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of <h1>Additional sales tax on CST turnover exceeding threshold u/s 9(2): demands quashed for lack of enabling provision.</h1> The dominant issue was whether additional sales tax (AST) could be levied while enhancing CST assessments on the ground that CST turnover exceeded the AST ... Enhancement of CST assessment by the levy of AST in cases where the quantum of the turnover from CST exceeds the threshold under the TNAST Act - HELD THAT:- The Tamil Nadu General Sales Tax Act provides for the levy of tax on the sales turnover earned by an assessee. The TNGST assessments in the present case, have passed muster seamlessly, and the assessing authority has accepted the returns filed by the assessee without levy of AST as the turnover falls below the threshold as stipulated under the TNAST Act. Section 9(2) makes it clear that there must be an enabling provision under the specific enactment to fasten such a levy upon the assessee, by use of the phrase, ‘payable by a dealer under this Act’. Hence, reliance upon Section 9(2) is of no avail in the absence of an enabling mechanism for the levy of AST in CST assessments. We may in this regard, make useful reference to the judgment in the case of Indian Carbon Ltd v State of Assam [1997 (7) TMI 566 - SUPREME COURT] - In that case, the Supreme Court considered the levy of interest on delayed payments and ultimately quashed the levy on the ground that there was no substantive provision under the CST Act enabling such levy. The Department was not entitled to take assistance of Section 9(2) in such a situation. The CST Act was amended thereafter to provide for the levy of interest. Likewise, in the present case, till such time there is an amendment either to the TNAST or CST enactments, the interpretation of the revenue cannot be sustained. The impugned assessments and the consequential demands are hence quashed - Petition allowed. Issues: Whether additional sales tax (AST) levied under the Tamil Nadu Additional Sales Tax Act can be imposed in assessments under the Central Sales Tax Act by enhancing CST liability where inter-State turnover exceeds the AST threshold.Analysis: The question turns on the charging and enabling provisions: Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act creates AST linked to general sales tax, while the Central Sales Tax Act defines dealers, turnover and prescribes rates for inter-State sales (Sections 2, 6, 8, 8(2), 8(2-A) and 9(2)). Section 8 permits reference to State law for fixing rates but does not itself incorporate a distinct levy of AST absent an express enabling provision under the CST Act. Where a specific levy (AST) is provided by a separate State enactment and its charging provision refers only to general sales tax, the mechanism to fasten that levy within CST assessments requires an express substantive provision enabling such levy under the CST framework. Precedents distinguishing general exemptions from conditional/limited exemptions and the need for clear statutory intendment were applied to determine that AST, being a separate State enactment tied to general sales tax, cannot be extended to inter-State CST assessments without express statutory enablement.Conclusion: AST cannot be levied in CST assessments in the absence of an enabling provision; the impugned CST assessments enhanced by AST and the departmental clarification instructing inclusion of AST are quashed in favour of the assessee.
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