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TMI Blog2010 (7) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment of taxes. 2. Initially, when the writ petition was filed, the second prayer was not sought because that stage had not been reached. The petitioner had approached this court immediately on the issuance of the notices of default payment of taxes and default assessment of penalties. Thereafter, subsequent to directions of this court, the petitioner filed its objections before the Additional Commissioner in terms of the provisions of Section 74 of the Delhi Value Added Tax Act, 2004. By virtue of the order dated 09.10.2009, the Additional Commissioner rejected the objections of the petitioner and confirmed the Value Added Tax Officer‟s earlier orders. Hence, the second prayer was made in the amended writ petition. 3. Before us, originally, the plea taken by Mr Vellapally, the learned senior counsel for the petitioner, was two-fold. In the first place, he submitted that the Value Added Tax Officer as well as the Additional Commissioner in their orders have clearly held that the sales made by the petitioner to its purchasers in Andhra Pradesh, Haryana and Maharashtra were in the nature of sales which fell under Section 3(a) of the Central Sales Tax Act, 1956 (hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-State sale effected by transfer of documents of title to the goods during the movement of the goods from one State to another and it must be preceded by a prior inter-State sale. It is only then that Section 6(2) may be attracted in order to make such subsequent sale exempt from levy of sales tax. However, the proviso to sub-section (2) of Section 6 prescribes further conditions and it is only on fulfillment of those conditions that the subsequent sale stands exempted. If those conditions are not satisfied, then notwithstanding the fact that the sale is a subsequent sale, the exemption would not be admissible to such subsequent sales. This is the scheme of Section 6 of the CST Act, 1956." 5. Mr Taneja also placed reliance on a decision of the High Court of Andhra Pradesh in the case of Jadhavjee Laljee v. State of Andhra Pradesh: 1989 (74) STC 201 (DB) to submit that where the first sale is exempted, the second sale cannot be exempted under Section 6(2) of the CST Act. 6. During the course of arguments, we had put a pointed question to Mr Taneja as to whether the second sales made by the petitioner to its buyers in Andhra Pradesh, Haryana and Maharashtra were in the category o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of goods if-, (a) the sale or purchase of such goods is, under the sales tax law of the appropriate State exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent. or such reduced rate as may be notified by the Central Government, by notification in the Official Gazette, under sub-section (1) of section 8 (whether called a tax or fee or by any other name); and (b) The dealer effecting such subsequent sale proves to the satisfaction of the authority referred to in the preceding proviso that such sale is of the nature referred to in this sub-section." 8. A plain reading of Section 6(2) indicates that, first of all, it is a non-obstante provision inasmuch as it begins with the words "notwithstanding anything contained in sub-section (1) or sub-section (1A)..." Secondly, it deals with a situation where the sale of goods in the course of inter-State trade falls either under Section 3(a) or 3(b) because the provision uses the words "where a sale of any goods in the course of inter- State trade or commerce has either occasioned the movement of such goods from one State to another or has been affected by the transfer of documents of title t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the purpose of introduction of Section 6(2) of the CST Act was to avoid the cascading effect of multiple taxation and that where the first sale is exempted, the second sale cannot be exempted even if the conditions under Section 6(2) are satisfied. He had placed reliance for this proposition, first of all, on the Supreme Court decision in the case of A & G Projects and Technologies Limited (supra) and, secondly, on the Andhra Pradesh High Court decision in the case of Jadhavjee Laljee (supra). We have already extracted the relevant portion of the Supreme Court decision wherein the Supreme Court observed that the purpose behind Section 6(2) was to avoid the cascading effect of multiple taxation. A reading of the said portion of the Supreme Court decision only indicates that where the first sale is taxed, the second sale would be exempted because of the object of avoiding the cascading effect. However, the Supreme Court decision cannot be understood to mean that where the first sale is exempted, the second sale must be taxed even though the conditions under Section 6(2) for exemption stand satisfied. The decision of the Andhra Pradesh High Court in the case of Jadhavjee Laljee (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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