1997 (9) TMI 578 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the additional tax imposed under the State Act can be considered as a base for determining the rate of tax under the Central Sales Tax Act.
2. Whether the additional tax imposed under the State Act is applicable to inter-State sales.

Analysis:
1. The assessing authority did not levy additional tax on inter-State sales, which was imposed under the State Act. The revisional authority proposed to include the additional tax in the sales tax rates for inter-State sales. The contention that additional tax should not apply to inter-State sales was rejected. The Tribunal held that as per section 8 of the Central Act, no additional tax was imposed, and thus, the State Act's additional tax could not be levied on inter-State sales.

2. The Department filed revision petitions against the Tribunal's decision. The Tribunal, following a Karnataka High Court decision, ruled that the Central Act's charging section did not create liabilities, and as no additional tax was imposed under it, the State Act's additional tax could not be applied to inter-State sales. The Department then referred a legal question to the High Court regarding the character of the additional tax in inter-State transactions and its impact on the rate of tax under the Central Sales Tax Act.

3. The legal question was settled by a Supreme Court judgment in a similar case. The Supreme Court held that additional tax imposed under a separate Act could be considered as sales tax under the State law. The Court emphasized that the additional tax was of the same category as the original tax and could be levied on inter-State sales. The Court clarified the interpretation of the Central Sales Tax Act's provisions regarding the applicability of additional tax from State laws to inter-State transactions.

4. In light of the Supreme Court judgment, the High Court answered the legal question in favor of the Department. It held that the additional tax imposed under the State law would enhance the rate of tax applicable to goods in inter-State transactions. The Court concluded that the Central Sales Tax Act did not exclude the applicability of the additional tax rate. The reference was answered in the affirmative, supporting the Department's position.