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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether, on the third year of exemption granted to a new unit under the notification issued under section 8(5) of the Central Sales Tax Act, 1956, the reduced rate of tax on inter-State sales against form C had to be computed with reference to the rate applicable under the Central Sales Tax Act or with reference to the higher rate applicable under the U.P. Trade Tax Act, 1948 after the amending notification.
Analysis: The notification issued under section 8(5) of the Central Sales Tax Act, 1956 was framed to grant exemption from or reduction in the rate of Central sales tax in public interest, and not to enhance the tax burden on inter-State sales. The amending notification substituting the U.P. sales tax rate for the earlier reference had to be read in harmony with the parent provision and the object of the scheme. A construction that makes the concessional notification result in a higher tax than the normal Central sales tax rate would be inconsistent with the legislative purpose and would render the exemption scheme anomalous. The proper approach was to read down the amended notification so that the applicable rate would not exceed the lower of the rates under the two enactments.
Conclusion: The dealer was liable to pay tax at 10% of the Central sales tax rate of 4% on inter-State sales against form C, and not 10% of the higher U.P. trade tax rate; the question was answered in favour of the dealer.
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