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2014 DIGILAW 1034 (GAU)

Tread N Patches v. State of Assam and Ors.

2014-12-02

INDIRA SHAH, K.SREEDHAR RAO

body2014
K. SREEDHAR RAO, CJ (ACTG.) 1. In the present case, the State of Assam declared an Industrial Policy by Notification, dated 6.4.1991 giving sale tax exemption for the purchase of raw material and sale of finished products for a period of 7 years. A notification was also issued in that behalf by the Assam Government on 16.8.1995 under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 ('CST Act, 1956')- The relevant provisions of section 8(5) are extracted hereunder for convenient reference : "8 Rates of tax on sales in the course of inter-State trade or commerce. -(5) Notwithstanding anything contained in this section, the State Government may [on the fulfilment of the requirements laid down in sub-section (4) by the dealer 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 [***]] from any such place of business of any such goods or classes of goods as maybe Specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) [***] 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 [ ***]] 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 sub-section (1) [***] as may be mentioned in the notification.]" 2. The provisions of sub-section (5) of section 8 of the CST Act, 1956 came to be amended w.e.f. 11.5.2002. The provisions of sub-section (5) of section 8 of the CST Act, 1956 came to be amended w.e.f. 11.5.2002. The petitioner, in view of the benefits given under the industrial policy, established a unit for production of tyre patches, tube patches, rubber solution, cushion compound/tread rubber, etc. The petitioner was selling the goods to the registered and un-registered dealers. The industrial policy and the notification did not make a distinction between the sale to registered and unregistered dealers for availing the benefit of industrial policy. However, the provision of sub-section (5) of section 8 of the CST Act, 1956 came to be amended w.e.f. 11.5.2002, which gave discretion to the State Governments to grant exemption only in respect of sales made to a registered dealer by way of a notification in the official gazette. In the instant case, it is admitted that the State Government has not issued any separate modified notification in official gazette as required under sub-section (5) of section 8 of the CST Act, 1956, withdrawing the benefit of the tax concession for the sales made in favour of unregistered dealers. However, the contention of the Department that in view of the amendments, the sales made in favour of the unregistered dealers would not be entitled to the benefit of tax exemption and thus for the period 2002-03, a notice is issued that no tax exemption shall be given and no Form-C is furnished to show that a sum of Rs. 2,14,25,600 is claimed as exemption, which is not supported by furnishing Form-C to show that sales are in favour of registered dealers. Therefore, demand is made in the notice for payment of aforesaid amount of 2 crores and odd. The petitioner aggrieved, has filed a writ petition challenging the notice. 3. It is evident that under sub-section (5) of section 8 of the CST Act, 1956, discretion is given to the State Government that upon fulfillment of requirements laid down in sub-section (5) of section 8 of the CST Act, 1956 by the dealer, if it is satisfied that it is necessary to do so in public interest, by notification in the official gazette, subject to such condition as may be prescribed, then direct that no tax under this Act shall be payable by a dealer in respect of sales made by him in the course of inter-State trade and commerce to a registered dealer. 4. 4. The requirements of sub-section (5) of section 8 of the CST Act, 1956 insist that if the State can restrict the concession of exemption of sale tax on sale only in respect of registered dealers then a notification shall have to be issued. In the instant case, no such modified notification has been issued. The exemption of sales tax that was offered for sale either to the registered dealer or unregistered dealer remains intact/ undisturbed until a notification is issued by Government in that behalf by virtue of amended provisions. In the absence of such notification, the impugned notice under Annexure-J is bad in law. Accordingly, the writ petition is allowed and the show-cause notice issued is set aside.