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TMI Blog1998 (2) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... been produced, the assessing officer sought to levy tax on the said turnover at double the rate, that is to say 2 + 2 = 4 x 2 = 8 per cent as per section 8(2)(a) of the Central Sales Tax Act, 1956 (Act No. 74 of 1956-for short the CSTA ) and accordingly levied the tax. 2.. The aggrieved assessee-dealers filed appeal in C.S.T. No. 300 of 1995 before the Appellate Assistant Commissioner (C.T.), Virudhunagar (for short the AAC ), who, in turn, confirmed the assessment, as made by the assessing officer, namely, the Commercial Tax Officer-II, Virudhunagar. 3.. The assessee-dealers filed further appeal in T.A. No. 216 of 1997 before the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai-600 104 (for short the Tribunal ). 4.. The operative portion of the order of the Tribunal, modifying the order of the AAC gets reflected in paragraph 13 of its order, as below: 13. In respect of the item in question covered in this appeal-cotton yarn, the rate of tax applicable is 2 per cent as per notification dated March 19, 1976. The cotton yarn attracts no liability under the Surcharge Act but attracts liability under the Additional Sales Tax Act. As the turnover of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he has no objection for the deletion of such a levy. What further transpires is that the said learned Special Government Pleader would seek to assail the levy of tax at two per cent, pursuant to the aforesaid notification, even without the filing of C forms. According to him, the levy of two per cent, as per the said notification is impermissible in law, without the production of C forms. What he would further say is that the reduced rate of two per cent under the notification for the sale of cotton yarn is, after all, nothing but a reduction of four per cent to two per cent under sub-section (1) of section 8 of the CSTA. For the reduced rate to operate, he would say, the performance of the condition, as had been prescribed under sub-section (4) of section 8 of the CSTA is implicitly necessary and that such performance of a feat is not at all dispensed with and for such position, as already indicated, he would rely upon the decision in Sarvotam Vegetables Products [1996] 101 STC 547 (SC). 9.. The moot or vexed question that crops up for consideration here is as to: Whether it is impermissible for the said learned Special Government Pleader (Taxes) representing the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the appellate authority is no different, functionally and substantially, from the assessing authority itself. 11.. No doubt true it is, this Court is a revisional authority. This Court, as a revisional authority, is definitely possessed of the power to intervene and interfere with the order of the Tribunal, if travesty of justice results in to the parties by wrong construction or interpretation of the provisions of law. If such a mistake of law is not rectified, while sitting in revision, not only nor the manifested injustice resulted to the party aggrieved could at all be removed, but also such injustice would be inflicted on the litigant public, in the system of administration of law. The maxim is that the courts of law should put an end to litigations, and not instigate further litigations-a sanguine principle to be followed for preventing docket explosion. In this view of the matter, we rather feel that the question raked up by the said learned Special Government Pleader has to be necessarily answered, in the interest of one and all concerned. 12.. The apex Court of this country, in the case of State of Madras v. N.K. Nataraja Mudaliar [1968] 22 STC 376, in the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time was two per centum of the turnover. All that the registered dealer has to do is to get included in his certificate of registration goods of the class or classes which he proposes to purchase as being intended for resale by him or for use by him in the manufacture or processing of goods for sale or in the mining or in the generation or distribution of electricity or any other form of power. Here again, the incidence of taxation is so low as ordinarily not to affect the free-flow of trade. This takes us to the remaining sales in the course of inter-State trade or commerce. By and large, these sales are made to unregistered dealers. Here again, so far as the declared goods are concerned, tax has to be levied at the rate applicable to local sales, as provided in section 8(2)(a). Then we come to clause (b of section 8(2), which deals with goods other than declared goods. Here the law at the relevant time was that the tax shall be calculated at the rate of seven percentum of the turnover or at the rate applicable to sale or purchase of such goods inside the appropriate State, whichever is higher. As could be seen from the report of the Taxation Enquiry Committee, the main reason f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly foreseeable contingencies, still some discretionary power has to be given to the executive to meet unexpected situations. If we bear in mind the fact that sales tax on inter-State sales is levied for the benefit of the States and the further fact that each one of the State Governments in its own interest is bound to create the best possible condition for the growth of industry and commerce in that State, it is reasonable to assume that they will not be blind to economic forces. All that one has to guard against is to see that they do not, by having recourse to their taxation power, obstruct the flow of trade into their States. In the normal course they will be interested in seeing that goods produced in their States are sold outside. Reasonably sufficient safeguards against the free flow of trade into a State have been provided by the provisions of the Act, firstly, by providing for the levy of sales tax in the State in which the goods are produced, and, secondly, by placing various restrictions on the power of the States in fixing the rates. 13.. Sub-section (5) of section 8 of CSTA reads as under: 8. Rates of tax on sales in the course of inter-State trade or commerce. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification issued reflects as below: Notification No. II(1)/CTRE/139(b)/76 dated the 19th March, 1976. In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Governor of Tamil Nadu, having been satisfied that it is necessary so to do in the public interest, hereby directs- (i)................... (ii) that the tax payable under the said Act by any dealer having his place of business in the State of Tamil Nadu in respect of the sale by him of cotton yarn in the course of inter-State trade or commerce, shall be calculated at the lower rate of two per cent. 15.. For a proper understanding of the notification, extracted as above, the Board issued an administrative circular and the circular so issued reads as below: Board s Ref. A2/1660/76, dated 19th April, 1976: The Government have reduced the rate of tax on the sales of cotton yarn in the course of inter-State trade to 2 per cent. This means sales of yarn to registered or unregistered dealers will have to be taxed at 2 per cent whether they are covered by C forms or not. 16.. It appears a notification in No. II(1)/CTRE/188(a)/82 dated Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received based on our decision taken from this office and the orders are awaited from the Government. 18. Our attention has now been drawn to the Tamil Nadu General Sales Tax (Sixth Amendment) Act, 1997 (Act No. 60 of 1997), which has received the assent of the Governor on the October 28, 1997, and had been published in the Tamil Nadu Government Gazette, Extraordinary No. 560, Part IV, section 2, dated November 6, 1997, at page 315. (a) Clause (b) of sub-section (2) of section 1 of the said Amendment Act prescribes that section 4 thereof shall be deemed to have come into force on the first day of April, 1996 and clause (c) of the said sub-section provides that section 11 to the said Amendment Act shall come into force on the first day of April, 1998. Thus, the operation of section 4 though had the retrospective effect, section 11 had been postponed beyond the date of publication of the Amendment Act, which event happened, as already stated, on November 6, 1997. (b) So far as the other provisions of the said Amendment Act are concerned, it goes without saying that they are to be in operation on and from November 6, 1997, the date of publication of the said Amendment Act, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the date on which the judgment in the said case was delivered by the Supreme Court. 22.. Learned Special Government Pleader representing the Revenue, though not placing any reliance on the clarifications so issued by the Commissioner in the instant case, yet, as already indicated, he would say, that the judgment of the Supreme Court in Sarvotam Vegetables Products [1996] 101 STC 547, would govern the factual matrix of the instant case and therefore, the decision of the Tribunal in levying tax at two per cent, even without the production of C forms is not correct and he has to levy tax at the rate of four per cent, in the sense of doubling the tax of two per cent, equal to four per cent, under clause (a), subsection (2) of section 8 of the CSTA. 23.. We shall now proceed to examine as to whether the dictum laid down in Sarvotam Vegetables Products [1996] 101 STC 547 (SC) is applicable to the facts of the case on hand. 24.. (a) In that case, the respondents-assessees were manufacturers and/ or dealers in edible oils and stainless steel sheets. During the relevant years, they effected a large number of inter-State sales to various dealers in Bombay and Gujarat. They obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case may be. The exemption applies to and extends to all edible oils excluding those oils as are specified in the notification. Further, the exemption is subject to a condition, viz., that the dealer claiming the exemption imposed, satisfies the assessing authority that the oil-seeds purchased for the manufacture of such oil have been subjected to tax in accordance of with section 5C of the Rajasthan Sales Tax Act, 1954, in which case, the sales tax will be charged at the rate of 1 per cent; in case the oilseeds purchased for the manufacture of such oil have been subjected to tax under section 5CC of the Rajasthan Act then the rate of tax leviable on the inter-State sale of edible oils would be 2 per cent. There is yet another condition mentioned in clause (b) of the said notification with which we are not concerned in these appeals and hence is not being referred to by us. The notification dated April 17, 1990 was issued in supersession of the aforementioned notification. This notification too exempts inter-State sales of all edible oils excluding certain oils mentioned therein. As against the tax payable at the rate of 4 per cent under section 8(1), the notification prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifications have done is to reduce the rate of tax from 4 per cent to 1 per cent (2 per cent, as the case may be). Separate conditions are prescribed for availing the rate (which itself is a concessional rate) prescribed in section 8(1) and for availing the further reduction provided by the notification. Those two sets of conditions are prescribed by section 8(4) and by the notifications respectively. One cannot conceive of the said notifications independent of, or apart from section 8(1). They merely reduce the rate in section 8(1) as already mentioned. One must first satisfy the condition in section 8(4) to become eligible for the concessional rate in section 8(1). It is only thereafter that he can claim the benefit of the said notifications, for which purpose again he has to satisfy the conditions prescribed in the notifications. It is therefore wrong to think that section 8(5) or the notifications are self-contained and operate de hors the other provisions of the Act/Rules. The Division Bench has unfortunately failed to appreciate the notifications in their correct perspective. We are of the opinion that the judgment under appeal is unsustainable in law and it is accordingly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate payable by the assessee-dealers is with reference to sub-section (1) of section 8 or with reference to sub-section (2) of section 8 of the CSTA. But, the words employed, as already indicated, categorically indicate that the rate of tax payable under the said Act, meaning thereby-whether it be under sub-section (1) or (2) of section 8-shall be calculated at the lower rate of two per cent. We have already indicated that the power of the State Government under sub-section (5) of section 8 is so wide enough to reduce the rate of tax either under sub-section (1) or (2) in respect of any dealer or in respect of sales of goods or sales of such class of goods by the issuance of a notification in the public interest, subject to such conditions, as may be specified therein, apart from having the power to exempt payment of tax in respect of inter-State sales effected. We are of the view that while issuing such a notification covering the instant case, the State Government has exercised its power to the fullest extent possible and with intent to give relief to the tax-payers, like the assessee-dealers, in the sense of calculating the levy at the lower rate of two per cent, even in cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public interest, hereby directs that the tax payable by any dealer under the said Act in respect of the sales in the course of inter-State trade or commerce of goods made of leather or canvas or a combination of leather and canvas shall be reduced to the rate specified in subsection (1) of section 8 of the said Act. (ii) Notification No. II(1)/CTRE/42/82 (G.O.P. No. 156) dated 8th February, 1982, Tamil Nadu Government Gazette, dated February 24, 1982, Part II, section 1, at page 13: In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Governor of Tamil Nadu having been satisfied that it is necessary so to do in the public interest, hereby directs that the tax payable by any dealer under clause (b) of sub-section (2) of section 8 of the said Act in respect of sales of (hand-made toys, dolls, figures and other articles of art made of paper, cloth, wood or clay or tin, or a combination of any one or more of them) in the course of inter-State trade or commerce shall be calculated at the rate of four per cent. The notification hereby issued shall come into force from the date of its publication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1966 dated March 8, 1966, fixing the rate of tax at one per cent on inter-State sale of coconut oil and cake. The question that arose for consideration was as to whether additional sales tax under the Kerala Additional Sales Tax Act, 1978 is leviable on inter-State turnover of goods, namely, oil and oil cake, which are covered by the said notification. (b) The Division Bench of the Kerala High Court answered the question, as well, that the tax payable by the respondents under the CSTA would not exceed one per cent, by virtue of the Notification S.R.O. No. 117/66 issued by the State Government, in exercise of the powers conferred on it by sub-section (5) of section 8 of the CSTA. (c) On further appeal, by way of special leave, the Supreme Court upheld the view of the High Court. (d) It appears, an issue regarding the interpretation of sub-section (2-A) of section 8 of the CSTA also seems to have been agitated before the High Court and the State s grievance is principally against the interpretation of that provision. (e) The Supreme Court said that the interpretation of that provision falls for consideration in the other appeals, which were listed before it on the day, when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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