TaxTMI 
TaxTMI 
2016 (4) TMI 7
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....5 (for short, "the Rules") and the Central Sales Tax Act, 1956 (for brevity, "CST Act") In the year 1995-96, the assessee-company after purchase of Radio Pagers from M/s Bharati Telecom Limited was also engaged in inter-state sale of the said Radio Pagers and in course of the said transaction, did not charge any sales tax from the purchasers on the basis of Notification No. SO 89/CA.74/56/S.8/95 dated 04.09.1995 issued under Section 8(5) of the CST Act read with Rule 28A(4)(c) of the Rules. The appellant filed its return and claimed exemption placing reliance on the said notification, but the claim of exemption put forth by the assessee was not accepted by the assessing officer vide assessment order dated October 05, 2001. Being aggrieved by the order of assessment, the appellant preferred an appeal before the Joint Excise and Taxation Commissioner (Appeal), Rohtak Circle, Rohtak who dismissed the appeal vide order dated May 2, 2002. 3. Being dissatisfied with the order passed in appeal, the appellant knocked at the doors of the Sales Tax Tribunal, Chandigarh (for short 'the tribunal') which dismissed the appeal by its order dated September 9, 2002. The dismissal of the appeal b....
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....e Rules and as such, the goods sold by it in course of inter-state trade were not exempted from the tax under the CST Act merely because the same had been purchased from M/s Bharati Telecom Limited which possesses a valid exemption certificate. Reliance was placed on the decision of this Court in State Level Committee and another v. Morgardhsammar India Ltd. (1996) 101 STC 1. 7. The High Court referred to Section 8(2A) and 5 of the CST Act and Rule 28A(2)(n) and (4)(c) of the Rules and notification dated 04.09.1995; distinguished the authorities cited by the assessee and came to hold that the expression "notional sales tax liability" as used in Rule 28A(2)(n) takes within its fold not only the amount of tax payable on the sales of finished goods of the eligible industrial unit under the Act but also the amount of tax payable under the CST Act on the sales of finished products of the eligible industrial units made in the course of inter-state trade or commerce and branch transfers or consignment sales outside the State of Haryana. Reference was made to clause (c) of sub-rule (4) of Rule 28A of the Rules to opine that the scope of exemption was extended to the goods manufactured b....
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....f the sales made by him in the course of inter-State trade or commerce. It also empowers the State Government to direct that no tax shall be payable under the Central Act or tax shall be calculated at lower rates in respect of all sales of goods or classes of goods as may be specified in the notification which are made in the course of inter-State trade or commerce by any dealer having his place of business in the State or class of dealers specified in the notification. Notification dated 4.9.1995 declares that no tax shall be payable under the Central Act w.e.f. 1.4.1988 on the sale of goods manufactured in the State of Haryana by any dealer holding a valid exemption certificate under Rule 28A of the Rules, provided that such dealer has not charged tax under the Central Act on the sale of goods manufactured by him." 8. After so stating, the High Court referred to the notification dated 04.09.1995 and observed that it was not happily worded and thereafter, it proceeded to hold that the tribunal was correct in following its earlier order for arriving at the conclusion that the notification did not exempt the goods sold in the course of inter-state trade by dealer other than those....
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....cuits (P) Ltd. v. State of Bihar & others (2005) 9 SCC 669. Learned senior counsel has further contended that the High Court has committed an error in noting that in the notification, there is no similar expression as used in Rule 28A(4) of the Rules. According to him, the reasoning given by the High Court is fallacious on two scores, namely, (i) Rule 28A(4)(c) of the Rules exempts all subsequent sales made in the State of Haryana, as one product can be sold any number of times within the State, whereas there can be only one inter-state sale from the State of Haryana, and consequently there is no requirement of any reference to subsequent sale in notification dated 04.09.1995; and (ii) Rule 28A(4)(c) of the Rules provides a mechanism to confirm that goods are manufactured by a person holding exemption certificate in terms of Rule 28A by providing the requirement to furnish a certificate in the form of certificate ST-14A. Section 8(5) of the CST Act mandates the requirement of issuance of Form C by the buying dealer which is to be issued by the sales tax authorities of purchasing State and, therefore, there is no requirement for such mechanism to be provided in the notification. It ....
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....r in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four percent (whether called a tax or fee or by any other name), shall be nil, or as the case may be, shall be calculated at the lower rate. xx xx xx xx (5) Notwithstanding anything contained in this Section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the official gazette, and subject to such conditions as may be specified therein, direct (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-state trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that 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. (b) That in respect of all sales ....
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.... 14. The above notification has been issued in exercise of powers conferred by sub-section (5) to Section 8 of the CST Act by the Governor of Haryana in public interest. As per the notification, no tax is payable under the aforesaid Act w.e.f. 1st April, 1988 on sale of goods during the period of exemption that are manufactured in the State of Haryana by any dealer, who holds a valid exemption certificate under Rule 28A of the Rules. Proviso to the said notification stipulates that the dealers should have also not charged any tax under the Central Sales Tax Act on the sale of goods manufactured by him. 15. As mentioned earlier, sub-section (5) to Section 8 of the CST Act begins with the non-obstante clause and empowers State Governments to issue a notification in the official gazette subject to the condition(s) as may be specified and under clause (a) direct that no tax shall be payable by any dealer having his place of business in the State in respect of sale in the course of inter-state trade or commerce, etc. and under clause (b) in respect of all sales of goods or classes of goods, etc. In this context, Rule 28A is extremely relevant. The said Rule, as per heading relates ....
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....e State of Haryana shall be deemed to be sale in the course of inter-State trade or commerce. Note:- The expression and terms, if any appearing in this rule not defined above shall unless the context otherwise requires carry the same meaning as assigned to them under the Act and rules made there under. (3) Option - An eligible industrial unit may opt either to avail benefit of tax exemption or deferment. Option once exercised shall be final except that it can be changed once from exemption to deferment for the remaining period and balanced quantum of benefit. (4)(a) Subject to other provisions of this rule, the benefit of tax exemption or deferment shall be given to an eligible industrial unit holding exemption or entitlement certificate, as the case may be to the extent, for the period, from year to year in various zones from the date of commercial production or from the date of issue of entitlement exemption certificate as may be opted as under. 4(2)(c) The goods manufactured by an eligible industrial unit availing exemption under this rule shall be exempt from the levy of tax at all the successive stage(s) of sale or purchase subject to the condition that the dealer ....
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....ferently, it extends the benefit granted under clause (n)(ii) which relates to inter-state trade or commerce to intra-state sale or purchase. Such sales may be one or successive and tax at all stages is exempt. The exemption, therefore, is good specific, subject of course to other conditions being satisfied. 18. It is not disputed that on all intra-state sales no tax has been charged as the said transactions were treated as exempt by the tax authorities. However, in the course of inter-state sales, it is submitted by the revenue that the exemption would be limited and available only if the manufacturer i.e. the eligible industrial unit makes sale in inter-state trade or commerce, but if a third party, who had procured the goods from the eligible industrial unit makes inter-state sale, such trade or commerce would not be exempt. The contention of the State suffers from incorrect appreciation and understanding of the purport and objective behind Rule 28A and the notification in question. The basic objective and purpose is to exempt the goods manufactured in the State when they are further transferred in the course of inter-state or intra-state trade or commerce. Therefore, referen....
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....y implication. It is by nature of an addendum or dealing with a subject matter which is foreign to the main enactment. (See : CIT, Mysore etc. v Indo Mercantile Bank Ltd AIR 1959 SC 713). Proviso should not be normally construed as nullifying the enactment or as taking away completely a right conferred. 20. Read in this manner, we do not think the proviso should be given a greater or more significant role in interpretation of the main part of the notification, except as carving out an exception. It means and implies that the requirement of the proviso should be satisfied i.e. manufacturing dealer should not have charged the tax. The proviso would not scuttle or negate the main provision by holding that the first transaction by the eligible manufacturing dealer in the course by way of inter-state sale would be exempt but if the inter-state sale is made by trader/purchaser, the same would not be exempt. That will not be the correct understanding of the proviso. Giving over due and extended implied interpretation to the proviso in the notification will nullify and unreasonably restrict the general and plain words of the main notification. Such construction is not warranted. 21. ....