By C. B. Thakar,Advocate, G. G. Goyal,Janak Vaghani, Chartered Accountants
Central Sales Tax – Exemption From Payment of Tax Or Concessional Rate
of Tax – Notification u/S. 8(5) – under Two Separate Notifications – Not
allowed, Section 8(5) of The Central Sales tax, act, 1956.
Facts
The appellant,
a Public limited
Company incorporated under the
Companies act, 1956, is engaged in the business of manufacturing and selling
Grey Portland Cement. in exercise of powers conferred by section 8(5) of the
Central Sales tax act, 1956 (for short, “CST act”), the Government of Rajasthan
had issued a Notification No. F4(72)FD/Gr. IV/81- 18 dated 06.05.1986 allowing
partial exemptions from the sales tax payable in respect of inter-state sales
in the manner and subject to the conditions mentioned therein. Partial
exemption was granted under the said notification at the rate of 50%/75% on the
basis of increase in the percentage of the entire inter-state sales and
decrease in percentage of stock transfers but the benefit under the said
notification was not available on levy cement. from the assessment year 1989-90
to 1997-98 the appellant had been granted benefit of partial exemption under
the notification dated 06.05.1986 except for the assessment year 1995-96 and
1996-97 as no claims were made by the appellants being not eligible. By
Notification no. 97-122 dated 12.03.1997 issued u/s. 8(5) of the CST act, the
State Government rescinded the Notification No. 94-70 dated 07.03.1994 and
directed that CST on inter-State sales
of cement shall be calculated at the rate of 4%, inter alia, subject to
fulfillment of the condition that the dealer making inter-State sales under
this notification shall not be eligible to claim benefit provided by partial
exemption notification dated 06.05.1986. further, in exercise of power u/s.
8(5) of the CST act, the State Government vide Notification No. 97-266 dated 21.1.2000
directed that tax payable under sub-sections (1) and (2) of the said Section on
the inter-state sales of cement shall be calculated at the rate of 6%, inter
alia, subject to the condition that the dealer making inter-state sales under
this notification shall not be eligible to claim benefit provided under partial
exemption notification dated 06.05.1986. After a lapse of seven years from the
previous circular dated 15.04.1994, the CCT issued another Circular no.
94-95/119 dated 16.04.2001 purporting to clarify the applicability of partial
exemption notification dated 06.05.1986 vis-a-vis
notification dated 07.03.1994 and
subsequent notifications dated 12.03.1997 and 21.01.2000. By the said circular,
the competent authority purported to state that the dealer can avail the
benefit of either of these two notifications in any financial year meaning
thereby that if he opts for the benefit under notification dated 06.05.1986 for
the year 2000-2001, he would not be entitled to claim simultaneous benefit in
respect of the same year under the notification dated 21.01.2000. The
Department Held that as per circular dated 16.04.2001 the benefit could not be
claimed under notification dated 06.05.1986 if the unit had made sales under
notification dated 21.01.2000. It was Held that benefit of both the
notifications could not be availed of in the same financial year.
The High Court in appeal, filed
by the appellant, confirmed the order of Rajasthan Board allowing the appeal
filed by the Department. The appellant company filed appeal before the SC.
Held
The circular dated 15.04.1994,
when in force, had referred to the notifications dated 07.03.1994 as well as
06.05.1986. Under the notification dated 07.03.1994, the rate of central sales
tax on inter-State sale of cement was unconditionally fixed at 4%, even when
there was no declaration in form C and
form d. The notification dated
06.05.1986 relating to inter-State sale required Form C and Form D, for
availing the benefit. The circular did not in clear and categorical terms lay
down that dual or multiple benefits under the two notifications could be
availed of by the same dealer. it, however, appears that both the assessee as
well as the revenue had understood the circular dated 15.04.1994 to mean that
inter-state transactions would qualify and would be entitled to partial
exemption under the notification dated 06.05.1986, when accompanied with
form C and d and for inter-state sale
transactions without Form C and D, benefit of notification dated 07.03.1994
would apply. The understanding by the assessee and the revenue, in obtaining
factual matrix, has its own limitation. it is because the principle of res-
judicata would have no application in spite of the understanding by the
assessee and the revenue, for the circular dated 15.04.1994, is not to the specific
effect as suggested and, further notification dated 07.03.1994 was valid
between 1st april, 1994 up to 31st march, 1997 (upto 31st march, 1997 vide
notification dated 12.03.1997) and not thereafter. The Commercial tax
department, by a circular, could have extended the benefit under a notification
and, therefore, principle of estoppel would apply, though there are authorities
which opine that a circular could not have altered and restricted the
notification to the detriment of the assessee. Circulars issued under tax
enactments can tone down the rigour of law, for an authority which wields power
for its own advantage is given right to forego advantage when required and
considered necessary. This power to issue circulars is for just, proper and
efficient management of the work and in public interest. It is a beneficial
power for proper administration of fiscal law, so that undue hardship may not
be caused. Circulars are binding on the authorities administering the enactment
but cannot alter the provision of the enactment, etc. to the detriment of the
assessee.
The controversy herein centres
round the period from 1st april, 2001 to 31st
march, 2002. The period in question is mostly post the circular dated
16.04.2001. The appellant assessee has pleaded to take benefit of the circular
dated 15.04.1994, which stands withdrawn and was only applicable to the
notification dated 07.03.1994. It was not specifically applicable to the
notification dated 21.01.2000. The fact that the third paragraph of the notification
dated 21.01.2000 is identically worded to the third paragraph of the
notification dated 07.03.1994 but that would not by itself justify the
applicability of circular dated 15.04.1994.
Accordingly, the SC dismissed the
appeal, filed by the appellant, and Held that due to language of notifications
the appellant cannot take benefit of concession under both notifications in
same financial year.
