C Form use in inter-State purchases did not breach exemption conditions, making additional tax and interest unsustainable.

Purchase of goods against C Forms in inter-State trade by a works contractor did not breach Condition No. 4 of the Rajasthan exemption notification, because the condition had to be read harmoniously with Condition No. 5 and confined to purchases within the State sales tax framework. The notification, issued under the Rajasthan Sales Tax Act and Rules, could not be construed to prohibit inter-State purchases governed by the Central Sales Tax regime or to authorise additional tax merely because C Forms were used. On that reading, levy of additional tax and interest was unsustainable.

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Issues: Whether purchase of goods against C Forms in the course of inter-State trade by a works contractor violated Condition No. 4 of the exemption notification issued under the Rajasthan Sales Tax Act, 1954 so as to justify levy of additional tax and interest.

Analysis: The exemption notification of 28.04.1993 was issued in exercise of powers under Section 4(2) of the Rajasthan Sales Tax Act, 1954 read with Rule 10B of the Rajasthan Sales Tax Rules, 1955. Its conditions had to be read in the context of the State enactment under which the notification was issued. Condition No. 4, when read harmoniously with Condition No. 5, regulated the use of declaration forms for purchases attracting tax under the State sales tax regime and did not create a prohibition extending to inter-State purchases made under the Central Sales Tax regime. The State could not impose additional tax on inter-State purchases merely because C Forms were used, and such a restriction could not be read into the notification.

Conclusion: The use of C Forms for inter-State purchases did not amount to breach of Condition No. 4, and the levy of additional tax and interest was unsustainable. The revision petition was therefore without merit and the assessee succeeded.

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