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TMI Blog2014 (4) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... mind, then Orissa Cement (supra), on the other, suggests that rebate for timely payment – provided for in the State law – can be extended by virtue of Section 9(2) as it is intrinsically linked to the concept of tax collection which falls properly within Section 9(2) - The condition for grant of benefit, i.e., the benefit u/s 5(3) and 5(4), subject to production of prescribed declarations, is engrafted within the main statute, i.e. Central Sales Tax. Relying upon Kedarnath Jute Manufacturing Company [1965 (4) TMI 91 - SUPREME COURT OF INDIA] - SC even went to the extent of saying that occurrence of events such as fires cannot be covered expressly by Section 5 and that in the absence of any Rules under the CST Act, local State laws cannot be used to give relief - To take the logic further, permitting such relief in the absence of statutory authorisation would not only transgress the extent of jurisdiction allowed to State authorities by Section 9(2) to lead to diverse and probably contradictory results - In the administration of a concededly Central law, such as the Central Sales Tax Act, despite the statutory injunction contained in Section 5(3) and 5(4), each State of the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be submitted. The actual loss could not be ascertained so far. It is for your information and appropriate action, if any warranted, at your end. A copy of the F.I.R. and the Statement of the partner is enclosed 3. A similar letter was sent by M/s. Tiles Emporium. Both dealers later filed an application before the Commissioner of Sales Tax under Rule 7(3) of the Delhi Sales Tax Rules, 1975 ( the Local Tax Rules ) seeking an exemption from production of statutory declaration forms stating that its business premises were severely affected by the fire. The claim for exemption was for the concerned AYs. The Commissioner was told that the M/s. Anand Traders was in the business of trading sanity materials, and packing materials for these items was in the form of corrugated cartons, dried grass and plastic sheets, which were inflammable, thus leading to the fire, while M/s. Tiles Emporium also contended that a fire had broken out on the 1st, 2nd and 3rd floors of the building premises at No. 3679, Chawri Bazaar. Accordingly, exemption under Rule 7(3) of the Local Tax Rules was claimed. 4. As regards M/s. Anand Traders, the fire took place at the show room of the assessee, No. 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the local Act, the Commissioner granted the exemption sought. An exemption also granted to M/s. Tiles Emporium. 8. Subsequently, both assessees application (dated 7.1.1992 in both caases) for review of the orders to extend the exemption to other sales tax apart from that covered by the Local Act. The applications stated that: 5. ..........Section 4(2)(V) of the Delhi S.T. Act takes care of all admissible deductions and does not restrict only to Sales covered by the S.T.1 only 6. That granting exemption from the production of ST 1 forms and not other statutory forms particularly when the fire does not discriminate between Local and Central Statutory forms or any other forms, records and documents, it would be denying the benefit what is otherwise granted by the Act. 9. Thus, it was claimed that in proceedings under Rule 7(3) of the Local Tax Rules, the assessee is entitled to receive a deduction, and exemption from producing statutory forms, in respect of tax-free sales, inter-state sales, sales made to embassies, tax paid sales and tax on exports out of India, or in other words, the grant of exemption under Section 4(2)(v) of the Local Act must extend to sales tax c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the provisions and rules made under Central Sales Tax Act. Rules framed under the Local Acts which are inconsistent and incongruous to the provisions of the Central Sales Tax, have to be ignored. The dealer cannot take refuge in those contradictory and incongruous rules framed under the local laws. As such, the assessment under the Central Act has to be framed u/s 8 of the Central Sales Tax Act. Central law in this regard is intransigent. It admits of no exceptions. No amendment in Central Sales Tax Act has been made despite of the observations made by the Supreme Court in above cited authority of Kedar Nath Jute Co. Ltd. The introduction of Rule 7(3) in the Delhi Sales Tax Act does not have ipso facto application to the Central Sales Tax Act. It would be no exaggeration to say that Rule 7(3) runs contrary to the provisions of the Central Sales Tax Act. This is quite apparent when we read Rule 7(3) in juxtaposition with observations made by the Supreme Court in the above mentioned authority of Kedar Nath Jute Co Ltd. It is trite saying that deductions under Central Sales Tax Act are not permissible. Furnishing of C-forms is mandatory as was held in commissioner of Sales Tax V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproach. The assessees were as much victims of the fire in the case of records pertaining to local sales tax, as in the case of CST. Therefore, the Tribunal should have opted for a consistent and rational approach in the interpretation given to Rule 7 (3), which was merely procedural and could not be treated as substantive. Counsel also underlined the provision of Section 9 (2) which enabled application of provisions like Rule 7 (3). To say that the CST s policy was to enact broad Parliamentary intention to collect Central Sales tax, and leave it to the states to utilize their respective mechanisms, reliance was placed on Khemka Co. (1975) 35 STC 571 (SC) and India Carbon Ltd. v State of Assam 1997 (106) STC 460 (SC). Illustrating that only matters such as levy of interest, penal interest and penalties have been left as substantive matters for which the State laws are to yield to CST, learned counsel submitted that Rule 7 (3) confers exclusivity to state authorities who alone can deal with all aspects relating to assessments, re-assessments, etc. 14. To highlight the argument, the assessee s counsel relied on Orissa Cement Ltd. v. State of Orissa and Another 25 STC 118 (SC) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner in that order 17. Section 5 of the CST, which requires the dealer, liable to interstate sales tax, to bear tax liability, is cast in the following terms: 5 When is a sale or purchase of goods said to take place in the course of import or export (1)A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. (3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le which does not fall within sub-section (2) of section 6, the tax shall be levied and collected- (a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of subsection (4) of section 8 in connection with the purchase of such goods; and (b) where such subsequent sale has been effected by an unregistered dealer, in the State from which such subsequent sale has been effected. (2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, re-asses, collect and enforce payment of tax, including any interest or penalty, payable by a dealer under this Act as if the tax or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State agencies. The words assess, re- assess, collect and enforce payment of tax including any enforce payment of tax including any penalty payable by dealer under this Act mean that the tax as well as penalty is payable only under the Central Act. It was also stated, by the Chief Justice, that: 15. It is only tax as well as penalty payable by a dealer under the Central Act which can be assessed, re-assessed, collected and enforced in regard to payment. The words as if the tax or penalty payable by such a dealer under the Central Act is a tax or penalty payable under the general sales tax law of the State have origin and root in the words payment of tax including any penalty payable by dealer under the Central Act. Just as tax under the State Act cannot be payable and collected and enforced, similarly penalty under the State Act cannot be assessed, collected and enforced. 20. The words and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State in Section 9(2) of the Central Act were held to be important. The words and for this purpose relate to assess, re-assess, collect and enforce payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd enforcement of tax and penalty payable by a dealer under the Act. 22. Beg, J., concurring with the majority view, found that provisions relating to penalties were special and specific provisions in the Central and State Acts. He said that they are 69.................not part of the general sales tax law of either the State or of Union. If the provisions relating to penalties, such as those found in the Central Act and the State Acts, are really special provisions which can be invoked in the special circumstances given in each statute, we must interpret the reference to penalties in the concluding portion of Section 9(2) to relate only to the special provisions relating to penalties provided for specifically in the Central Act . According to Beg, J, the legislative intent was to confine penalties mentioned in the concluding part of Section 9(2) to only those penalties as were mentioned specifically in the Central Act. 23. The words charging or payment of interest in sub- section (2) and sub-section (2A) of the Section 9, were introduced with retrospective effect in 1976. Section 9(2A) reads thus: All the provisions relating to offences and penalties (includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question requiring decision was whether in view of Section 9 (of the Central Sales Tax Act), the rebate provided in another provision of the local State law could be used. The Court upheld the contention, stating that, the rebate is offered to facilitate and expedite collection. It is intended to stimulate the collection therefore, it is a part of process and collection. In that view, it is proper to hold that in view of Section 9(3) of the Central Act the rebate provided in Section 13(8) of the Orissa Act is payable to the assessee under the Central Act if they pay the tax within the prescribed time. Like in the case of India Carbon (supra) and Mahim Patram (supra) dealt with the issue whether Section 9(2) could be used to enforce payment of tax and penalty. The Court held that the expression for this purpose cannot enlarge the content of tax and the content of penalty payable under the Central Act. Liability to pay tax as well as liability to pay penalty is created by the Central Act. 27. In International Cotton Corporation (Pvt.) Ltd. v. Commercial Tax Officer, Hubli and Ors. (1974) 3 CTR (SC) 265, the Supreme Court observed that: 4................................ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it : see Craies on Statute Law , 6th Edn., p.217. If the intention of the Legislature was to give exemption if the terms of the substantive part of sub-clause (ii) alone are complied with, the proviso becomes redundant and otiose. To accept the argument of the learned counsel for the appellant is to ignore the proviso altogether, for if his contention be correct it will lead to the position that if the declaration form is furnished, well and good; but, if not furnished, other evidence can be produced. That is to rewrite the clause and to omit the proviso. That will defeat the express intention of the Legislature. XXX 9. We realize that the section and the rules as they stand may conceivably cause unmerited hardship to an honest dealer. He may have lost the declaration forms by a pure accident, such as fire, theft etc., and yet he will be penalized for something for which he is not responsible. But it is for the Legislature or for the rule-making authority to intervene to soften the rigour of the provisions and it is not for this Court to do so where the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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