1984 (8) TMI 299 - HC - VAT and Sales Tax

Issues Involved:

1. Right to purchase newsprint and other goods under C forms.
2. Definition of "goods" under the Central Sales Tax Act, 1956.
3. Constitutionality of taxing materials used in newspaper manufacturing.
4. Interpretation of Section 8(3)(b) of the Central Sales Tax Act.
5. Applicability of concessional tax rates to materials used in newspaper manufacturing.

Issue-wise Detailed Analysis:

1. Right to Purchase Newsprint and Other Goods Under C Forms:

The primary question raised in the writ petition under Article 226 of the Constitution was whether the petitioners were entitled to purchase newsprint and other goods at a concessional rate of tax using C forms under the Central Sales Tax Act, 1956, for use in the manufacture or processing of newspapers and periodicals. The petitioners contended that they should be allowed to use C forms for purchasing articles used in the manufacture of newspapers, despite the exclusion of "newspapers" from the definition of "goods" under the Act.

2. Definition of "Goods" Under the Central Sales Tax Act, 1956:

The definition of "goods" under Section 2(d) of the Act explicitly excludes "newspapers." The Assistant Commercial Tax Officer, VII Circle, Bangalore, informed the company that they could not use C forms for purchasing articles used in the manufacture of newspapers. The petitioners argued that newspapers should still be considered "goods" in a commercial sense and requested the use of C forms for purchasing the necessary materials.

3. Constitutionality of Taxing Materials Used in Newspaper Manufacturing:

The Constitution of India imposes constraints on the power of the State to tax the sale or purchase of newspapers. Entry 54, List II of the Seventh Schedule, restricts the State's power to tax sales or purchases to "goods" other than newspapers. Entry 92, List I of the Seventh Schedule, grants the Centre the power to tax the sale or purchase of newspapers and advertisements. The amendments made to the Act were in conformity with these constitutional parameters, excluding "newspapers" from the definition of "goods."

4. Interpretation of Section 8(3)(b) of the Central Sales Tax Act:

Section 8(3)(b) of the Act prescribes concessional tax rates for goods used in the manufacture or processing of goods for sale, mining, or the generation or distribution of electricity. The petitioners argued that the term "goods" in this section should be understood in a commercial sense, including materials used in newspaper manufacturing. However, the court held that the word "goods" must be interpreted as defined under Section 2(d) of the Act, excluding newspapers.

5. Applicability of Concessional Tax Rates to Materials Used in Newspaper Manufacturing:

The court examined the provisions of Section 8(1)(b) and Section 8(3)(b) and found no justification for extending the concessional tax rate to materials used in newspaper manufacturing. The court noted that the Legislature had prescribed the concessional rate of tax only for specific categories of goods, and if the Parliament intended to include materials used in newspaper manufacturing, it would have been explicitly stated in Section 8(3)(b). The court reiterated the view taken in the earlier case of Samyukta Karnataka v. Commercial Tax Officer, which held that newspapers and materials used in their manufacture are outside the reach of the Act.

Conclusion:

The court dismissed the writ petition, holding that the petitioners were not entitled to purchase materials used in the manufacture of newspapers at a concessional rate of tax using C forms. The court emphasized that the word "goods" in Section 8(3)(b) must be interpreted as defined under Section 2(d) of the Act, excluding newspapers. The court made no order as to costs.

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