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TMI Blog2002 (4) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 1995 by addition to Schedule IV to the main notification, which is as follows: SCHEDULE IV Persons or units, the rate of tax on whose sales or purchase of goods, is reduced under sub-clause (3) of clause 1 ----------------------------------------------------------------------------------- Sl. Description of Description of Reduced Condition No. person/unit. goods and rate of transactions tax ----------------------------------------------------------------------------------- 8. Small-scale indusSale of goods 4% Nil. trial units whose manufactured by total turnover does them within the not exceed Rs. 50 State lakhs ----------------------------------------------------------------------------------- Later the Government further amended the above notification whereunder the concessional rate of four per cent was made applicable on the first rupees fifty lakhs of turnover during the first year where the turnover of the SSI unit exceeds Rs. 50 lakhs so that the higher rate was made applicable in that year only on the turnover above Rs. 50 lakhs. This amendment was brought about by introducing an explanation to entry 8 of the Schedule IV as given below vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the rate of tax is known to them in advance they will not be able to collect appropriate tax as provided under section 22(1) of the KGST Act. The effect of the notification as amended is that after the first year of turnover crossing rupees fifty lakhs a SSI unit will have to estimate in advance their possible turnover in a year and if it is below rupees fifty lakhs they have to collect tax at four per cent. On the other hand, if the turnover is above rupees fifty lakhs, they will have to pay tax at the rate applicable to the product on the entire turnover. However, according to the petitioners, if the concessional rate at 4 per cent is available on the first rupees fifty lakhs turnover every year then they can collect tax at the appropriate rate without any risk of under-collection or excess collection. If their prayer is allowed then they can collect tax at 4 per cent on the first rupees fifty lakhs of turnover every year and for the turnover above rupees fifty lakhs at the higher rate applicable to the goods. This of course is a practical suggestion, but the question is whether this so-called practical difficulty experienced by the petitioners is sufficient to invalidate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nience or hardship. I do not know how this decision helps the petitioners because the notification challenged by the petitioners is a beneficial notification, which gives concessional rate of tax to SSI units with turnover below rupees fifty lakhs. Another decision cited is that of the Madhya Pradesh High Court in M.P. Shoe House v. State of M.P. [1987] 67 STC 427. In this case the Madhya Pradesh High Court held that the conditions imposed by notification which militates against the purpose for which the exemption was granted cannot be upheld. In this case, in order to avail of the benefit of concessional rate no condition is imposed by the Government to SSI units which can be divided into two classes; one with turnover below rupees fifty lakhs and the other with turnover above rupees fifty lakhs. The Government is absolutely right in making such a classification which is based on reasonable basis between small and large industries. While the benefit of concessional rate is available to relatively small industries, the same is denied to SSI units with large turnover (above rupees fifty lakhs). However, it is seen that the notification under challenge, S.R.O. No. 585/96 has in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andatory for a dealer to collect tax at the full rate at which the dealer is liable to pay tax. It is only an option given to the dealer to collect or not to collect. If sufficient margin is there to take care of payment of tax, the dealer need not even collect tax. It cannot be said that the dealer having a turnover above rupees fifty lakhs in a year is a small dealer unable to pay tax. The estimation of turnover in a year going by market conditions and competition in business is one of the requirements of business and therefore the contention of the petitioners that it is impossible to estimate the turnover in advance and pay the tax is not convincing or acceptable. The requirement of estimation of turnover is contemplated under the various provisions of the Act including the charging section. The provision for turnover tax, which provided for payment of turnover tax on the estimated turnover, if the turnover exceeds rupees fifty lakhs in a year. Even the liability to pay tax under section 5(1) of the Act itself is only when the turnover of the dealer exceeded rupees two lakhs in a year is one such situation. Therefore, I do not think any of the practical difficulties highl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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