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2016 DIGILAW 1359 (GUJ)

Kataria Automobiles Limited v. State of Gujarat

2016-07-18

G.R.UDHWANI, K.S.JHAVERI

body2016
JUDGMENT : K.S. Jhaveri, J. 1. All these matters arise out of the common order passed by the Gujarat Value Added Tax Tribunal, Ahmedabad (for short, "the Tribunal") and involve common questions on law and facts and therefore, they are decided by this common judgment. 2. In Tax Appeal Nos. 488/2010, 535/2010, 2342/2009 & 2144/2010, the following substantial question of law arises for determination: "Whether on the facts and in the circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in holding that the Notification dated 12.09.1995, is treated as repealed and revoked by virtue of amendment of Section 8(5) of the Central Sales Tax Act, 1956 w.e.f. 11.05.2002?" 3. In Tax Appeal No. 826/2010, the following substantial question of law has arisen for our determination: "Whether on the facts and in the circumstances of the case, the notification dated 18.5.1992 issued by the State Government u/s.8(5) of the Gujarat Sales Tax Act, 1969 can be treated as continued for the purpose of benefit available for exemption of tax or reduction of tax or rate of tax under the said notification after the amendment in section 8(5) of the Central Sales Tax Act, 1956 on 11.05.2002 by the Central Government, upto 31.3.2006 wherein the State Government has rescinded the notification on 31.3.2006?" 4. In S.C.A. No. 5975/2010 & 5980/2010, challenge has been made to the impugned order dated 17.08.2009 passed by the Tribunal in Revision Application Nos. 146/2007 & 147/2007 whereby, the Tribunal dismissed the Revision Application of the petitioners on the issue of interpretation of effect of amendment dated 11.05.2002 under The Central Sales Tax Act, 1956 (for short, "the CST Act"). 5. For the purpose of this judgment, Tax Appeal No. 535/2010 is taken as the lead matter: 5.1 The assessee is an authorized distributor of Maruti cars and is a registered dealer under the Gujarat Sales Tax Act, 1969 as well as CST Act. The Government of Gujarat, vide powers conferred u/s. 8(5) of the Central Act, issued Notification dated 12.09.1995 wherein, all sales effected in the course of inter-state trade or commerce were chargeable with the concessional rate of tax @ 4%. Pursuant thereto, the assessee was charged tax @ 4%. The Government of Gujarat, vide powers conferred u/s. 8(5) of the Central Act, issued Notification dated 12.09.1995 wherein, all sales effected in the course of inter-state trade or commerce were chargeable with the concessional rate of tax @ 4%. Pursuant thereto, the assessee was charged tax @ 4%. During the assessment proceedings, the Assessing Officer imposed tax @ 10% on the inter-state sale, which were not supported with 'C' forms relying upon the amendment to the section w.e.f. 2002. The assessee brought to the notice of the Assessing Officer that the State Government had issued Notification dated 31.03.2006 whereby, the earlier Notification dated 12.09.1995 was rescinded and therefore, till that time, the said Notification dated 12.09.1995 was in force and effective. 5.2 Against the said order, the assessee preferred an appeal before the first appellate authority. The first appellate authority dismissed the appeal vide order dated 26.03.2004 inter-alia holding that after the amendment in the Central Act, production of 'C Forms' is mandatory and as the assessee has failed to produce 'C Forms' in certain cases, the order of the assessing authority does not call for any interference. 5.3 Aggrieved by the order of the first appellate authority, the assessee preferred appeal before the Tribunal. However, the Tribunal dismissed the appeal as also the Revision Applications, vide impugned common order dated 17.08.2009. Hence, these Tax Appeals and writ petitions. 6. We have heard learned counsel for both the sides and perused the documents on record. It is not in dispute that the goods in question are taxable at the rate of 4% within the State of Gujarat. Vide Notification dated 18.05.1992 issued u/s. 8(5), the State Government had resolved that if goods mentioned therein are sold in course of inter-state trade and commerce, the rate of tax applicable u/s. 8(2) would be 4%. Thus, even in absence of 'C Forms', the rate applicable u/s. 8(2), by virtue of the above Notification, would be 4% and not 10%. The said Notification was holding field and was on the statute book till 30.03.2006. 7. For applying the rate of tax on interstate sales, two conditions have been laid down in Section 8. Thus, even in absence of 'C Forms', the rate applicable u/s. 8(2), by virtue of the above Notification, would be 4% and not 10%. The said Notification was holding field and was on the statute book till 30.03.2006. 7. For applying the rate of tax on interstate sales, two conditions have been laid down in Section 8. Section 8(1) lays down the condition that if sales are supported by 'C Forms', then concessional rate is supposed to be applied and Section 8(2) lays down that if sales are not supported by 'C Forms', then higher rate is supposed to be applied. The amendment dated 11.05.2002 has inserted the condition in Section 8(5) that the State Government can exercise the powers vested in them subject to condition laid down in Section 8(4). Section 8(4) lays down the condition that benefit of concessional rate as provided for u/s. 8(1) is allowable subject to the submission of 'C Forms'. In other words, the condition laid down in Section 8(4) are in relation to Section 8(1) meaning thereby, that on fulfillment of condition laid down in Section 8(4), the sale would be accepted and treated as sale under Section 8(1), otherwise, it would be considered as sale covered and governed by Section 8(2). Thus, the amendment, in any way, does not affect Section 8(2) and is in connection with Section 8(1). 8. The State Government had issued several Notifications u/s. 8(5) with respect to Section 8(1) until 11.05.2002, which is the date on which the amendment was brought in. By the said amendment, the Legislature intended to restrict the issuance of Notifications with respect to conditions laid down in Section 8(1) and 8(4). If the amendment is treated to be affecting Section 8(2), then the said section would become redundant, which is not the intention of the Legislature. In our opinion, the amendment dated 11.05.2002 does not affect or restrict the powers of State Government to issue Notifications u/s. 8(5) with respect to Section 8(2). Therefore, the State Governments can issue Notifications u/s. 8(5) reducing the rate of tax with respect to transactions falling u/s. 8(2) even after this amendment. 9. In any case, the amendment does not affect the Notifications issued prior to amendment. Therefore, the State Governments can issue Notifications u/s. 8(5) reducing the rate of tax with respect to transactions falling u/s. 8(2) even after this amendment. 9. In any case, the amendment does not affect the Notifications issued prior to amendment. It is settled position of law that Notifications hold the field unless they are specifically rescinded and the Notification in question, has been rescinded w.e.f. 31.02.2006 and so, it holds the field till then. Hence, the authorities are bound to follow the same. 10. Our attention was drawn by learned counsel for the assessee to a judgment of the Bombay High Court in the case of Prism Cement Ltd. v. State of Maharashtra, [2013] 29 taxmann.com 518 (Bombay) wherein, it has been held that if the Legislature by inserting the words "on the fulfillment of the requirements laid down in sub-section 4 by the dealer" had intended to restrict the power of the State Government to grant total/partial exemption only in respect of the tax payable under Section 8(1), then the Legislature would not have made any reference to the power of the State Government to grant total/partial exemption from tax payable under Section 8(2). The very fact that the Legislature even after the 2002 amendment has retained in Section 8(5), the words that "relate to the power of the State Government to grant total/partial exemption from tax payable u/s. 8(2)", clearly show that the said amendment was not intended to affect the power of the State Governments to grant total/partial exemption from the tax payable in respect of the transactions covered u/s. 8(2). 11. Considering the facts of the case and the principle rendered in the aforesaid judgment, we are of the view that dealers, whether registered or unregistered, are entitled for the benefits of Notification, until the same is in force. 12. Consequently, we answer the Question raised in the Tax Appeals in favour of the assessee and against the Revenue. Insofar as the writ petitions are concerned, the impugned order of the Tribunal stands modified accordingly. The Tax Appeals as well as writ petitions stand disposed of. No order as to costs.