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TMI Blog2015 (11) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... erson, though the goods are taxable. Such exemptions operate in circumscribed boundaries and not as expansive as in the case of taxable goods. Exemptions with reference to taxable events or taxable persons would not exempt the goods as such, for a subsequent transaction or when the goods are sold or purchased by a non-specified person, the subsequent transaction or the taxable person would be liable to pay tax. It is, in this context, it has been highlighted by the respondent and, in our opinion, absolutely correctly that Section 4 of the Act provides for levy of tax in a situation where the goods, which were not exempted but could otherwise not be subjected to tax on account of exemption granted to a person or to a transaction. The goods remain taxable goods through exemption stands granted to a particular individual or a specified transaction. Appellant though exempted from payment of tax, subsequent transactions of sale of asbestos cement sheets would be taxable. The transaction of sale by the manufacturer/dealer covered by the exemption notifications issued under Section 8(3) of the Act would be protected or an exempted transaction, but the goods not being exempted goods wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial used in manufacturing A.C. Sheets for the period mentioned hereinabove and pursuant to the show cause notice the assessee filed a detailed reply and eventually the assessing authority passed orders under Section 22 of the Act disallowing the ITC and charged interest. The said orders were assailed before the Appellate Authority which declined to interfere with the orders appealed against, compelling the assessee to file second appeals before the Board which placed reliance on ACTO v. M/s. Suncity Trade Agency (2006) 147 STC 405 and dismissed the appeals. The Board while dismissing the appeals opined that the assessee-Company, a manufacturing unit, had not been charged on the sales of its product, as per the notification which squarely fall under the definition of exempted goods and hence, the final product was exempted, but it was not entitled to avail ITC as the notification clearly postulated that the units/institution was not exempted from the tax but the sales of its goods were exempted from tax as per the definition of Exempted Goods . 3. The grievance of dismissal constrained the assessee to file the revision petitions before the High Court, and seeking interferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance was placed on M/s. Sun City Trade Agency (supra). 5. The High Court referred to the dictionary clause as enumerated in Section 2(13) which deals with exempted goods , Section 2(15) that defines the terms goods , Section 8 which provides for exemption of tax and Section 18 which deals with Input Tax Credit and thereafter, referred to the notification dated 16.03.2005 under the 1994 Act and the notifications dated 01.06.2006, 05.07.2006, 09.03.2007 and the amendment notification issued on the same day by the Finance Department (Tax Division). The learned Single Judge analysed the provisions of the Act and the notifications and took note of the fact that under the 1994 Act exemption granted related to sale of A.C. Sheets and Bricks, subject to the conditions indicated therein. The High Court further noted that the notification dated 01.06.2006 which had been issued in exercise of power under Section 8(2) and Schedule-I which was amended and A.C. Sheets and Bricks having contents of fly ash 25% more than by weight was inserted as entry 60A, and further adverted to the notification issued under the same provision, on 05.07.2006 vide which the Schedule-I was amended and en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods would fall outside the definition of exempted goods. 8. The learned Single Judge referred to the definition contained in Section 2(13) of the Act which deals with exempted goods and not with exemption of person or class as indicated in Section 8(3) of the Act, and observed that the intention of the legislature in incorporating Section 18(1)(e) of the Act takes away the exempted goods from the purview of the ITC and not the person or class of persons exempted under Section 8(3) and the intention of the legislature was not to include exempted goods in the category of exempted persons as mentioned in Section 18(1)(e) of the Act, and hence, it was demonstrable that the goods and dealers are treated separately and the same was also evident from the provision of Section 5 of the Act. 9. As is evident, the High Court further proceeded to opine that the goods included in Schedule-II were entitled for ITC inasmuch as the said conditions indicated for exemption related to Self-Help Groups and those who had been registered with the Khadi and Village Industries Commission or Rajasthan Khadi and Village Industries Board by the notifications S.O. 376 and S.O. 378 issued on 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down the method, the manner and the conditions prescribed for availing the input tax credit. Section 8 and the relevant portion of Section 18 are reproduced below:- Section 8 Exemption of tax (1) The goods specified in the Schedule-I shall be exempt from tax, subject to such conditions as may be specified therein. (2) Subject to such conditions as it may impose, the State Government may, if it considers necessary so to do in the public interest, by notification in the Official Gazette, add to or omit from, or otherwise amend or modify the Schedule-I, prospectively or retrospectively, and thereupon the Schedule shall be deemed to have been amended accordingly. (3) The State Government in the public interest, by notification in the Official Gazette, may exempt whether prospectively or retrospectively from tax the sale or purchase by any person or class of persons as mentioned in Schedule-II, without any condition or with such condition as may be specified in the notification. (3A) Subject to such conditions as it may impose, the State Government may, if it considers necessary so to do in the public interest, by notification in the Official Gazette, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 15 of the Rajasthan Sales Tax Act, 1994. It is as under:- Notification dated 16.03.2005 under the Act of 1994:- S. No. 1874; F.4(78)FD/Tax/2004-168 dated 16.03.2005 In exercise of the powers conferred by section 15 of the Rajasthan Sales Tax Act 1994 (Rajasthan Act No. 22 of 1995) and in supersession of this Department s Notification No. F.4/(68)FD/Tax-Div/99-271 (S.No. 1147), dated, January 24, 2000 (as amended from time to time), the State Government being of the opinion that it is expedient in the public interest so to do, hereby exempts form tax the sale of asbestos cement sheets and bricks, manufactured in the State by an industrial unit having fly ash as its main raw material on the following conditions, namely:- 1. that such fly ash shall constitute twenty five percent or more in the contents by weight of such asbestos cement sheets and bricks; and 2. that such unit commences commercial production by 31.12.2006. This notification shall remain in force upto 23.1.2010. 16. The said notification as mentioned therein was to remain in force upto 23.1.2010. When the said notification was in vogue another notification dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification dated 09.03.2007, S.O. 377 FINANCE DEPARTMENT (TAX DIVISION) NOTIFICATION Jaipur, March 9, 2007 S.O. 377 In exercise of the powers conferred by sub-section (3) of Section 8 of the Rajasthan Value Added Tax Act, 2003 (Rajasthan Act No. 4 of 2003), the State Government being of the opinion that it is expedient in the public interest so to do, hereby exempts from payment of tax, the sale of asbestos cement sheets and bricks manufacturers in the State having contents of fly ash twenty five per cent or more by weight, on the following conditions, namely :- (1) that the goods shall be entered in the registration certificate of the selling dealer; (2) that the exemption shall be for such goods manufactured by the dealer who commenced commercial production in the State by 31.12.2006; and (3) that the exemption shall be available up to 23.01.2010. 19. As we find the High Court in the impugned order has referred to the provisions of the Act and the notifications. On a careful scrutiny of the order passed by the High Court, it is perceivable that it has proceeded on the foundation that there is a distinction between the exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te; or (c) dispatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay tax on the turnover relating to the purchase aforesaid at the rate mentioned in Sections 3, 4 or 5 as the case may be whatever be the quantum of such turnover in a year: Provided that a dealer (other than a casual trader or agent of a non-resident dealer) purchasing goods the sale of which is liable to tax under sub-section (1) of Section 3 shall not be liable to pay tax under this sub-section, if his total turnover for a year is less than twenty-five thousand rupees. Section 7-A, it was observed, provided for such situations where the goods were taxable goods in the hands of the purchasing dealer, if any of the conditions (a), (b) and (c) of sub-section (1) of Section 7-A was satisfied. In the facts of the case, it was noticed that the goods in question were chargeable to tax as they were taxable goods under Schedule I, but exemption had been granted. Reversing the decision of the High Court, reference was made to an earlier decision of the Supreme Court in Ganesh Prasad Dixit Vs. Commissioner of Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though merely by such sales he satisfies the definition of dealer in the Act. Thus, such a person selling such produce is treated as a dealer within the meaning of the Act and the sales are of goods which are taxable under the Act but when he sells these goods, it is not part of his turnover. Therefore, it is a case of a dealer selling goods liable to tax under the Act in circumstances in which no tax is payable under the Act. In such a case, the purchaser is sought to be taxed under Section 5A provided the conditions are satisfied. The case of growers selling goods to persons to whom Section 5A thus applies is covered by this example. 24. In CST v. Pine Chemicals Limited (1995) 1 SCC 58, this Court posed the following question:- 7. The simple question before us is whether the Bench which decided Pine Chemicals is right in holding that the benefit of the said sub-section is available even where the goods are exempted with reference to industrial unit and for a specified period, viz., period of five years from the date the relevant unit goes into production. In other words, the question is whether an exemption of the nature granted under Government Order No. 159 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -specified person, the subsequent transaction or the taxable person would be liable to pay tax. It is, in this context, it has been highlighted by the respondent and, in our opinion, absolutely correctly that Section 4 of the Act provides for levy of tax in a situation where the goods, which were not exempted but could otherwise not be subjected to tax on account of exemption granted to a person or to a transaction. The goods remain taxable goods through exemption stands granted to a particular individual or a specified transaction. That being so, all subsequent transactions in those goods, which are not specifically exempt and not undertaken by an exempted person could be subjected to taxation. Therefore, the appellant though exempted from payment of tax, subsequent transactions of sale of asbestos cement sheets would be taxable. The transaction of sale by the manufacturer/dealer covered by the exemption notifications issued under Section 8(3) of the Act would be protected or an exempted transaction, but the goods not being exempted goods would be taxable and could be taxed on the happening of a taxable or charging event. It is simply because the goods are not exempt from tax or e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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