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2015 (12) TMI 1038 - HC - VAT and Sales TaxLevy of additional tax under section 4A of the Gujarat Sales Tax Act, 1969 - adjusting the additional tax against the exemption limit - mode and manner of payment of such additional tax - appellant was required to deposit additional tax in cash - Held that:- Exigibility to tax is not the same as liability to pay tax. The former depends upon the charge created by the statute and the latter on the computation in accordance with the provisions of the statute and the rules framed thereunder, if any. Thus, the Supreme Court in the above decisions has held that when there is an exemption, the liability to pay tax remains, but the requirement to pay tax to fulfil such liability is done away with. In other words, while there is a liability to pay tax, in view of the exemption, there is no obligation to pay tax. Liability to pay tax under sections 3, 3A and 4 of the Act would continue despite the fact that the sale or purchase of goods are wholly exempt from payment of sales tax, general sales tax or, as the case may be purchase tax. If no sales tax, general sales tax or purchase tax is payable, there can be no additional tax thereon. While it could be said that having regard to the first part of section 4A of the Act, additional tax is leviable, considering the second part of the section, such additional tax would be nil as the tax payable by the dealer on sale or purchase of goods which are wholly exempt from payment of sales tax, general sales tax or, as the case may be, purchase tax would be nil. If the dealer is called upon to pay the additional tax in cash, an anomalous situation arises, inasmuch as, on the one hand, he has to bear the burden of tax and on the other hand, he cannot pass on the same to the purchaser. The additional tax being a tax on the sale or purchase of goods liable to tax under the Act, the legislative intent would normally be that such tax should be recovered from the buyer of the goods. However, in view of the bar contained in section 56 of the Act, in case where the sale or purchase is exempt from tax, the dealer would not be in a position to recover the additional tax from the purchaser, thereby frustrating the very object of the provision namely, to tax the sale or purchase and would result in taxing the dealer instead of the sale or purchase. The authorities under the Act, therefore, cannot recover additional tax under section 4A of the Act in relation to sale or purchase of goods which are wholly exempt from payment of tax under section 49(2) of the Act by resorting to any fictional basis. It follows as a natural corollary that when the additional tax payable is nil, the question of payment of such tax either in cash or by way of adjustment against the exemption limit would not arise. Till the date of amendment of the exemption notification, viz., 3rd March, 2001, whereby the aggregation clause came to be amended, the question of payment of additional tax, either in cash or by way of adjustment against the exemption limit would not arise. The Tribunal was, therefore, not justified in holding that additional tax was payable under section 4A of the Act by the dealers even for the period prior to 3rd March, 2001, either in cash or by way of adjustment. To that extent, the impugned orders passed by the Tribunal, cannot be sustained. - Decided in favour of assessee.
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