2021 (4) TMI 1217

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....ial Taxes in letter No.VAT Cell/28868/2007 (VCC No.853) dated 04.07.2007 is under challenge in WP No.10623 of 2008. 2. The clarification letter dated 04.07.2007 reveals that "local rate of tax for plywood is 4% when it is sold locally to Railways within the State and if sold to Railways under CST on interstate sales, it is taxable at 12.5%". 3. Taking an exception, the petitioner-company have stated that two different imposition of tax contemplated by way of clarification is in violation of Section 8(2) of the Central Sales Tax Act, 1956 (hereinafter referred to as the 'Act' in short). Thus, they are constrained to move WP No.10623 of 2008. 4. The petitioner is the supplier of plywoods to the Railways for the usage under Ra....

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....r the purpose of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the Sales Tax Law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law". 10. Thus, the provisions of the Act is clear that the rate of tax on sales in the course of interstate trade or commerce is enumerated under Section 8(1) of the Act. Under sub section (2) of Section 8 of the Act, once the concession for rate of tax is extended to the dealer, who supplied the materials to the Indian Railways, then the said benefit extended under Entry 112 of Part-B of the First Schedule is to be extended to another State supply also. In other words, there cannot be two sales tax, one for the supply inside the S....

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....n given under Entry 112 of Part-B of the First Schedule. Therefore, gaskets used as a part in railway engines as specified under Entry 112 of Part-B of the First Schedule are taxable at 5%. 9. The clarification therefore is that "Gaskets" as parts in rail engines are taxable at 5% under Entry 112 of Part-B of the First Schedule to the TNVAT Act. Gaskets used in Railway engine as specified under Entry 112 of Part-B of the First Schedule, if sold outside the State are taxable at 5% if not covered by 'C' Form. However, gaskets having use other than in railway engines are taxable at 14.5% under the appropriate Entry under Part-C of the First Schedule to the TNVAT Act, 2006." 13. With reference to the above contentions, the l....

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....coaches, engines and wagons were substituted thrice. As per Act No. 7 of 2005, railway coaches, engines and wagons were brought under Entry 76 and included the words "parts thereof". The said entry continued till 31-3-2007. Entry 76 reads as under: "76. Railway coaches, engines, wagons and part thereof." 14. In the case of State of Karnataka vs. Honey Comb International Inc. [(2015) 77 VST 76 (Kar)], the High Court of Karnataka considered the following observations, which is extracted as under:- "From the aforesaid judgments it is clear, a particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the article. The intention of the legislature seems to levy ....

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...., the learned counsel for the petitioner reiterated that Section 8(2) of the Act is unambiguous and once the goods are supplied for the purpose of construction of coaches for Indian Railways, then the tax levied within the State is to be applied for the interstate supply also. Even the subsequent clarification of the year 2013, asserts the said position with reference to the provisions of the Act and therefore, there is no reason to sustain the impugned clarificatory order dated 04.07.2007. 16. Adjudication of other grounds became unnecessary in view of the fact that the subsequent clarification of the first respondent dated 16.12.2013 stands in favour of the writ petitioner in respect of supply of gaskets to the Indian Railways and in W....