2009 (10) TMI 850 - HC - VAT and Sales Tax

Summary

Issues:
1. Disallowance of sales tax exemption on nylon tyre cord fabric
2. Demand of interest under section 23(3)

Disallowed Sales Tax Exemption:
The petitioner claimed sales tax exemption on the sale of nylon tyre cord fabric under entry 11(ii) of the Third Schedule to the Act. However, the Government argued that nylon tyre cord fabric is specifically covered by entry 59.02 of the Central Excise Tariff Act, which excludes it from falling under the general entry for man-made fabrics. The court noted that nylon tyre cord fabric is indeed covered by entry 59.02 of the Central Excise Tariff Act, which specifically includes "Tyre cord fabric of high tenacity yarn of nylon or other polyamides, polyesters or viscose rayon." It was established that a specific entry in the Tariff Act will exclude a general entry, hence nylon tyre cord fabric cannot be considered under any other entry, including man-made fabrics. Although the petitioner's exemption claim for the assessment year 1995-96 was not accepted, it was highlighted that entry 59.02 was later included in entry 11(ii) of the Third Schedule to the Act, granting exemption to nylon tyre cord fabric from April 1, 1999 onwards. The court dismissed the revision on this issue, emphasizing that the exemption was not available for the year in question but only from the specified date after the amendment.

Demand of Interest:
Regarding the petitioner's challenge against the demand of interest, it was argued that the petitioner had been given an installment facility for tax payment under a deferred scheme, and had timely remitted the arrears of tax as per the installment scheme without default. The court accepted this argument and allowed the revision against the demand of interest sustained by the Tribunal. Consequently, the order of the Tribunal and lower authorities levying and demanding interest for the alleged delay in tax payment for the relevant year was vacated.