1973 (5) TMI 83 - HC - VAT and Sales Tax

Summary

Issues:
Exemption of Central sales tax on turnover of sales with paid purchase tax inside the State.
Validity of Tribunal's decision to allow exemption and reduce assessment.

Analysis:
The case involves a dealer registered under the Central Sales Tax Act dealing in mahua seeds, a declared good. The dealer claimed exemption on the turnover of sales of mahua seeds based on paid purchase tax at the first point. The assessing officer and first appellate authority did not allow the exemption, leading to a second appeal. The Tribunal considered the key issue of whether exemption applied if the first purchaser paid the purchase tax. The Tribunal disagreed with the department's narrow interpretation of the notification, emphasizing that the exemption applies to declared goods regardless of who paid the purchase tax.

The State contended that the Central Act imposes restrictions on tax levy on declared goods and provides for refund on inter-State sales. The State had issued a notification under section 8(5) of the Act, specifying conditions for exemption from Central sales tax. The notification required proof of tax payment under the Orissa Act and prohibited refund claims. The revenue argued that the dealer must prove intra-State tax payment on goods ultimately exported for exemption, citing a similar decision from the Andhra Pradesh High Court.

The Central Act's section 15 was amended, emphasizing that only one set of tax is exigible for declared goods. The amendment clarified that if intra-State tax was paid, Central tax is not payable. The court noted that the identity of the goods, not the dealer, was crucial for exemption eligibility. The court found that the dealer satisfied the conditions of the notification as the mahua seeds were taxed at the first purchase point, and the dealer agreed not to claim a refund under section 15(b) of the Central Act.

The court rejected the revenue's argument that the notification was invalid, stating it was not within their jurisdiction to decide its validity. The court concluded that the dealer was entitled to exemption from Central sales tax on the turnover of sales with paid purchase tax inside the State, regardless of the payer. The Tribunal's decision to allow the exemption and reduce the assessment was upheld. The judgment was delivered by two judges, with both agreeing on the outcome.

In conclusion, the court clarified the conditions for exemption from Central sales tax on declared goods, emphasizing the importance of tax payment under the Orissa Act and the prohibition on refund claims. The judgment upheld the dealer's entitlement to exemption and the Tribunal's decision to reduce the assessment, highlighting the harmonious relationship between the Orissa Act and the Central Act in tax imposition on declared goods.