TMI Blog2014 (9) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... entry tax on the goods in question on satisfaction of the other conditions, which have been specified in the Notification No. 57 dated July 5, 1995. Impugned orders of the assessing authority dated February 13, 2004 as well as the revisional authority dated January 12, 2005, cannot be sustained and are hereby set aside. The assessing authority is directed to pass a fresh order of assessment by treating that the Notification No. 57 dated July 5, 1995 is attracted in the case of the petitioner, since the petitioner is liable to tax at two per cent on the sale under item No. 2 of the Notification No. 55 dated July 5, 1995, and extend him the benefit accruing from the exemption Notification No. 57 dated July 5, 1995, if the petitioner satisfies all other relevant conditions of the said notification. Decided in favour of assessee. - Writ Petition No. 416 of 2005 - - - Dated:- 5-3-2013 - SHANTANU KEMKAR AND PRAKASH SHRIVASTAVA, JJ. For the Appellant : P.M. Choudhary For the Respondents : Ms. M. Raveendran, Deputy Government Advocate, ORDER :- The order of the court was made by PRAKASH SHRIVASTAVA J.- The petitioner is aggrieved with the denial of exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al authority has rejected the said contention. Being aggrieved with the same, the petitioner has filed the present writ petition. The learned counsel appearing for the petitioner submits that under the notification dated October 23, 1981, the petitioner is exempted from payment of sales tax as a dealer but the tax liability on the goods is not extinguished and under Notification No. 55, dated July 5, 1995, the rate of sales tax was reduced to two per cent and therefore, under the Notification No. 57, dated July 5, 1995, the petitioner became entitled for exemption from payment of entry tax for the period under consideration. The learned counsel for the respondent/State has submitted that since the petitioner was exempted from payment of sales tax by virtue of the notification dated October 23, 1981, therefore, no question of reduction of the rate of sales tax to two per cent under Notification No. 55, dated July 5, 1995 arises in his case and since Notification No. 55, dated July 5, 1995 is not attracted, therefore, the petitioner cannot be granted the benefit of Notification No. 57 dated July 5, 1995 and the revisional authority has not committed any error in rejecting the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. A-3-9-95-St-V(55) dated July 5, 1995 Part/full exemption on various categories of iron and steel . . . In exercise of the powers conferred by section 17 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995), the State Government hereby exempts the class of goods specified in column (2) of the Schedule below from payment of tax under the said Adhiniyam to the extent specified in column (3), for the period specified in column (4) subject to the restrictions and conditions specified in column (5) of the said Schedule: SCHEDULE S. No. Class of goods Extent of exemption Period Restrictions and conditions subject to which exemption is granted (1) (2) (3) (4) (5) l. ... 2. Iron and steel as specified in categories (iv), (v) and hoops and strips falling in category (vi) of clause (iv) of section 14 of the Central Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clause (iv) of section 14 of the Central Sales Tax Act, 1956 and such dealer proves to the satisfaction of the assessing authority at the time of assessment that the said goods had been purchased from a registered dealer at the reduced rate of tax of 1.5 per cent under item 4 of the Schedule to CTD Notification No. A3-5-9-95-ST-V(55) dated July 5, 1995 by issuing to the selling registered dealer a declaration in the form specified in the said notification, or the goods manufactured out of such raw material are liable to tax at the rate of 1.5 per cent on the sales under item No. 2 of the Schedule to the CTD notification referred above. In simple words, the petitioner case is that under the notification dated October 23, 1981, he as a dealer is exempted from payment of sales tax but the goods are not exempted therefore, liability to pay the sales tax on the goods continued and the rate of sales tax on goods was reduced to two per cent under the Notification No. 55 dated July 5, 1995 and therefore, in terms of the Notification No. 57, dated July 5, 1995, the petitioner is entitled for exemption from payment of entry tax. The Supreme Court in the matter of A.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciated Cement Companies Ltd. v. State of Bihar reported in [2004] 137 STC 389 (SC), the Supreme Court has examined the meaning of phrase exemption and has held that the exigibility to tax is not the same thing as liability to tax. It has been held by the Supreme Court as under (pages 397-399 in 137 STC): 18. The stand of the respondents appears to be that since there was no liability in respect of a portion of sales because of notification of the State Government S.O. No. 479 dated December 12,1995 as part of the Industrial Policy, 1995 granting exemption from payment of sales tax on production of extended industrial unit which undertakes expansion of their capacity, no question of adjustment arises. To put differently stand of the respondent is that when there was no tax liability on such sales, there was no liability to pay any tax and, therefore, the benefit of adjustment available under clause (2) of the Notification S.O. No. 37, dated February 25, 1993 does not arise. The interpretation put forward by the respondent found acceptance by the High Court. 19. Crucial question, therefore, is whether the appellant had any 'liability' under the Act. The answer to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise have been so taxable.' 22. Therefore, it cannot be said that as tax was not paid on portion of the turnover of the scheduled goods, i.e., cement, the assesseeappellant had no liability under the Act. It was definitely liable to pay tax under the Act, but for the exemption. There is no dispute that the assessee-appellant was liable to pay tax under sub-section (3) of the Entry Tax Act. Therefore, it was entitled to reduction to the extent of tax paid under the Entry Tax Act while working out tax payable by it under the Act. The Supreme Court in the matter of Commissioner of Sales Tax, Jammu and Kashmir v. Pine Chemicals Ltd. reported in [1995] 96 STC 355 (SC), considered the distinction between general and conditional exemption and has held as under (pages 359 and 360 in 96 STC): The idea behind sub-section (2A) of section 8 of the Central Sales Tax Act, which we have analysed hereinbefore, is to exempt the sale/ purchase of goods from the Central sales tax where the sale or purchase of such goods is exempt generally under the State sales tax law. We must give due regard and attach due meaning to the expression 'generally7 which occurs in the sub-section an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of exemption may also vary from unit to unit depending on the date of commencement of production in each unit. For the above reasons, we are of the opinion that the exemption granted under the aforesaid Government order does not satisfy the requirements of section 8(2A). The Division Bench of the Kerala High Court in the matter of Sales Tax Officer, Angamaly v. Ragam Plastics reported in [1990] 77 STC 313 (Ker), while considering the issue if a new unit entitled to exemption from payment of tax on the turnover of the goods could avail of the benefit of lower rate of tax on raw material under the Act although no tax was payable by such new unit because of exemption, has held that (page 317 in 77 STC): 7. In order to attract the proviso, the finished products should not be liable to tax either under the Kerala General Sales Tax Act or under the Central Sales Tax Act or when such finished products are exported out of the territory of India. The words 'liable to tax under this Act' mentioning along with the liability under the Central Sales Tax Act or liability under export sale would indicate that the proviso will apply to exclude section 5(3) only in the case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer during the periods under consideration was exempt from payment of tax either under section 4(1) or section 4(2) of the Act and since the cloth which is a cotton fabric which the manufacturer was dealing was exempt from payment of tax, he was not required to pay any tax on it or in other words the tax was not payable by him. But none-the-less when non-petitioner No. 1 is a manufacturer (dealer within the meaning of section 2(f) of the Act) and does the business as defined in section 2(cc) of the Act having a turnover which is taxable under section 3 of the Act, can still be said to be not liable to pay tax under the Act though the tax is not payable on the cloth manufactured by him by virtue of the exemption under section 4(1) or 4(2) of the Act . . . ? The above question has been answered by the Rajasthan High court as under (pages 169 and 170 in 67 STC): But for the exemption, the manufacturer in this case was required to pay tax under the Act on the cloth dyed and printed by him or in other words on the cloth manufactured by him, the tax was payable. Section 3 to our mind is a provision for levy of tax, if the conditions laid down therein are satisfied, then t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or payment of tax but on account of exemption, tax is not payable by him. We have already given reasons that 'liable to pay tax' does not mean that tax is payable by the dealer/manufacturer under the Act. From a dealer/manufacturer tax may not be payable because of exemption under the Act, none-the-less it cannot be said that he is not liable to pay tax under the Act. . . The Kerala High Court in the matter of Ragam Plastics v. Sales Tax Officer reported in [1988] 69 STC 341 (Ker), has held that partial exemption of sales tax does not mean sale of finished goods was not liable to tax under the Act by holding as under (pages 347 in 69 STC): It is clear from the above authorities that the taxable event is the sale or purchase of goods and the sale of the finished products referred to in the first proviso to section 5(3) does not cease to be liable to tax for the reason of the partial exemption provided for in the Notification SRO No. 968/80. The mere fact that in the matter of computation of tax payable the benefits of exemption will be available to the small-scale industrial units is not a ground to hold that the sale of its finished products is not liable to tax und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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