Central sales Tax- State
Government–Power to Grant Exemption total/partial – U/s. 8(5) – Not
Affected Even After Amendment From 11.5.2002-To Grant Exemption From
Payment of Tax – On sales Not Supported by Form C/D – Section 8(5) of
The Central Sales Tax Act, 1956.
Facts
The
dealer filed a writ petition against three trade circulars issued by the
Commissioner of Sales Tax, dated 27.5.2002, 20.7.2002 and 8.2.2007 and
also notices issued by the commissioner for revising the assessment
before the Bombay High Court. By the above mentioned circulars, the
Commissioner had informed that u/s. 8(5) of the CST Act, amended by
Finance Act, 2002 from 11.5.2002, State Government is empowered to grant
exemption only in respect of inter-State sales to the registered
dealers or to the Government covered by section 8(1) of the Act, unless
such sales are supported by declaration in form C or D respectively, as
provided in section 8(4) of the act. It was further informed that as a
result of the above amendment, any notification issued u/s. 8(5) of the
act prior to 11.5.2002, which is contrary to the amended section 8(5)
shall be amended accordingly. In other words according to Commissioner,
unless C or D forms are produced, benefit of exemption or concessional
rate of tax, under any notification issued prior to 11.5.2002, cannot be
granted in respect of any inter-state sales effected after 11.5.2002.
Based
on the above, the department initiated proceedings against the dealer
to recover tax on inter- state sales not supported by either form C or
D, which was claimed by the dealer as exempt from payment of tax under
notification issued by the State prior to 11.5.2002.The dealer filed
writ petition before the Bombay High Court challenging the
abovementioned three trade circulars issued by the Commissioner of sales
tax and other notices issued by the assessing authority.
The
question to be considered by the High Court was, whether section 8(5) of
the act as amended by the Finance Act, 2002 restricts the powers of
State Government to grant exemption either wholly or partially only in
respect of sales of goods to registered dealer/Government subject to
furnishing declaration in form C or D as the case may be?
If the
answer is yes, then whether amended section 8(5) affects the vested
right of the eligible unit to claim the exemption from payment of tax
under package scheme of incentives 1993, so far it relates to
inter-State sales of goods to dealers other than registered
dealers/Government?
Held
The High Court rejected
the self-destructive argument of the department that section 8(5) of the
Act after the amendment, restricts the power of State Government to
grant total/partial exemption in respect of inter-State sales covered by
section 8(1) only. Even after the amendment to section 8(5) of the act,
the power of state Government to grant total/partial exemption in
respect of inter-state sales covered by section 8(2) of the act is not
affected. Since the High Court decided first question in favour of the
dealer, second question was not answered by the High Court.
Accordingly, the High Court allowed the writ petition and quashed and
set aside the impugned trade circulars issued by the Commissioner of
sales tax and other notices issued by the Department.
