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TMI Blog1998 (4) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... o a maximum of Rs. 7,76,583 or for seven years whichever was reached earlier under the Sales Tax Incentive Schemes for Industries, 1987 ( the schemes for short) notified by the State Government under the relevant provisions of the RST Act and the CST Act. 4.. In the periods in question the dealer sold transformers to the Rajasthan State Electricity Board (RSEB) among others. On such sales to the RSEB the dealer collected sales tax at 4 per cent and deposited the sums so collected with the Government. Such collection it is contended by the dealer was in consonance with the terms of the contract(s) with RSEB as well as with the State Government s Notification S.O. No. 109 dated June 27, 1990. The Assessing Authority (AA)-respondent No. 2 accepted this position in the course of the regular assessment proceedings as evidenced by the assessment orders dated December 27, 1993, April 23, 1994 and January 18, 1995 respectively for the assessment years 1991-92, 1992-93 and 1993-94. 5.. On April 6, 1996 the impugned notices-one each for each of the assessment year in question-issued requiring the dealer to show cause against: (i) treating the tax liability on the sales made to RSEB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AA as not entitled to reopen the assessments under section 12, RST Act on the same grounds, and, holding that the tax collected from RSEB and paid to the State Government is not liable for forfeiture under section 5G, RST Act and/or for imposition of penalty under section 16(1)(j), RST Act. 8.. On behalf of the respondents it is contended that as per provisions of the RST Act and of the schemes it was necessary for the dealer not to collect any tax on the sale of the goods covered by the schemes; that any tax so collected would invite forfeiture under section 5G and penalty under section 16(1)(j), RST Act; that the dealer could not collect tax and also avail of benefits under the schemes; the dealer could not have collected tax on some sales and not on others; that section 17, RST Act was rightly invoked; that the dealer s apprehensions regarding the invoking of section 12, RST Act cannot be made the subject-matter of this application; that the correct course was for the dealer to show cause against the proposed action before the AA and avail of alternative remedies if aggrieved by any decision thereon; and that, therefore, the application deserved to be dismissed 9.. We ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is necessary in the public interest so to do, hereby exempts from tax the sale of goods by a registered dealer to the Rajasthan State Electricity Board for exclusive use in the generation, transmission or distribution of electric power to the extent to which the rate of tax in respect thereof exceeds 4 per cent....... (emphasis added) 14.. Section 17, RST Act pertains to rectification of any mistake apparent from the record. 15.. The schemes have been notified under section 4(2), RST Act and section 8(5), CST Act. The opening paragraph or preamble of the schemes read: In exercise of the powers conferred by section 4(2), RST Act, 1954/[section 8(5), CST Act, 1956] the State Government being satisfied that it is expedient in the public interest so to do, hereby notifies the Sales Tax Incentive Scheme for Industries, 1987 .......and exempts the industrial units from payment of tax on the sales of the goods manufactured by them within the State in the manner and to the extent and for the period as covered by this notification. (emphasis added). 16.. Clause 1 sets out the operative period of the schemes which is from March 5, 1987 to March 31, 1997. Clause 2 gives the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of inter-State trade or commerce. (emphasis added) Here italicised. 19.. Annexure C gives the quantum of sales tax exemption. In the case of new small-scale industrial units it is 100 per cent of eligible fixed capital investment and the period of eligibility is seven years and provides that if a unit reaches the admissible amount during the time-limit fixed it shall not be eligible for incentives thereafter. 20.. Clauses 5 and 6 are not relevant for our present purposes pertaining as they do respectively to new industrial units covered by 1985 dispensation and to sick units. 21.. Clause 7 in so far as relevant reads: 7. Grant of eligibility certificate.-(a) An industrial unit eligible for sales tax exemption under the Incentive Scheme would be required to make an application........ to the Member-Secretary of the appropriate screening committee...... ....................... (c) The screening committee may pass appropriate orders for sanction/refusal of eligibility certificate. In case of sanction of eligibility certificate, such sanction shall be conveyed in writing to the assessing authority concerned who shall issue eligibility certificate............ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication in this behalf, and after affording an opportunity of being heard to the industrial unit, if he is satisfied that a breach of any of the conditions mentioned above has been committed, obtain the prior permission of the CCT before taking legal action under the provisions of the RST Act for the purpose of levy of tax on the finished goods not taxed under the tax exemption scheme, as if there was no exemption and there was escapement of tax. The CCT, in case he concurs with the findings of the assessing authority, shall before according such permission to the assessing authority consult the appropriate screening committee. (c) The screening committee shall be empowered to amend, suspend, restore or cancel the sanction for eligibility certificate accorded by it and copies of such orders shall be endorsed to the assessing authority. (Emphasis added) 24.. Clause 10 reads: 10. Incentive is a concession.-The incentive scheme is in the nature of a concession and it shall not confer any right to any industrial unit/entrepreneur to claim benefits provided for under it. (emphasis* added) 25.. Clause 11.-The last clause-provides for the review of the provisions of the schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts industrial units, i.e., a class of persons, from payment of tax (cf. preamble and clauses 4 and 7 of the scheme). 28.. The goods in question are transformers. They are not exempted goods. The sale of transformers was exigible to tax at the relevant time. Therefore, it could not be said that no tax was payable on the sale of transformers within the meaning of section 5G, RST Act. Two persons were however exempted under section 4(2), RST Act. One was an industrial unit manufacturing transformers admitted for benefits under the scheme and was thus entitled to avail of total exemption subject to the ceilings of quantum and time prescribed under the scheme. The other was the RSEB which was required to pay tax at the concessional rate of 4 per cent in terms of the notification of June 27, 1990 (cf. para 13 supra). 29.. A perusal of the schemes would show that they are fiscal devices to encourage investment in the industrial sector. They provide incentives and concessions for investment in new industrial ventures, in the revival of sick units and in the expansion and diversification of existing industrial units engaged in certain selected lines of manufacture. Such specification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme framed under section 4(2), RST Act and therefore collecting by way of tax in respect of the sale of transformers on which no tax is payable so as to attract the provisions of section 5G, RST Act is not warranted. 32.. In any case if the AA was of the view that the dealer was in breach of the conditions of the schemes on account of unauthorised collection of tax he could have had recourse in the first instance only to clause 9 of the schemes (cf. para 23 supra) and not to section 17, RST Act and much less to sections 5G and 16(1)(j)(iii), RST Act. However, even this would be unwarranted in view of the foregoing analysis. There was no unauthorised collection of tax. There would have been if the dealer had charged tax from the RSEB at a rate higher than 4 per cent. That is not the case. The AA exercised jurisdiction irregularly in issuing the impugned notices. 33.. Even otherwise the scope of section 17, RST Act is limited, confined as it is, only to the rectification of errors apparent from the record. For one thing in the case in hand there is no error much less an error apparent from the record. Section 17, RST Act is not a provision to be invoked to unsettle an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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