Lower State rate applies to inter-State sales covered by C forms where CST tax exceeds the intra-State rate.

Inter-State sales of poultry-feed supplements covered by C forms attracted tax at the lower rate applicable to an intra-State sale under the State sales tax law, because section 8 of the Central Sales Tax Act, 1956 limits tax to whichever is lower, the CST rate or the State rate. As a State notification under the Tamil Nadu General Sales Tax Act fixed the intra-State rate for poultry-feed supplements at 2%, the corresponding inter-State turnover covered by C forms was taxable at 2% rather than 4%.

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Issues: Whether the inter-State sales of poultry-feed supplements covered by C forms were liable to tax only at the lower State rate of 2% instead of 4% under the Central Sales Tax Act, 1956.

Analysis: The assessment was challenged only in respect of the turnover of poultry-feed supplements covered by C forms. The applicable statutory framework under section 8 of the Central Sales Tax Act, 1956 permits tax at four per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the State sales tax law, whichever is lower. In view of the State notification issued under section 17 of the Tamil Nadu General Sales Tax Act, 1959, the rate applicable to sales of poultry-feed supplements inside the State was two per cent. The inter-State turnover covered by C forms therefore attracted the lower State rate.

Conclusion: The levy of tax at four per cent on the turnover of poultry-feed supplements covered by C forms was reduced to two per cent, in favour of the assessee.

Ratio Decidendi: For inter-State sales covered by C forms, tax under section 8 of the Central Sales Tax Act, 1956 is limited to the lower of the CST rate and the rate applicable to an intra-State sale of the same goods under the relevant State law.

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