State-linked central sales tax and exemption limits upheld; rectification of assessments sustained after statutory amendment.

A State-linked rate in the Central sales tax scheme was treated as a valid legislative policy to prevent evasion and avoid disadvantaging inter-State trade, and the concessional treatment for a defined class did not make the provision discriminatory. Section 8(2A) was construed harmoniously with section 6(1A) so that exemption applied only where the commodity was wholly not liable to State tax, not merely taxed at a single point; the inter-State sales therefore remained taxable. Rectification of the assessments was upheld because the statutory amendment created an apparent error and the correction was within time.

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Issues: (i) Whether section 8(2)(a) of the Central Sales Tax Act and section 6(1A) of that Act, read with section 10 of the Central Sales Tax (Amendment) Act, 1969, were unconstitutional. (ii) Whether section 8(2A) of the Central Sales Tax Act impliedly repealed section 6(1A) or otherwise exempted the inter-State sales in question. (iii) Whether the rectification of the assessment orders was barred either for want of an error apparent on the face of the record or by limitation under rule 38 of the Mysore Sales Tax Rules.

Issue (i): Whether section 8(2)(a) of the Central Sales Tax Act and section 6(1A) of that Act, read with section 10 of the Central Sales Tax (Amendment) Act, 1969, were unconstitutional.

Analysis: The provision adopting the local rate for inter-State sales was held to embody a clear legislative policy, namely, that inter-State trade should not be placed at a disadvantage and that evasion of tax should be prevented. The use of the rate prevailing in the appropriate State was treated as a permissible legislative choice, not an abdication of legislative power. The concession created by section 10 for a defined class and period did not render the provision discriminatory merely because similar relief was not extended to all other assessees.

Conclusion: The challenge to the constitutional validity of section 8(2)(a), section 6(1A), and section 10 failed and the provisions were upheld.

Issue (ii): Whether section 8(2A) of the Central Sales Tax Act impliedly repealed section 6(1A) or otherwise exempted the inter-State sales in question.

Analysis: The two provisions were read harmoniously. Section 8(2A) was construed as granting exemption only where the commodity was not liable to tax at all under the State law, and not where the State law taxed the commodity at a single point, whether at sale or purchase. The phrase "sale or, as the case may be, purchase" was held to recognise the structure of State sales tax laws and not to create a general exemption whenever one aspect of the same transaction was untaxed. On that construction, section 6(1A) continued to operate.

Conclusion: Section 8(2A) did not impliedly repeal section 6(1A), and the inter-State sales remained taxable.

Issue (iii): Whether the rectification of the assessment orders was barred either for want of an error apparent on the face of the record or by limitation under rule 38 of the Mysore Sales Tax Rules.

Analysis: Once the amendment to the Central Sales Tax Act had altered the legal position and superseded the earlier basis of rectification, the authorities were entitled to correct the assessments. The existence of prior judicial views to the contrary did not destroy the apparent error after the statutory amendment. As to limitation, the order sought to be corrected was the rectified assessment order and not the original assessment order, and the rule permitted rectification of any order within time.

Conclusion: The rectification orders were valid and were not time-barred.

Final Conclusion: The statutory amendments were upheld, the rival interpretations of the exemption provision were rejected, and the rectification orders sustaining the levy of tax were maintained.

Ratio Decidendi: Where a State-linked rate is adopted in the Central sales tax scheme to prevent evasion and discrimination, the provision is a valid legislative policy; and an exemption clause is not to be construed as overriding a charging provision unless the commodity is wholly exempt from tax under the State law.

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