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TMI Blog2009 (12) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... as provided under the State Act. Further the reference of sub-section (1) or sub-section (2) is indicative of the fact that a notification can be issued only with respect to the rate of tax referred in aforestated sub-sections and not to sub-section (2-A) of section 8. The circular therefore, clarifying the above legal position is not in any manner illegal or contrary to law. - 1721,3042, 2786 of 2002 - - - Dated:- 16-12-2009 - PRAKASH KRISHNA AND NIGAM S.C., JJ. The judgment of the court was delivered by PRAKASH KRISHNA J. These seven writ petitions have been filed by the manufacturers of electronic picture tubes (black and white), commissioning and manufacturing of electronic components. The dispute relates to the validity of circular dated March 18, 2002 issued by the Commissioner of Trade Tax. Assessment years 1995-96 to 1999-2000 are involved in all these petitions. As common questions of law and facts are involved in these petitions, as jointly agreed by the learned counsel for the parties, they were heard together and are being disposed of by a common judgment. Writ Petition No. 1721 of 2002 was considered as the leading case and the arguments have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the items manufactured by the petitioner are taxable at 2.5 per cent. in the State of U.P. The rate of tax under the Central Act has been provided under section 8(1) and subsection (2) of the Central Sales Tax Act. Sub-section (2A) of the Central Sales Tax Act provides that if the rate of tax in the State is either nil or less than four per cent., the tax on inter-State shall be nil or as the case may be shall be calculated at lower rate. Hence, as per section 8(2A), the rate of tax under the Central Act should be 2.5 per cent. The notification dated October 10, 1995 is in respect of the tax payable under sub-section (2) of section 8 by any dealer at the place of business in the State of U.P. in respect of sales made by him from any such place of business in the course of inter-State trade or commerce of electronic goods, it shall be calculated at two per cent. The language of the notification under consideration, covers only those transactions which are covered either under sub-section (1) and or sub-section (2) of section 8 of the Central Sales Tax Act and not the transaction which is covered under section 8(2A) of the Central Sales Tax Act. In the rejoinde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les of any goods to the Government; or (ii) sales of goods which are declared to be of special importance in the inter-State trade or commerce; (iii) sales to a registered dealer; and (iv) sales to other persons. The inter-State sales in question which are sought to be taxed do not fall under sub-section (1) or clause (a) of sub-section (2) of section 8 of the Central Act. The sales were of goods other than the declared goods. It is also not in dispute that the electronic goods in question, i.e., the picture tubes and electronic components are taxable at 2.5 per cent. in the State of U.P. (two per cent. normal tax + 0.5 per cent. surcharge as per section 3E of the U.P. Act). This being so, the goods in question also do not fall under sub-section (2) of section 8 of the Act which provides that the tax shall be calculated in respect of goods other than declared goods, at 10 per cent. or at applicable to the sale or purchase of such goods inside the State whichever is higher. Sub-section (2A) of section 8 states that notwithstanding anything contained in clause (b) of sub-section (2), the tax payable under the Central Act by the dealer where intra-State Sales of the same unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Act No. 74 of 1956), the Governor is pleased to direct that with effect from October 10, 1995, the tax payable under sub-section (2) of the said section by any dealer having his place of business in the State of Uttar Pradesh in respect of the sales made by him from any such place of business in the course of inter-State trade or commerce of electronic goods shall be calculated at the rate of two per cent. whether or not the declaration in form 'C' or certificate in form 'D' covering such sale has been furnished. On a plain and meaningful reading of the notification under section 8(5) reproduced above would show that the State Government by means of the said notification has provided that with effect from October 10, 1995 the tax payable under sub-section (2) of section 8 of the Central Act by any dealer having his place of business in the State of U.P. in respect of the sales made by him from any such place of business in the course of inter-State trade or commerce of electronic goods shall be calculated at two per cent. The said notification besides many other things pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be taxed at 2.5 per cent. including surcharge which is lower than four per cent. and the notification issued under section 8(5) prescribed the rate of tax at two per cent. Thus the case in hand would be covered by sub-section (2A) of section 8 of the Central Act and not by subsection (1) or sub-section (2) of section 8. Our, above view finds support from the phrase used tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification . The use of words lower rates implies that rate of tax may be lowered down than the rate of tax as provided under the State Act. Further the reference of sub-section (1) or sub-section (2) is indicative of the fact that a notification can be issued only with respect to the rate of tax referred in aforestated sub-sections and not to sub-section (2A) of section 8. The circular therefore, clarifying the above legal position is not in any manner illegal or contrary to law. Much emphasis was laid by the petitioners on the following two decisions of the apex court: (i) Assistant Commissioner (Assessment), Sales Tax Special Circle, Trichur v. Jana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85 STC 105 (SC). The following observations of the High Court were reproduced in the aforestated judgment (page 116 in 85 STC): We are also of the view, that even in cases where tax is exigible under section 8(2A) of the Central Sales Tax Act for the inter-State sales, the Kerala Additional Sales Tax Act, 1978 (Act 20 of 1978), has no application. As stated already, in cases where the tax is payable under section 8(2A) of the Central Sales Tax Act, what is crucial or relevant is to ascertain, the appropriate sales tax law of the State, under which the tax is levied for the sale or purchase of the goods or the commodity, in question. Looked at from the angle, we have no doubt, that the appropriate sales tax law of the State, of which tax is levied, is the Kerala General Sales Tax Act, 1963. The Kerala Additional Sales Tax Act, 1978 (Act 20 of 1978), does not levy sales tax on the sale or purchase of the goods or commodity, in question. We hold that the provisions of Act 20 of 1978 are inapplicable to a situation, where inter-State sales are to be taxed under section 8 or section 8(2A) or section 8(5) of the Central Sales Tax Act. To the aforesaid observations the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at Rs. 2.5 per cent. including the surcharge as provided under section 3E of the U.P. Trade Tax Act. The ratio of the decision of the apex court in the case of Aysha Hosiery Factory (P) Ltd. [1992] 85 STC 106 is fully attracted. Having said so, we may consider the circular dated March 18, 2002 issued by the Commissioner of Trade Tax. By the said circular the Commissioner has drawn the attention of the authorities towards the notification dated October 10, 1995 issued under section 8(5) of the Central Sales Tax Act in respect of rate of tax on the inter-State Sale of electronic goods . The Commissioner has sought to clarify the position that a notification under section 8(5) can be issued only for those goods which are covered either under sub-section (1) or sub-section (2) of section 8 of the Central Sales Tax Act. Meaning thereby notification was issued under section 8(5) of the Central Sales Tax Act for those goods on which trade tax is leviable at four per cent. and more. The trade tax on the electronic goods (picture tubes) including additional tax being 2.5 per cent., the tax shall be payable under section 8(2A). Tax on inter-State sales on such electronic goods is at 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There being no specification of any of the sub-clause of section 8, which is not so here, the decision laid down therein is distinguishable and has no application to the controversy on hand. The observations made in paragraph 28 of the judgment, further supports our view. Viewed as above, the writ petition is devoid of substance. All the writ petitions are hereby dismissed with costs of Rs. 5,000 in each petition. Lower rate Under sub-sections (1) and (2) of section 8 of the Central Act, the rate of tax on the goods sold is generally four per cent. against the declaration form C/D or 10 per cent. or more at the goods are liable to be taxed under State law without declaration form. However, under section 8(2A) of the Act, the rate of tax would be less than four per cent. or exempt if the goods are subjected to tax at lower than four per cent. or generally exempt under the general law of the State. By sub-section (5) of section 8 of the Central Act the State Government has been empowered to specify rate of tax payable on sale of goods under the Central Act which may be lower than the rate prescribed under sub-section (1) or sub-section (2) of section 8 of the Central Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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