1969 (8) TMI 73 - SC - VAT and Sales Tax

Levy and collection of tax and penalties - Held that - Appeal allowed. The High Court held that because under the general sales tax law of the State eggs were not taxable except at the last point of purchase in the State they were not taxable in the course of inter-State sale. But that view cannot now be sustained in view of the provisions of section 6 of the principal Act as amended by the Ordinance. Since the assessment has not been made in accordance with the provisions of the Ordinance which retrospectively amends the provisions of sections 6 8 and 9 of the principal Act it is necessary to set aside the order passed by the sales tax authorities the Tribunal and the High Court and to direct that assessment of tax be made in the manner provided by the Central Sales Tax Act 1956 as amended by the Ordinance.

Summary

Issues:
1. Interpretation of provisions of the Central Sales Tax Act, 1956.
2. Tax liability on inter-State sales of eggs.
3. Retroactive application of the Central Sales Tax (Amendment) Ordinance, 1969.

Detailed Analysis:

1. The judgment dealt with the interpretation of provisions of the Central Sales Tax Act, 1956, specifically focusing on the tax liability on inter-State sales of eggs. The respondents, who were dealers in eggs, were assessed to tax on their turnover in inter-State sales by the Sales Tax Officer under the Kerala General Sales Tax Act. The issue arose as to whether the sale of eggs in the course of inter-State trade was taxable under the Central Sales Tax Act, 1956. The High Court, following a previous judgment, reversed the order of assessment. The State contended that the interpretation of the law had changed post-amendments, leading to the promulgation of the Central Sales Tax (Amendment) Ordinance, 1969.

2. The Central Sales Tax (Amendment) Ordinance, 1969, introduced amendments to the Central Sales Tax Act, 1956, with retrospective effect. The amendments clarified that tax on inter-State sales of goods, including eggs, would be levied according to the sales tax law of the appropriate State. The Ordinance superseded previous judgments and established that even if no tax was leviable under the general sales tax law of the State for intra-state transactions, tax would be applicable to inter-State sales. The Ordinance empowered State authorities to assess, re-assess, and collect tax under the Central Sales Tax Act as if it were under the general sales tax law of the State, ensuring procedural compliance with State laws while determining tax liability based on Central Act provisions.

3. As a result of the Ordinance's retrospective operation, the High Court's decision was set aside, and the case was remanded to the Sales Tax Officer for reassessment under the provisions of the Central Sales Tax Act, 1956, as amended by the Ordinance. The judgment emphasized the necessity to adhere to the amended provisions of the Act for determining tax liability on inter-State sales, highlighting the significance of the Ordinance in clarifying the tax treatment of such transactions. The State was directed to bear the costs of the respondents in the proceedings before the court, with the order being set aside and the case remanded for reassessment in accordance with the amended provisions.