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2015 (2) TMI 968 - HC - VAT and Sales TaxDeferment & Exemption from sales tax - Mode of computation of notional sale tax liability - Whether Rule 2 (xxi) (ii) of the Rules which provides for calculation of "notional sale tax liability" by including branch transfers, fastens a liability to pay tax on branch transfers or merely provides a methodology for calculating notional tax liability for the purpose of achieving the amount of deferred tax - Held that:- Admittedly, branch transfers outside the State of Punjab are exempted from the payment of sales tax. The State of Punjab has from time to time, notified schemes for deferment and exemption from payment of sales tax and for the said purpose, has enacted Section 10-A of the 1948 Act. A perusal of Section 10-A of the 1948 Act, reveals that the State Government may defer the payment of "tax due" if it is necessary or expedient to do so in the interest of industrial development subject to such conditions as may be prescribed. Admittedly, branch transfers outside the State of Punjab are not exigible to sales tax. A taxing statute imposes tax by enacting a taxing provision that sets out the taxing event. The exigibility of a transaction to tax must flow from the statute and, therefore, requires legislature to enact a specific provision setting out the contours of the event/transaction that would invite tax. If liability to pay tax is not set out in the parent statute, a rule, a policy, an instruction or a clarification cannot whether by intent or by interpretation, be used to impose a tax. The words "subject to such conditions" used in Section 10-A of the Act while referring to the deferment, cannot be construed to confer power to prescribe a fresh tax by way of a rule. It would also be appropriate to point out that the words "and liable to tax" used in the explanation and the words "on the presumption that these transactions are exigible to tax under the aforesaid Act" used do not lend themselves to an interpretation that raises them to the status of a charging provision thereby imposing a fresh charge or tax rendering an assessee exigible to a tax that is not imposed by the parent statue. It is, therefore, apparent that Rule 2(xxi) of the Rules is a provision that aids and assists the assessee and the State in calculating notional tax liability for deferment and empowers the State Government while calculating the limit of deferment to include sale tax on branch transfers outside the State of Punjab on a presumption that they shall be deemed to be taxable but only for the purpose of calculating the quantum of deferred tax achieved by the assessee. The proviso cannot whether by interpretation or by reference to the presumption be assigned the status of a taxing provision rendering an assessee liable for a taxing event which is exempted under the parent statute i.e. the 1948 Act. Consequently, we allow the writ petition as well as the appeal, set aside the impugned orders and remit the matter to the assessing officer to decide the matter afresh and in accordance with law. - Decided in favour of assessee.
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