Interpretation to Government Notification: Exempted goods cannot be chargeable to tax
Civil Appeal No. 1410 of 2007
Bench: Justice Dipak Misra; Justice Shiva Kirti Singh
Case Brief: In the present case, bench observed that to consider the bunch of appeals in common decision. In the facts of the matter, appellant is the company engaged in the business of manufacturing and sale of Radio Pagers. This company being assessee found engaging in the inter- state sale of the Radio Pagers in the year 1995- 1996 and even after there is notification issued under section 8(5) Central Sales Tax Act, 1956 the company did not charge any sale tax from purchasers. It was seen that the company claimed exemption by filing return on the basis of said notification, which was denied by the Assessing officer by its order of 2001. The appeal of the company was also dismissed by the Joint Excise and Taxation Commissioner (Appeal). Thereafter, the Sales Tax Tribunal also dismissed his appeal. Later, the appellant filed a Writ Petition in the year 2003 before the High Court, which accepted its prayer and called for reference from the Tribunal. The High in its decision ultimately concluded that the successive sales of the goods manufactured by the dealer holding valid exemption certificate were exempt from payment of sale tax so long as they were inter- state sales but in respect of the sale of goods by a dealer, in connection with the inter- state trade, not holding exemption certificate under the Rules, then the benefit of exemption provided under the Notification was not available. Now, the bench observed the provision of Section 8(2A) and section 5 of the Act and said that the said provision clearly enables the State Government to exempt the Tax payable under the Act in public interest by issuing notification. It is also observed that the company concerned was having valid exemption certificate under Rules. The dealer in another state was also holding such exemption certificate. Moreover, after analysing the concerned provision, and thereafter, the various submissions and ruling preferred to be brought as authorities, the bench finally observed that the rules discussed by the court refers to inter- state trade or commerce and the notification does not refer to subsequent sales as in case of Rule 28A(4)(c). Thus, bench found that the issue of paying the tax, on the subsequent sales/ purchase in the other state cannot be made subject matter of said Rule or notification. The bench found credibility in the submission for the assessee that there is only one inter- state sale from the Haryana State and if the another interpretation suggested by the revenue was to be considered then that would have amounted to making the exempted goods chargeable to tax and such goods would be ceased to enjoy the competitive edge given to the manufacturer in the Haryana State. Thus, appeals allowed by the bench, in favour of assessees.
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