Declared goods and input tax credit: reimbursement under central law cannot be curtailed by state notification.

State delegated legislation may regulate only the manner and conditions of reimbursement for declared goods, but it cannot curtail the quantum mandated by Article 286(3) and section 15(b) of the Central Sales Tax Act, 1956. An earlier decision was not binding on the specific question of declared goods purchased and resold as declared goods because that point had not been consciously decided and had gone sub silentio. On that basis, the impugned notification was read down and held invalid to the extent it reduced input tax credit on declared goods, with full reimbursement payable for such inter-State resale.

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Issues: (i) Whether the earlier decision upholding the notification concluded the challenge to its application to declared goods resold in the course of inter-State trade and commerce, or whether that aspect had gone sub silentio; (ii) whether the impugned notification could validly reduce input tax credit in respect of declared goods notwithstanding Article 286(3) of the Constitution of India read with section 15(b) of the Central Sales Tax Act, 1956.

Issue (i): Whether the earlier decision upholding the notification concluded the challenge to its application to declared goods resold in the course of inter-State trade and commerce, or whether that aspect had gone sub silentio.

Analysis: The earlier case had considered the notification in the setting of goods manufactured into different products, and the specific question whether section 15(b) protected declared goods purchased and resold as declared goods was not consciously decided. A ruling passes sub silentio when the precise point of law is neither perceived nor determined. A decision is binding only for its ratio decidendi, not for an issue that escaped consideration.

Conclusion: The earlier decision was not binding on the present controversy to the extent it concerned declared goods purchased and resold as declared goods.

Issue (ii): Whether the impugned notification could validly reduce input tax credit in respect of declared goods notwithstanding Article 286(3) of the Constitution of India read with section 15(b) of the Central Sales Tax Act, 1956.

Analysis: Article 286(3) subjects State taxation on declared goods to Parliamentary restrictions and conditions. Section 15(b) mandates reimbursement of the State tax levied on declared goods when those goods are sold in the course of inter-State trade or commerce, leaving the State law to prescribe only the manner and conditions of reimbursement. The State may regulate the mode of reimbursement, but it cannot curtail the quantum of reimbursement itself. A notification issued under the State VAT law cannot override the mandate of the Central statute. Accordingly, the notification was required to be read down so far as declared goods were concerned.

Conclusion: The impugned notification was invalid in its application to hides and skins purchased and resold as declared goods, and full input tax credit was payable.

Final Conclusion: The challenge succeeded to the extent of declared goods resold in inter-State trade and commerce, and the petitioners were entitled to full reimbursement of the State tax paid on such goods.

Ratio Decidendi: State delegated legislation may regulate the manner and conditions of reimbursement under section 15(b) of the Central Sales Tax Act, 1956, but it cannot reduce or curtail the amount of reimbursement mandated for declared goods sold in the course of inter-State trade or commerce.

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