Allahabad High Court
The Commissioner Of Trade Tax ... vs S/S Spark Electrodes Pvt. Ltd. on 24 September, 2013
Bench: Arun Tandon
HIGH COURT OF JUDICATURE AT ALLAHABAD
?AFR
Court No. - 10
Case :- SALES/TRADE TAX REVISION No. - 1044 of 2007
Applicant :- The Commissioner Of Trade Tax U.P.Lucknow
Opposite Party :- S/S Spark Electrodes Pvt. Ltd.
Counsel for Applicant :- Standing Counsel
Hon'ble Arun Tandon,J.
Heard Sri U. K. Pandey on behalf of the department and Sri Shubham Agrawal on behalf of the assessee.
The department has filed this revision under Central Sales Tax Act against the order of the Tribunal dated 17.02.2007 passed in Appeal no.542 of 2001 for the assessment year 1995-96. The Tribunal having regard to the provisions of Section 8(1) of the Central Sales Tax Act read with Section 8 (4) has proceeded to hold that since the assessee had furnished a certificate in Form C, the rate of tax to be applied on the inter state sale of Iron & Steel manufactured from tax paid raw material would attract tax at the rate of 2 % only.
Learned counsel for the department submits that there has been complete misreading of the proviso to Section 8 (1) at the hands of the Tribunal while recording the findings that since on goods manufactured (Iron & Steel) from tax paid raw material on sales within the State attract tax @ 2 %, the same rate would be applicable in respect of inter state sales made from the goods manufactured from tax paid raw material. According to learned counsel for the department the impact of proviso to Section 8 (1) has completely been ignored. The proviso clarifies that so far as a notification under section 8(1) is not issued by an appropriate government notifying the rate of tax being 2 % on the turn over of a selling dealer, the rate would continue to be 4 %. In the facts of the case no notification under Section 8 (1) had been brought on record nor any such notification has been noticed by the Tribunal while holding that the rate of tax on Iron & Steel sold by the assessee to dealers outside the State would attract tax under the Central Sales Tax Act @ 2 % only. He submits that in absence of notification the proviso will hold the field and the rate of tax would be 4 %.
Learned counsel for the assessee submitted before this Court that since Form C was submitted by the selling dealer as contemplated by Section 8 (4), the provisions of section 8 (1) were satisfied. Since, the rate of tax applicable on the sales affected within the State on such goods was 2 % only. The same rate would apply for inter State sales also. This according to him flows from simple reading of Section 8 (1) of Central Sales Tax Act and, therefore, the order of the Tribunal according to him, is legally justified.
Heard counsel for the parties and examined the records of present revision.
It is not in dispute that the goods manufactured by the assessee had been so manufactured from tax paid raw material. It is also not in dispute that sale of Iron & Steel so manufactured, within the State of U.P attracted tax @ 2 %. In view of notification dated 21.04.1995 issued by the Governor of State of U. P. in exercise of powers under Section 3 (a) (1) of U.P Trade Tax Act.
The issue which is up for consideration is as to whether in view of the said notification the rate of tax on inter state sale of goods manufactured by the assessee would be 2 % in view of Section 8 (1) of the Central Sales Tax Act or would it be covered by the proviso to Section 8 (1) and, therefore, attract tax @ 4 %. It is not in dispute that the assessee had produced a certificate in Form C as required under Section 8 (4) and, therefore, the other conditions of Section 8 (1) are satisfied.
For the purposes of appreciating the controversy, it is worthwhile to reproduce Section 8(1) along with the proviso, which reads as follows :
"8 Rates of tax on sales in the course of inter-State trade or commerce
(1) Every dealer, who in the course of inter-State trade or commerce-
(a) sells to the Government any goods; or
(b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3);
shall be liable to pay tax under this Act, with effect from such date as may be notified by the Central Government in the Official Gazette for this purpose, which shall be two percent of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, or, as the case may be, under any enactment of that State imposing value added tax, whichever is lower:
PROVIDED that the rate of tax payable under this sub-section by a dealer shall continue to be four per cent of his turnover, until the rate of two per cent takes effect under this sub-section."
From a simple reading of the Section 8 (1), as was then applicable, it is apparently clear that the rate payable on the sales affected to a government or registered dealer by the selling dealer in the State of U.P during course of inter State sales, would attract tax @ 2 % with effect from said date, as may be notified by the Central Government in the Official Gazette for this purpose. Further power has been conferred upon the Central Government to provide for the lower rate in respect of said goods at par with the rate applicable to the sale or puchase of said goods inside appropriate State under the State tax law. To attract the said clause 8 (1) it is but necessary that there is a notification by the Central Government declaring that the rate of tax on turn over of a selling dealer would be 2 % during course of inter State trade covered by Section 8 (1) or the lower rate as applicable on the sale of the same goods within the State under the State law. So long as a notification under Section 8 (1) is not issued, the proviso to Section 8(1) would continue to hold the field. The proviso prescribes the rate of tax to be 4 % of the turn over.This follows from simple reading of the proviso quoted above.
This Court, therefore, has not hesitation to hold that so long as the notification under the main Section 8 (1) is not issued by the Central Government fixing the rate of tax as 2 % or for lower rate of tax as applicable on the sales within the State under State law, the main section shall also not apply and in that circumstance, the proviso shall determine the rate of tax, which will be 4 % of the turn over of the selling dealer in respect of inter State sales.
Since, under the order of the Tribunal and even otherwise, no notification issued by the Central Government in exercise of powers under Section 8 (1) has been brought on record nor has been referred to the findings of the Tribunal that the rate of tax under the Central Sales Tax Act for the assessee would be 2 %, cannot be legally sustained as it is based on ignorance of the proviso to Section 8 (1) of the Central Sales Tax Act as noticed above. The same cannot be legally sustained. The order impugned is hereby quashed. Second appeal filed by the assessee is restored to its original number and the Tribunal is directed to decide the same afresh in accordance with law in the light of the observation made above preferably within 3 months from the date of receipt of certified copy of this Order.
This revision is allowed.
Order Date :- 24.9.2013/M. Himwan
