Rajasthan High Court - Jodhpur

M/S Banswara Syntex Ltd vs Asst.Commissioner,C.T.,Banswara on 19 February, 2025

Author: Birendra Kumar

Bench: Birendra Kumar

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      HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
                       JODHPUR



               S.B. Civil Revision Petition No. 294/2004




M/s Banswara Syntex Limited,
Industrial Area, Dohad Road,
Banswara (Rajasthan).
                                                                   ----Petitioner
                                    Versus


Assistant Commissioner, Commercial Taxes,
Banswara (Rajasthan),
(wrongly     mentioned     in    learned       Tax     Board's    Judgment    as
Bhilwara)
                                                                 ----Respondent


For Petitioner(s)          :    Mr. Sanjeev Johari, Sr. Advocate
                                assisted by Mr. Shubhankar Johari

For Respondent(s)          :    Mr. Mahaveer Prasad Pareek, AGC



            HON'BLE MR. JUSTICE BIRENDRA KUMAR

JUDGMENT RESERVED ON                            :   29/01/2025
JUDGMENT PRONOUNCED ON                          :   19/02/2025


1.    Heard the parties.

2. The petitioner is engaged in the business of manufacturing

and trading of Synthetic and Acrylic Yarns in the State of

Rajasthan. The State of Rajasthan in exercise of power conferred

under Section 8(5) of the Central Sales Tax Act 1956 issued a

notification bearing SO No.23 dated 06.05.1986 providing for

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partial exemption from tax payable in respect of the sales, by the

assessee, of the goods in course of inter-State trade or commerce.

3. The petitioner claims 75% of exemption in the matter of

inter-State Trade and the Taxing Authority has allowed only 50%

exemption of the tax for the assessment year 1999-2000.

4. Initially, the Assessment Authority passed order dated

28.02.2002 allowing only 50% of deduction. The said order was

challenged before the Appellate Authority in Appeal No.7/CST/01-

02. The appeal was also dismissed on 27.09.2002. The order of

the Appellate Authority was challenged before the Rajasthan Tax

Board in Appeal No.1586/2002. The Tax Board also dismissed the

appeal by order dated 19.12.2003. Hence, this tax revision under

Section 86(2) of the Rajasthan Sales Tax Act.

5. Contention of the petitioner is that the above statutory

authorities have acted against mandate of law and spirit of the

notification aforesaid.

Further contention is that the concept of horizontal increase

applied by the Taxing Authorities would frustrate the entire

legislative intent of notification dated 06.05.1986, rather in true

spirit vertical increase should have been accepted by the

authorities.

6. For brevity, the notification dated 06.05.1986 is being

reproduced below :

"S.O.23.-In exercise of the powers conferred by S.8(5), CST Act, 1956, the State Govt.(.2.) in supersession of the FD notfn No.F.4(72)FDGr/IV/81-36 dated 3.12.1985 [S.No.584], hereby directs that, with

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immediate effect, any dealer, having his place of business and manufacturing goods in the State of Rajasthan, may claim partial exemption from the tax payable in respect of the sales by him of such goods in the course of inter-State trade or commerce by way of reduction at the rate of 50% of the tax so payable [on increased sales upto 50% and at the rate of 75% of the tax so payable on increased sales made over and above the aforesaid 50%), in the manner and subject to the conditions as follows:-

(1) Such reduction of tax shall be allowed to a dealer only after and in respect of the increase which is effected in the percentage of the quantum of goods sold in the course of inter-State trade or commerce out of the total quantum of goods sold within the State and in the course of inter-State trade or commerce and despatched to Head Office, Branch Office, Depot or agent outside the State for sale outside the State, during any accounting year as against such percentage during the accounting year 1984-85;

(2) in the case of a dealer who commenced the manufacture of goods in the State of Rajasthan [on or after 1.1.1985), the average of the aforesaid percentages in respect of the other manufacturers in the State in the relevant industry during the accounting year 1984-85, calculated and determined by the assessing authority with the approval of the Commissioner, shall be deemed to be the percentage in respect of such dealer for the accounting year 1984-85;

(3) This increase effected in the percentage, as referred to in clause (1) above in respect of the sales in the course of inter-State trade or commerce, to be considered shall be limited to the extent of the decrease in the percentage in respect of the despatch of goods to Head Office, Branch Office, Depot or agent outside the State for sale outside the State, during the relevant accounting year as against such percentage during the accounting year 1984-85; and (4) No claim for such reduction of tax shall be allowed in respect of levy-cement.

Note-Claim for partial exemption under this notfn dated 6.5.1986 [S.No.625] shall not be made and allowed in respect of the inter-State sales of levy cement, and of other cement made in accordance with S.No.928 dated

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7.3.1994, and also of the following goods when the sales are made and CST paid thereon in accordance with the notfns mentioned against each:-

(a) All edible oils (excluding hydrogenated oils, palm oil whether refined or not and refined coconut oil):

S.No.649 dated 26.12.1986, S.No.793 dated 17.4.1990, pub. 18.4.1990, S.No. 934 dated 31.3.1994.

(b) Solvent extracted edible oil : S.Nos.650 dated 26.12.1986 and 934 dated 31.3.1994;

(d) Polymer chips and polypropylene filament yarn: S.No. 741 dated 2.3.1989, w.e. f. 13.9.1989 ;

(e) Polyester staple fibre and acrylic staple fibre:

S.No 742 dated 2.3.1989;

(f) All kinds of yarn or waste thereof made from man-made fibre including spun and blended yarn but excluding polyester filament, nylon filament and polypropylene filament yarn: S.No. 781 dated 12.10.1989.

(g)(1) Stainless steel blooms, rounds, wire rods, squares, strip sheets, and (2) Hot rolled and cold rolled coils, [mis-rolls], slabs, plates, and end cuttings thereof: S.No. 867 dated 19.12.1991.

(h) Cement: S.No. 1301 dated 21.1.2000.

(i) A.C. Pressure pipes: S.No. 1335 dated 30.3.2000.

(j) Tyres and tubes of all types of motor vehicles sold to State Road Transport Corporations of various States: S.No. 1436 dated 29.3.2001.

(k) Leaf springs and loose leaves for springs sold to State Road Transport Corporations of various States and Indian Railways: S.No. 1563 dated 22.3.2002.

(l) Hydrogenated vegetable oil including vanaspati and margarine manufactured from edible oil: S.No. 1605 dated 16.4.2002."

7. Learned Senior Counsel has referred to the judgment of the

Hon'ble Supreme Court in Commissioner, Customs, Central

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Excise and Service Tax, Patna Vs Shapoorji Pallonji and

Company Private Limited and Others reported in (2024) 3

SCC 358 for his submission that identical issue was considered in

the matter of some other notification issued under the Service Tax

Act and the Hon'ble Supreme Court held in Para 44 as follows :

"44. To make a statute workable by employing interpretative tools and to venture into a kind of judicial legislation are two different things. Merely because the statute does not yield intended or desired results, that cannot be the reason for us to overstep and cross the Lakshman Rekha by employing tools of interpretation to interpret a provision keeping in mind its outcome. Interpretative tools should be employed to make a statute workable and not to reach to a particular outcome."

8. Evidently, the interpretation should not be result yielding.

The Tax Board in Para 2 stated the point for consideration as

follows :

"2. The only point involved in this appeal is whether the learned authorities below correctly allowed partial exemption at 50% under the notion that the percentage increase in the inter-State sales effected by the appellants during the year 1999-2000 as compared to corresponding percentage of such sale in the context of their aggregate sale was less than 50% in terms of the State Government's Notification dated 6.5.86 (S.No. 625 of Shri J.K.Jain's Book). Basic facts of the case have, however, not been disputed by both the parties."

9. In Para 4, submission of the petitioner is elaborated and Para

6 contains reasons for the conclusion, which are being reproduced

below :

"4. Learned counsel for the appellants argued that the learned AA seriously erred in holding that the

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percentage of inter-State sales in respect of Synthetic Blended Yarn being 34.73% in the year under appeal (1999-2000) as compared to corresponding percentage of such sales at 20.24% in the base year (1984-85) constituted only an increase of 14.49%. As a matter of fact, the effective increase in the percentage in relation to the base year worked out to be 71.6% and not 14.49% as wrongly held by the learned appellate authority. Out of this effective increase of 71.6%, 50% increase qualified for partial exemption at 50% of the tax payable and the remaining 21.6% increase qualified for partial exemption at 75%, learned counsel argued. Similarly, in respect of Acrylic Yarn, his argument was that the learned appellate authority further erred in holding that the percentage of inter-State sales at 59.05% in the year under appeal as against corresponding percentage of 27.54% in the base year constituted an increase of only 31.55%. As a matter of fact, according to the appellants, the effective increase in relation to the base year constituted an increase of 112.21% and consequently eligible increase in excess of 50% qualified for partial exemption at 75% as per the provisions of the Notification dated 6.5.86 (S.No.

625). In this view of the matter, learned counsel for the appellants prayed for setting aside the orders passed by both the learned authorities below under their wrong notions. Consequently, he prayed for allowing the correct benefit of partial exemption on the effective increase in their inter-State sales in relation to the base year under the above-said Notification.

"6. I have carefully considered the arguments of both the learned counsel and have also studied the provisions of the above Notification issued by the State Government u/s 8(5) of the Act. Admittedly, in the case of Synthetic Blended Yarn, the appellants' inter-State sales constituted 20.24% of their aggregate sales in the base year, whereas in the year under appeal, their inter-State sales constituted 34.73% resulting in an increase of 14.49%. Similarly, in case of Acrylic Yarn, their inter-State sales rose from 27.54% (in the base year) to 59.09% (in the year under appeal) in the context of their aggregate sales, resulting in an increase of 31.55%. However, the decrease in the component of their Stock Transfer of the goods in the context of their aggregate sales, in the case of

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Synthetic Blended Yarn was 35.05% and in the case of Acrylic Yarn it was 30.91%. In terms of the above Notification dated 6.5.86, the appellants were entitled to avail the benefit of tax reduction on account of having achieved increase in the percentage of their inter-State sales as compared to what it was in the base year subject of course to the ceiling of the percentage decrease in the component of their Stock Transfer in the context of the aggregate sales. The learned AA seems to have allowed the benefit of reduction in tax in terms of the above Notification to the extent provided therein based on the difference between the percentage of inter-State sales in the year under appeal and the percentage of such sales in the base year in the context of the appellants' aggregate sales. On the contrary, the learned counsel for the appellants seems to have demanded the benefit of tax reduction on the basis of vertical increase in the quantum of their inter-State sales as compared to such sales in the base year. Such a demand is not found in accordance with the provisions of the above Notification dated 6.5.86. The spirit behind the above Notification appears to be to provide incentive to those dealers who effect higher volumes of inter-State sales and desist from the practice of transferring their goods outside the State under Stock/Branch/Depot Transfers or for sale outside the State, in the overall interest of augmenting the State's Revenue. The benefit of partial exemption admissible under the above Notification is subject to its Condition No. 1 which clearly provides that such a benefit of "reduction in tax shall be allowed to a dealer only after and in respect of the increase which is effected in the percentage of the quantum of goods sold in the course of inter-State trade or commerce out of the total quantum of goods sold within the State and in the course of inter-State trade or commerce and despatched to Head Office, Branch Office, Deport or agent outside the State for sale, during any accounting year as against such percentage during the accounting year 1984-85." This, therefore, makes it clear that the percentage increase needs to be worked out on the basis of the difference between the percentage of inter-

State sales in the context of the total quantum of sales effected by the dealer in any accounting year and such percentage during the base year i.e. 1984-85 and not on the basis of vertical increase in the quantum of his

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inter-State sales as compared to the base year. In this view of the matter, the learned AA seems to have committed no error in allowing the benefit of reduction in tax on the basis of the difference between the percentage of inter-State sales in the year under appeal and the percentage of such sales in the base year in the context of their aggregate sales to the extent provided in the above-said Notification. In this view of the matter, I find no force in their appeal."

10. A careful consideration of the notification aforesaid and the

scheme floated therein, this Court is of the view that none of the

Authorities who considered the claim of the petitioner have acted

against the spirit of the notification aforesaid. The Tax Board has

elaborately examined the entire facts and circumstances and

scenario of the case.

11. Hence, this Court does not find any reason to interfere with

the impugned order of the Tax Board.

12. Accordingly, the instant civil revision stands dismissed.

(BIRENDRA KUMAR),J deep