9911796707
TMI Blog1998 (12) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Sales Tax Act, 1956 would not arise? 2.. The petitioner is a limited company doing business of manufacture of chemicals and is a registered dealer under the Gujarat Sales Tax Act, 1969 as well under the Central Sales Tax Act, 1956. The unit is holding exemption certificate under entry 118 of notification issued under section 49 of the Act. The limit of exemption of tax up to which he is entitled to avail benefit of the incentive scheme is Rs. 90 lakhs as pioneer industry. The exemption under the scheme envisages that an eligible unit is entitled to be exempted from payment of sales tax on sales of goods manufactured by it subject to a quantum limit determined under the scheme with relation to fixed capital investment. The further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected by him as such, during the period of operation of deferment and only thereafter he is liable to make payment of such tax to the public exchequer without liability to pay interest thereon. Thus from the scheme it is clear that the industrial unit availing exemption incentive is not liable to pay tax and is also not entitled to collect tax on his turnover. 3.. In the aforesaid set of facts, a contention has been raised by the assessee before revenue authorities that while computing tax leviable from him during the period in question, by keeping out entry 118, out of consideration, from the entire turnover of sales made by him, a sum calculated in accordance with the formula referred to in rule 50(2)(i) be deducted to find out net taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the revenue that as no part of sales during the continuance of the exemption period, until full exemption is availed of could include any tax in respect of such sales, the question of treating the sale price collected by the assessee as gross turnover to be reduced to a net turnover by separating element of tax therefrom does not arise. If the contention of the assessee is to be accepted according to the counsel for the revenue, it would result in increase in the total exemption limit from the payment of tax which is otherwise, leviable. We have given our anxious consideration to the contention raised before us. 6.. Rule 50, reads as under: Reduction of sale price for levy of tax.-A registered dealer may in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the taxable turnover the tax element charged from the customer is to be separated therefrom by applying formula stated in sub-rule (ii). Thus pre-condition for operating the rule 50 is sale price charged by dealer contains element of sales tax whether shown separately or as part of sale price but not shown separately so that turnover on which sales tax is actually payable is found out. Where the sale price charged by the dealer in fact does not contain any element of tax, and it cannot contain such element because tax is not actually payable by him, there is no room for determining taxable turnover on which tax is notionally leviable. With reference to rule 50, where tax is not actually payable but is to be determined notiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im on the rate prescribed for the commodity in question by deeming that the sale price charged by him though in fact did not include any tax, though in fact assessee was not entitled to charge any part of his sale price as tax, yet for the purposes of computing tax leviable, in order to find out the extent of exemption enjoyed by him to be adjusted against the exemption limit, as if such sale price had ingredient of tax chargeable thereon. 8.. There is no room for assuming a legal fiction for the purpose of reducing the actual turnover of sales of goods manufactured by the assessee to a lesser sum to reduce the extent of tax notionally leviable as distinct from actually payable on such sales for the purpose of finding out the extent of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided under the exemption provision itself. 10.. The clear result of giving effect to rule 50(ii) as suggested by the assessee by considering the sales made by the assessee, which is bereft of any element of tax liability, as gross turnover having element of tax liability embedded therein and to apply the formula of net taxable turnover, shall be in extending the limit of exemption from payment of tax from what has been determined under the provision, and to read into the scheme that the dealer shall be exempt from payment of tax on gross turnover of maximum limit instead of exempt from payment of tax up to certain amount. 11.. The contention is contrary to all cannon of interpreting the statutory provisions and we are unable to accep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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