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2012 DIGILAW 1317 (JHR)

Tata Motors Limited v. State of Jharkhand

2012-09-05

APARESH KUMAR SINGH, PRAKASH TATIA

body2012
JUDGMENT By Court—Heard learned counsel for the parties. This writ petition has been preferred to challenge he order passed by the Assistant Commissioner of Commercial Taxes, Incharge, Jamshedpur Circle, Jamshedpur, dated 21.3.2005 in respect of the assessment year 200001, levying a tax on sale of the goods in course of inter-State trade and commerce by the writ petitioner-assessee @ 10% and @14.43% rejecting the petitioner's claim of concessional rate under the Notification No. S O 27 dated 30.1.1993, which was upheld by the order passed by the appellate authority, Joint Commissioner of Commercial Taxes (Appeal), Jamshedpur Division, vide order dated 19th April, 2007 and further upheld by the Commercial Taxes Tribunal, Jharkhand, vide order dated 10.7.2008. 2. The petitioner's contention throughout was that the petitioner's sale in question was the sale in the course of inter-State trade or commerce, of the articles which have been notified in the notification 2 dated 30.1.1993. The notification dated 30.1.1993 has been issued by the State Government in exercise of the power conferred by Clause (B) of subsection (5) of section 8 of the Central Sales Tax Act, 1956. By this notification, it has been provided that for all sales in course of inter-State trade or commerce irrespective of the buyers – whether it is Government or it is a registered dealer or unregistered dealer – if made of the articles mentioned in the notification dated 30.1.1993, then the rate of sale tax will be 4% in place of regular higher rate of tax. However, the petitioner's said contention was rejected by all the three authorities, i.e. Assessing Officer, Appellate Authority and the Tribunal and it has been held that for taking any benefit of the notification dated 30.1.1993, the dealer is required to submit Form C or D as the case may be and the petitioner should have furnished Form C without which it is not entitled to the benefit of the notification and consequently the petitioner has been levied with tax @ 10%/14.43% creating a total liability of Rs.54,96,61,740/. 3. 3. Learned counsel for the petitioner vehemently submitted that all these three authorities committed serious error of law in interpreting the notification dated 30.1.1993 and ignored the fact that the notification was issued under subsection (5) of section 8, which has overriding effect over other provisions of section 8 in view of the non obstante clause and which specifically provides that “notwithstanding anything contained in this section” (section 8), the State Government may grant any exemption in tax in respect of the sales by the dealer, subject to fulfillment of certain conditions, if imposed, obviously under subsection (5) of section 8 of the Central Sales Tax Act, 1956. It is 3 submitted that the notification unqualifiedly has covered all sales in the course of inter-State trade or commerce of the commodities mentioned in the notification dated 30.1.1993 and is not related to specific buyer i.e., Government or registered dealers only but it includes unregistered dealers. It is further submitted that Form C & D is required by subsection (4) of section 8 only when the sale falls under subsection (1) of section 8 and for the sales covered under subsection (2) of section 8, no Form is required and one is required to prove that the sale in question is the sale in course of inter-State trade or commerce obviously, by other evidence than Form C & D and that the notification dated 30.1.1993 no where says that it shall have application only to the sales made under subsection (1) of section 8. It is also submitted that all the authorities and specifically the Tribunal has committed gross error not only in interpreting the notification dated 30.1.1993 but also committed error of law in misinterpreting the judgment of Hon'ble Supreme Court delivered in the case of State of Rajasthan & Anr. Vs. Sarvotam Vegetables Products reported in (101 STC 547). The Tribunal committed further error of law in not appreciating the Division Bench judgment of the Patna High Court delivered in the case of Rameshwara Jute Mills Vs. State of Bihar & Ors. Vs. Sarvotam Vegetables Products reported in (101 STC 547). The Tribunal committed further error of law in not appreciating the Division Bench judgment of the Patna High Court delivered in the case of Rameshwara Jute Mills Vs. State of Bihar & Ors. reported in ([2007] 9 VST 444 (Patna)), wherein the scope of section 8(5) of the Central Sales Tax Act, 1956 has been considered in detail and in Rameshwara Jute Mills's case, the case of Sarvotam Vegetables Products was also considered and it has been held that when there is no restriction in the notification issued under 4 section 8(5) and when there is no requirement of furnishing of Form, in that situation, demanding for any Form from the dealer in the State is contrary to the requirement of the notification. Learned counsel for the petitioner also relied upon the judgment of Hon'ble Supreme Court delivered in yet another case of Shree Digvijay Cement Co. Ltd. & Ors. Vs. State of Rajasthan & Ors. reported in (117 STC 395 (SC)) in support of his argument. Learned counsel further relied upon yet another judgment of the Madras High Court delivered in the case of Sree Ayyanar Spinning And Weaving Mills Limited Vs. State of Tamil Nadu reported in (109 STC 205 (Madras)). 4. Learned counsel for the State submitted that taxing provision is the subsection (1) and (2) of section 8 of the Central Sales Tax Act, 1956 and one is required to be covered by either of the sales falling in the category of subsection (1) and/or subsection (2) of section 8 of the Act of 1956 and that once one is liable to pay tax under section 8, then the provision of exemption applies and subsection (4) of section 8 clearly provides that for sale or transaction made in course of inter-State trade or commerce, one is required to submit Form C or D, as the case may be, and subsection (4) clearly provides that subsection (1) shall not apply to any sale in course of inter-State trade or commerce unless the dealer selling the goods furnishes the requisite particulars in Form C and D and therefore, when such certificate is not furnished, subsection (1) itself will not apply and thus, compliance of subsection (4) is mandatory in nature. It is submitted that in view of the above reasons and in view of the judgment of Hon'ble Supreme Court delivered in the case of Sarvotam Vegetables Products (supra), the Tribunal rightly held that the petitioner is not entitled to exemption under the notification dated 30.1.1993. 5. We considered the submissions of the learned counsel for the parties and perused the relevant provisions of law as well as reasons given in the impugned orders and considered the judgments relied upon by the learned counsel for the parties. 6. Subsection (1), (2), (4) and (5) of Section 8, being relevant, are quoted below: “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 subsection (3) shall be liable to pay tax under this Act, which shall be four per cent 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, whichever is lower. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within subsection (1). (a) in the case of declared goods, shall be calculated at twice the rate applicable to the sale or purchase of such goods inside the appropriate State; and (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; and (c) in the case of goods, the sale or as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally shall be nil, and for the purpose of making any such calculation under clause (a) or clause (b), any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. Explanation:--For the purposes of this subsection, a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods. (2A)................................. (3).................................. (4) The provisions of subsection (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnished to the prescribed authority in the prescribed manner— (a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorized officer of the Government: [Provided that the declaration referred to in clause (a) is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit] (5) Notwithstanding anything contained in this section, the State Government on the fulfilment of the requirements laid down in subsection (4) by the dealer may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct— (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, to a registered dealer or the Government from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in subsection (1) or subsection (2) as may be mentioned in the notification. (b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made, in the course of inter-State trade or commerce, to a registered dealer or the Government by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in subsection (1) or subsection (2) as may be mentioned in the notification.” 7. Bare perusal of subsection (1) of Section 8 will reveal that it applies to the sales in the course of inter-State trade or commerce (a) if the sale is to the Government and (b) if the sale is to a registered dealer other than the Government. A perusal of subsection (2) of Section 8 will reveal that it covers the sales which are not covered by subsection (1), meaning thereby if the sale is not to the Government and not to the registered dealer obviously then it may be a sale to anybody who is not a registered dealer. In subsection (1), there is a different rate of tax and it is 4% of the turnover of the seller or the rate applicable to the sale or purchase of such goods inside the appropriate State under the Sales Tax Law applicable to the State, whichever is lower. Subsection (2) prescribes different rate of tax and as per clause (a) under subsection (2) of section 8, for a sale in the course of inter-State trade or commerce not falling under subsection (1) and if it is of declared goods, it shall be calculated at twice the rate applicable to the sale or purchase of such goods inside the appropriate State. As per clause (b) of subsection (2) of section 8, in the case of goods other than declared goods, it shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. As per clause (b) of subsection (2) of section 8, in the case of goods other than declared goods, it shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. As per clause (c) of subsection (2), in the case of goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally shall be nil. The other provisions are not very much relevant for our purpose. 8. Subsection (4) applies only to the sales covered under subsection (1) and has no application to the sales which are covered by subsection (2) of section 8 and therefore, requirement of furnishing Form C and D is for the transactions covered under subsection (1) obviously, which are the sales in the course of inter-State trade or commerce to (1) the Government or (2) to a registered dealer other than the Government. No requirement of furnishing any Form for the sale covered under subsection (2) of section 8 may have obvious reason that the Government may issue such Form as prescribed in the sales tax law and the same can be done by the registered dealer but if the purchaser is not a registered dealer, he cannot obtain any Form from the Sales Tax authority and therefore, these transactions are required to be proved by other evidence so as to fall in the category of sale in the course of inter-State trade or commerce. 9. Be that as it may, the issue involved in this case is that whether the notification in question has exempted sales covered under subsection (1) or under subsection (2) or both. For better understanding, it will be appropriate to quote the notification dated 30.1.1993, which is as follows: “Notification No. S.O. 27 (Ibid. page 8.), dated January 30, 1993. 9. Be that as it may, the issue involved in this case is that whether the notification in question has exempted sales covered under subsection (1) or under subsection (2) or both. For better understanding, it will be appropriate to quote the notification dated 30.1.1993, which is as follows: “Notification No. S.O. 27 (Ibid. page 8.), dated January 30, 1993. In exercise of the powers conferred by clause (B) of subsection (5) of section 8 of the Central Sales Tax Act, 1956 (Act No. 74, 1956), the Governor of Bihar, after being satisfied that it is necessary to do so in the public interest, is pleased to direct that the Central sales tax payable in respect of sales in course of inter-State trade and commerce of chassis of heavy motor vehicles (bus and truck), all kinds of motor vehicles (excluding motor cycle, scooter and moped), excavators and other implements of that category, that is hydraulic excavators, clamshell, dragline, rock-breaker, mini-excavators, crawler-cranes, wheeled-cranes, wheel-loaders, front-end loaders, shovels, breakhoe and articulated cranes from any place of business situated in the State of Bihar, shall be calculated at the rate of four per centum. 2. Notification No. S.O. 40, dated 26th February, 1992 (See [1992] 87 STC Statutes 109.) is hereby cancelled. 3. This notification shall come into force from the 1st February, 1993.” 10. This notification no where has restricted itself to either of the provisions under subsection (1) or (2) of section 8 and this notification in an unambiguous and clear language declared that the reduced rate of tax will be applicable to the sales in the course of inter-State trade or commerce of the articles mentioned in the notification. Learned counsel for the State also could not dispute this position and fairly admitted that this notification applies to subsections (1) and (2) both. 11. Learned counsel for the State also could not dispute this position and fairly admitted that this notification applies to subsections (1) and (2) both. 11. In that fact situation, we may consider the judgment of Hon'ble Supreme Court delivered in the case of Sarvotam Vegetables Products, which has been relied upon by the learned Tribunal for holding that the petitioner was required to submit Form C. In Sarvotam Vegetables Products' case, writ petitioner's contention was that since the inter-State sale effected by the petitioner was covered by the exemption notification dated 26th December, 1986 and another notification dated 17th April, 1990, the petitioner was not required to produce Form C for availing the exemption provided under the notification and the petitioner, who initially tried to take benefit of tax exemption under the above notification by submitting spurious C Forms, submitted that because of that reason no action could be taken against the petitioner as he was not under obligation to submit C Form. In Sarvotam Vegetables Products's case, the notification under consideration specifically gave benefit of concessional rate of tax for the sales covered only under subsection (1) of section 8 of the Central Sales Tax Act, 1956 and therefore, in that fact situation, Hon'ble Supreme Court specifically held that charging section is section 8(1) and the sale must fall within the ambit of section 8(1) and then only one can claim concessional rate of tax under the notification which has granted concession of tax only to the sales under subsection (1) of section 8. In this context, Hon'ble Supreme Court considered the requirement of furnishing of Form C and held that to cover the transaction of sale under subsection (1), one is required to comply with the mandatory provision of subsection (4) of section 8 without which exemption cannot be claimed. Therefore, submitting of Form 'C' for seeking exemption under the notification to cover itself within subsection (1) of section 8 is essential and subsection (4) has excluded application of subsection (1) in a case when required Form C is not furnished. Therefore, Sarvotam Vegetables Product's case had entirely different facts. Here in this case, the contention of the petitioner is that the petitioner's sale is covered under subsection (2) and not under subsection (1). Therefore, Sarvotam Vegetables Product's case had entirely different facts. Here in this case, the contention of the petitioner is that the petitioner's sale is covered under subsection (2) and not under subsection (1). Had the petitioner's sale been under subsection (1), it would have been required to furnish requisite Form 'C' or 'D' as prescribed in subsection (4). There is no requirement of furnishing any Form C or D when the sale is covered by subsection (2). It is also submitted that by notification in question, the rate of tax has been reduced to 4% and for the sale 11 covered under subsection (1), the rate of tax is already 4% and therefore, had the petitioner furnished Form C and had his case been covered under subsection (1), then also he would not have any benefit merely by virtue of the notification dated 30.1.1993, which also provides for levy of 4% tax. It is also submitted that the notification in question has been issued to cover the sale under subsection (2); otherwise this notification would have no effect at all. The higher rate of tax is only under subsection (2) and the rate is higher for the sales not falling under subsection (1) and the rate of tax for the sales falling under section (2) of the goods other than the declared goods is equal to the rate as provided under the notification dated 30.1.1993. It is also submitted that if the petitioner would have furnished C Forms, his case would not have fallen under subsection (2). It is also submitted that the Revenue has not questioned the nature of transaction and it is undisputedly the sale in the course of inter-State trade or commerce and therefore, by virtue of the notification dated 30.1.1993, all sales whether under subsection (1) or subsection (2) are covered by the notification dated 30.1.1993 and there can be levy of tax at the rate of 4% per annum only. 12. It appears that the Tribunal, instead of reading the notification as such and finding out what is the effect of the notification, proceeded astray and tried to find out what the notification should have contained. 12. It appears that the Tribunal, instead of reading the notification as such and finding out what is the effect of the notification, proceeded astray and tried to find out what the notification should have contained. We are, thus, of the considered opinion that when the statute, rule or any notification is unambiguously clear in its 12 language, then there was no need to look into other aspect as to how the notification should have been framed. Hon'ble Supreme Court in the case of Sarvotam Vegetables Products itself clearly held as under:-- “Subsection (5) of section 8 confers the power of exemption upon the State Government. As is well-known, almost every taxing enactment contains such a provision. The exemption under section 8(5) can be granted either with reference to dealers or class of dealers or with reference to goods or classes of goods. The exemption can be total or partial. It can also be subject to such condition as may be prescribed in that behalf.” 13. Therefore, by virtue of the power conferred under subsection (5) of section 8 of exemption upon the State Government, the State Government can grant exemption from payment of tax either with reference to dealers or class of dealers or with reference to goods or class of goods and exemption can be total or partial and exemption can also be subject to such conditions as may be prescribed in the notification. As we have already noticed from the notification that the notification no where has put any condition for availing the benefit of tax exemption, the notification covered all sales under subsections (1) and (2) of section 8 and that exemption could have been granted by the State Government and has been granted. In the Sarvotam Vegetables Products's case, as we have already noticed that exemption was only for the sales covered under subsection (1) and Hon'ble Supreme Court, while considering this aspect of the matter that as the notification dated 26th December, 1986 and another notification dated 17th April, 1990, itself imposed conditions and provided for submitting C Form for availing the benefit of the 13 notification, held as under: “Now the contention of the respondents-dealers, which has found favour with the Division Bench of the High Court is this : The notifications and subsection (5) of section 8 whereunder it has been issued, are self-contained notifications/provisions. Section 8(5) empowers the State Government to grant exemption subject to such conditions as they may deem fit to impose in public interest. The notifications do impose certain conditions. They do not provide that production of a C form is essential for availing the benefit of the notification. If so, no such condition should be read into notification.” 14. It is clear from the above that under section 8(5), while granting exemption, the Government can impose condition and Hon'ble Supreme Court held that if they do not provide any condition, then no such condition should be read into the notification. Here in the present case, as we have already observed that there is no condition in the notification and there could not have been any condition of producing Form C or D for sales covered under subsection (2). 15. In the case of Rameshwara Jute Mills (supra), by the notification, concessional tax was granted for the transactions covered under subsections (1) and (2) of section 8 of the Central Sales Tax Act, 1956 and in that notification, there was no requirement of furnishing Form C or D, then the Division Bench of the Patna High Court, of which one of the Members was Hon'ble Mr. Justice Aftab Alam, (as he then was), after considering the case of Sarvotam Vegetables Products held, that in a case, when the dealer claimed the benefit under subsection (1) of section 8 of the Central Sales Tax Act, 1956, but failed to produce certificate or declaration in Form D, the same would fall under subsection (2) of section 8 and by virtue of the notification, the rate of tax under that subsection too would only be 3% and not 10% as applied by the Commercial Taxes Officers in the impugned order. Meaning thereby in the present case also petitioner's sale is not falling under subsection (1) of section 8 and is falling under subsection (2) of section 8 and since the notification applies to the sales under subsection (2) of section 8 fully, then in that situation the petitioner's sale/transaction is fully covered by the notification dated 30.1.1993 and the petitioner was liable to pay tax as provided by the notification and was liable to pay tax @ 4% only and not as levied by the impugned order. 16. 16. In view of the above reasons, the writ petition of the petitioner is allowed and the impugned orders dated 21.3.2005 passed by the Assistant Commissioner of Commercial Taxes, Incharge, Jamshedpur division, and dated 19.7.2007 passed by the Joint Commissioner of Commercial Taxes (Appeal), Jamshedpur Division and dated 10.7.2008 passed by the Commercial Taxes Tribunal, Jharkhand, are set aside. The Assessing Officer is directed to recalculate the tax in accordance with the notification dated 30.1.1993. Petition allowed.