. Interpretation of the phrase "to any person or to such class of persons" in Section 8(5)(b) of the CST Act. 4. Refund of the amount deposited by the respondent(s)/assessee(s). Summary: Issue 1: Competence of the State Government to Issue Notifications u/s 8(5)(b) Post 2007 Amendment: The primary question was whether the amendment under the Finance Act of 2007 removed the State Government's power to grant exemptions to categories other than "registered dealers" under Section 8(5)(b) of the CST Act. The court concluded that the State Government retains the power to grant total or partial exemptions, even after the 2007 amendment. The Tribunal correctly held that the State Government's competence to issue notifications under Section 8(5)(b) was not denuded by the amendment. Issue 2: Validity and Consistency of the Notification Dated 30.6.2005: The court examined whether the notification dated 30.6.2005, issued prior to the amendment of Section 8(5)(b), had become inconsistent with the legislative declaration. It was held that the notification remains valid and effective even after the 2007 amendment, and it does not run counter to the legislative will. The Tribunal correctly appreciated and harmoniously construed the notification with the amended provisions. Issue 3: Interpretation of the Phrase "to Any Person or to Such Class of Persons" in Section 8(5)(b): The court addressed the scope of the phrase "to any person or to such class of persons as may be specified in the notification" in Section 8(5)(b) of the CST Act. It was concluded that this phrase includes all persons other than "registered dealers." The Tribunal rightly held that the State Government retains the power to issue exemption notifications to non-dealers, and this power was not affected by the 2007 amendment. Issue 4: Refund of the Amount Deposited by the Respondent(s)/Assessee(s): The court considered the respondent(s)/assessee(s)' request for a refund of the amounts deposited. It was determined that the respondent(s)/assessee(s) must establish that they have not passed on the tax liability to consumers to be entitled to a refund. The respondent(s)/assessee(s) may make a claim before the competent authority within six weeks, and the authority must dispose of such applications expeditiously. If found entitled, the refund shall be provided with interest as notified by the Reserve Bank of India. Conclusion: The court dismissed the revision petitions filed by the petitioner-revenue, upholding the Tribunal's judgment. The State Government retains the power to grant exemptions under Section 8(5)(b) of the CST Act post the 2007 amendment, and the notification dated 30.6.2005 remains valid. The respondent(s)/assessee(s) may seek a refund subject to proving that the tax liability was not passed on to consumers.
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