By C. B. Thakar | Advocate
G. G. Goyal, Janak Vaghani | Chartered Accountants
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Change of law — Amendment to section 8(5) of CST Act — Power of State Government — To grant concession from payment of CST — On sales to persons other than registered dealer or government not affected, section 8(5) of Central Sales Tax Act, 1956.
Facts
The dealer engaged in business of sale of IT products effected inter-State sales to persons other than registered dealer and government and charged concessional rate of CST @ 2% as per Notification issued u/s.8(5) of the CST Act by State Government of Pondicherry. The dealer filed writ petition before the High Court against the passing of assessment order under the CST Act, for the years 2003-04, 2004-05 and 2005-06, wherein tax was levied on such inter-State sales of software and other IT products at 10% and at local rate of 12% on sales of air-conditioners. Section 8(5) of the CST Act was amended by the Finance Act, 2002, w.e.f. 11-5-2002 restricting power of the State Government to grant exemption or concession from payment of tax on inter-State sales made to registered dealer or government.
Held
(1) Section 8(5) of the CST Act empowers the State Government to grant exemption or concession from payment of CST on inter-State sales. Section 8(5)(b), contemplates two categories of dealers or persons — (i) registered dealers or government; (ii) any persons or such class of persons as may be specified in the Notification. Therefore the latter category of any persons or any class of person cannot be registered dealer or the government. Certainly they are different and distinct persons and we have to give different meaning to them.
(2) Further, after the amendment to said section 8(5) of the CST Act, similar Notifications are issued by other States, granting exemption or concession from payment of CST on inter-State sales to banks, educational and medical institutions, etc. In view of this, the State Government still has power to issue specified Notification.
The High Court accordingly allowed writ petition filed by the dealer and directed the assessing authorities to consider issues on their own merits without being influenced by observations made by it.
