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TMI Blog2009 (3) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... te No. 116 for an amount of Rs. 533 lakhs with effect from March 15, 1995 to March 14, 2002 in terms of rule 28A of the said 1975 Rules. The assessee availed of the benefit of exemption till December 31, 1996 and from January 1, 1997 the assessee switched over to the deferment tax payment scheme. Till December 31, 1996 the exemption granted to the assessee was for an amount of Rs. 53.94 lakhs. On exercising the option of deferment, an entitlement certificate No. 07 for an amount of Rs. 479.06 lakhs effective for the period January 1, 1997 to March 14, 2002 was issued to the assessee in place of the earlier exemption certificate. The assessment of the assessee for the year 1996-97 was finalized vide order dated March 12, 2001; from the total gross turnover the assessing authority allowed the deduction of export sales against the declaration forms. However, the assessment was revised by the revisional authority, Karnal, which assessed the export sales made during the period of exemption (April 1, 1996 to December 31, 1996) at four per cent for the purpose of rule 28A of the 1975 Rules. Since the exempted quantum of the assessee fixed at Rs. 53.94 lakhs stood exhausted, the excess am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the learned advocate, on a bare reading of 28A(2)(n), it is clear that all the incidences of sales transaction that are to be computed for arriving at the notional sales tax liability stood incorporated in the said sub-rule. According to the learned advocate, on a bare reading of the above sub-rule, it is clear that sale made in the course of export outside India ("export sale", for short) was not included in "notional sales tax liability" as defined in rule 28A(2)(n). According to the learned advocate, such exclusion of export sale from the meaning of "notional sales tax liability" under rule 28A(2)(n) leads to the clear conclusion that rule 28A never intended to deem "export sale" within "notional sales tax liability" and, therefore, the learned advocate urged that in the context of "notional tax liability", turnover of export goods could not have been included in the "gross turnover". Relevant provisions of law: To decide the controversy we need to quote relevant provisions of the 1973 Act and 1975 Rules which read as under: "1973 Act: Section 2. Definitions.-In this Act, unless there is anything repugnant in the subject or context,- (e) 'export' means the taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13B. Power to exempt certain class of industries.-The State Government may, if satisfied that it is necessary or expedient so to do in the interest of industrial development of the State, exempt such class of industries from the payment of tax, for such period and subject to such conditions as may be prescribed. ... Section 27. Taxable turnover.-(1) In this Act, the expression, 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom his turnover during that period- (a) on account of- (i) to (iii)... (iv) Sale and purchase of goods falling under section 12: ..." "1975 Rules: Rule 28A. Class of industries, period and other conditions for exemption/deferment from payment of tax (section 13B and 25A).- (1) The industries covered under this rule shall not be entitled to any deferment or exemption from payment of tax under any other pro- visions of these Rules. (2) For the purposes of this Chapter, unless the context otherwise requires,- (a) to (m)... (n) 'notional sales tax liability' means- (i) amount of tax payable on the sales of finished products of the eligible industrial unit under the local sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he quantum of benefit and the "limit" or ceiling to be placed on that quantum. There is no dispute that but for the exemption claimed, the assessee was a dealer, who was subject to incidence of sales tax under the 1973 Act. Its transactions were liable to be dealt with in accordance with the provisions of the Act relating to taxability. What was exempted under the Act and the Rules was payment of tax by a class of dealers who had been issued eligibility/exemption certificates. This is not in dispute. Under the provisions of the 1975 Rules the benefit of exemption from payment of tax was available for a specified period and up to the specified quantum. Rule 28A provides for calculation of the quantum of exemption up to the limit of tax exemption and, therefore, it provides for deduction of the "notional sales tax liability" from the total exemption limit available to a dealer during the period of exemption. Rule 28A(2)(n) included in its purview the following transactions: (a) amount of tax payable under the local sales tax law; (b) sales made on consignment basis within the State or branch transfers within the State; (c) amount of tax payable under the Central Sales Tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department was entitled to order the recovery of the difference. In the present case, the Department has sought to recover the difference on the ground that the notional tax liability exceeded the exempted quantum during the period of exemption. Rule 28A deals with computation of the quantum of tax incentive available to a dealer in whose favour eligibility certificate is issued. In order to regulate the exemption scheme the concept of "notional sales tax liability" stood incorporated vide rule 28A(2)(n) of the 1975 Rules. The Department has placed heavy reliance on the proviso in rule 28A(4)(a), which has been quoted above. The said proviso states that in case of exemption, the benefit shall extend to tax on gross turnover and in case of deferment it shall extend to tax on the taxable turnover of the goods manufactured by the unit. We have quoted the definition of the word "gross turnover" which is defined to mean the aggregate of the amount of sales and purchases made by any dealer. The Department placed heavy reliance on this definition of the words "gross turnover" to say that it would include export sales, particularly, when rule 28A contains a proviso to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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