TaxTMI 
TaxTMI 
2009 (3) TMI 926
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....ms. Notice was ordered in both the writ petitions on January 21, 1998. This court also granted an interim injunction restraining the respondents from demanding more than four per cent. Subsequently, this court by a further order dated February 26, 2000 made the interim order absolute. A counteraffidavit was filed by the fourth respondent in W.P. No. 615 of 1998 dated July 14, 2000. The State Government issued G.O. Ms. No. 693, CT and RE Department, dated June 19, 1982 based on the request made by the Chamber of Commerce, Coimbatore about their difficulties in having exposed to the risk of paying enhanced rate of CST for non-production of "C" forms and loss of business due to competition from Maharashtra and Gujarat. In the operative portion of the order in paragraphs 2 and 3, the State Government had given a direction, which is as follows: "Para 2. The Government have examined the request in consultation with the Commissioner of Commercial Taxes. The Commissioner of Commercial Taxes has recommended for reduction of the rate of tax under section 8(2)(b) of the Central Sales Tax Act, 1956 to four per cent so that inter-State sales with or without "C" form will attract tax at....
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....s' case will fall under section 8(2)(b)-sale by unregistered dealers. They also relied upon the said judgment to contend that the Supreme Court was not considering the provision of section 8(2)(a). In response to their letter, the third respondent informed them by a letter dated November 6, 1997 that section 8(2)(a) of the CST Act is not an independent provision but a proviso to section 8(1) of the CST Act. Therefore, when a benefit is claimed under section 8(2)(a), it can only be in respect of goods which are exempted from tax generally or is subject to tax generally at a rate which is lower than four per cent. When the tax rate is four per cent or more, the State cannot dispense with the tax condition of filing "C" form and continue to tax goods at four per cent. Thereafter a notice was given by the Department informing the dealers that if "C" form is not produced, it will result in 10 per cent tax. It is at this stage, the petitioners came forward with the writ petitions seeking the direction referred to above. In para 4 of the counter, the fourth respondent has averred as follows: "Para 4 .... in the Notification No. II(1)/CTRE/188(a)/82 issued under sub-section (5....
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....tification, which are made in the course of inter-State trade or commerce, (1)(to a registered dealer or the Government) by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to (1)These words are added by section 152(v) of the Finance Act 20 of 2002) any person or to such class of persons as may be specified in the notification, no tax under the Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification." The words in parenthesis were introduced by section 152(v) of the Finance Act (20 of 2002). Therefore, the incorporation of sections 8(4) and 8(5) was not conceived before the amendment effected by Act 20 of 2002. The present exemption was rendered in terms of section 8(2)(b), which reads as follows: "Section 8. Rate of tax on sales in the course of inter-State trade or commerce.-(1) omitted. (a) omitted. (b) omitted. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-St....
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....me eligible for the concessional rate in section 8(1). It is only thereafter that he can claim the benefit of the said notifications, for which purpose again he has to satisfy the conditions prescribed in the notifications. It is therefore wrong to think that section 8(5) or the notifications are self-contained and operate de hors the other provisions of the Act/Rules. The Division Bench has unfortunately failed to appreciate the notifications in their correct perspective. We are of the opinion that the judgment under appeal is unsustainable in law and it is accordingly set aside. The learned single judge was right in dismissing the writ petitions." But in that case the Supreme Court considered a notification issued under section 8(5) but prescribing certain conditions. It was also held that in that case the impugned notification was not total but partial. The judgment of the Supreme Court came to be considered by a Division Bench of this court in Sree Ayyanar Spinning and Weaving Mills Limited v. State of Tamil Nadu reported in [1998] 109 STC 205. In that judgment, the Division Bench after referring to Sarvotam Vegetables Products case [1996] 101 STC 547 (SC); [1996] 8 SCC 6....