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TMI Blog1975 (3) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ision petition, it would be enough if we note the facts relating to these two items and the findings of the assessing authority, the Appellate Assistant Commissioner and the Tribunal. The first item of transaction took place in the following circumstances The petitioners purchased cotton yarn which is one of the items of declared goods falling under section 14(ii-b) of the Act from a manufacturing mill at Mysore. They obtained certificates from the manufacturing mill in form E-I and also issued the declaration in form C to the mills. The delivery of the goods in all these cases was to be effected by the mills in the States of Gujarat, Maharashtra and West Bengal. When the goods were on their movement from Mysore State to the other States, the petitioners sold the goods by transfer of documents of title to such goods to certain out-of-State purchasers who were not registered dealers. The petitioners claimed exemption in respect of these second inter-State sales under section 6(2). They also contended that, in any case, the proviso to section 9(1) is not applicable in respect of these transactions and that, therefore, the State of Tamil Nadu could not assess them for Central sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 8(2A) of the Act. The learned counsel for the petitioners in support of this contention also relied on the decision of this court reported in Madura South India Corporation Private Limited v. Joint Commercial Tax Officer[1968] 21 S.T.C. 163., which was affirmed by the Supreme Court in State of Tamil Nadu v. Madurai South India Corporation (P.) Ltd.[1972] 30 S.T.C. 401 (S C.). This assessment order was confirmed by the Appellate Assistant Commissioner and the Tribunal. In this petition, in respect of the first item of dispute, the learned counsel for the petitioners contended that though the second inter-State sale was effected during the movement of the goods from one State to another to an out-of-State buyer, who was not a registered dealer and that, therefore, section 6(2) is not applicable, the proviso to section 9(1) is not attracted as they were not persons who could have obtained the declaration form under section 8(4)(a). The argument was that in respect of declared goods for which a lower rate is prescribed for a local sale in the State law than the one prescribed under section 8(1), only section 8(2A) is applicable but section 8(4) applies only in respect of a sale to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent, or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. (2A) Notwithstanding anything contained in sub-section (1) or subsection (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than two per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation.-For the purposes of this sub-section a sale or purchase of goods sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may by Rules made in this behalf make necessary provision for all or any of the matters specified in this subsection. (3) The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union territor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e documents of title thereto to certain purchasers in Madras State, who were also registered dealers. The assessee produced the declarations in C form obtained from the authorities in the Madras State. It was contended for the assessee that it was only the Rajasthan State from which the goods moved that could tax the subsequent sale effected during the movement of the goods on rail. This court held that since the certificate in form E-I was not produced, the second sale by the assessee to a dealer in Madras would not fall within the ambit of section 6(2) and attracted the proviso to section 9(1). It was further held that the State which could tax them was the State from which the assessee who effected the subsequent sale obtained the declaration in form C in respect of his purchase. This view was reaffirmed in the decision in State of Madras v. Nandagopal Chetty[1968] 22 S.T.C. 290. A similar view was also expressed by the Andhra Pradesh High Court in State of Andhra Pradesh v. G. Muralidhar & Co.[1968] 22 S.T.C. 285. But the contention of the learned counsel for the petitioners is that in these decisions, there was no question about the registered dealers' right to obtain the decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere can be no case for calculating at the lower rate. Obviously, in order to find a lower rate, there should be two rates and sub-section (2A) deals with only one rate, that is the local rate under the State law. The other rate is only prescribed under section 8(1) of the Act. Therefore, necessarily both will have to be read together and the character of the transaction and its eligibility for concessional rates will have to be tested with reference to section 8(1) and (2A) and cannot be applied independently. The legislative history of section 8 also shows that section 8(2A) is not an independent provision but is in the nature of a proviso to section 8(1). Section 8 was amended by Central Act No. 31 of 1958 with effect from 1st October, 1958. Prior to that amendment section 8(1), (2) and (4) read as follows: "8. Rates of tax on sales in the course of inter-State trade or commerce.-(1) Every dealer who, in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in subsection (3) shall be liable to pay tax under this Act, which shall be one per cent of his turnover: Provided that, if under the sales tax law of the appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the opening part of the section, should not be read independently and has to be construed only as a proviso with respect to the rate of tax prescribed under section 8(1). Thus in respect of declared goods for which the rate prescribed in the local law for a local sale was lower than the concessional rate prescribed under section 8(1), the provisions of section 8(4) could be invoked in respect of inter-State sale of such goods. The petitioners are, therefore, persons who could have obtained the declaration in form C, for the purpose of clause (a) of sub-section (4) of section 8 in connection with their purchases from the Mysore seller-mills. As already stated, they had in fact obtained and given the declaration to their seller. The petitioners therefore satisfied the conditions prescribed in the proviso to section 9(1). Since they are entitled to get a declaration in form C from this State in respect of their purchases from the Mysore mills they are liable to be taxed by this State under the Act. The argument of the learned counsel for the petitioners in regard to the second disputed item was that for the purpose of finding out whether a transaction of sale or purchase of decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2) of section 6 were satisfied. That was the position even in respect of declared goods. What the learned counsel for the petitioners contended was that though the first inter-State sale is taxed under the Central Sales Tax Act, since the goods moved from this State, the assessment was factually made by the State Government authorities under section 9(2). In respect of the second inter-State sales also, by virtue of the proviso to sub-section (1) of section 9, this State became entitled to assess second inter-State sales and that, therefore, they are subjecting the same declared goods at more than one stage. This contention is merely to be stated for rejection. What is contemplated in the prohibition contained in section 15 is the levy at the second or subsequent sale under the State law. The decision in Madura South India Corporation Private Ltd. v. Joint Commercial Tax Officer[1968] 21 S.T.C. 163. also related to a case where the levy was attempted to be made under the local law after the goods had suffered levy under the Central Sales Tax Act by the same State. That is not the case here. Both the first transaction of inter-State sale and the second transaction of inter-State ..... X X X X Extracts X X X X X X X X Extracts X X X X
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