TMI Blog2010 (7) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Mr H.L. Taneja BADAR DURREZ AHMED, J (ORAL) 1. The petitioner has prayed for, inter alia, the issuance of a writ of certiorari or any other writ, order or direction quashing the notices of default payment of taxes and default assessment of penalties for the financial year 2007-08 (April 2007 to March 2008). The said notices and default assessment of penalties have been annexed as Annexures B (Collectively) and C (Collectively) alongwith the writ petition. The petitioner has also prayed for the issuance of a writ of certiorari or any other writ, order or direction quashing the Additional Commissioner‟s order dated 09.10.2009 which confirmed the Value Added Tax Officer‟s order with regard to default assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cascading. According to him, this aspect has been recognized by the Supreme Court in the case of A G Projects and Technologies Limited v. State of Karnataka: 2009 (2) SCC 326, in view of the following observations made by the Supreme Court in the said decision:- 16. Analysing Section 6(2), it is clear that sub- section (2) has been introduced in Section 6 in order to avoid cascading effect of multiple taxation. A subsequent sale falling under sub-section (2), which satisfies the conditions mentioned in the proviso thereto, is exempt from tax as the first sale has been subjected to tax under sub-section (1) of Section 6 of the CST Act, 1956. Thus, in order to attract Section 6(2), it is essential that the sale concerned must be a subsequent inter-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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may, for sufficient cause, permit,- a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and b) if the subsequent sale is made to a registered dealer, a declaration referred to in sub-section (4) of section 8: Provided further that it shall not be necessary tofurnish the declaration referred to in clause (b) of the preceding proviso in respect of a subsequent sale 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is known as a C-Form‟. Thus, the only conditions that are discernible from Section 6(2) are that:- i) The first sale could be either a Section 3(a) or a Section 3(b) sale; ii) The second or subsequent sale has to be a Section 3(b) sale; iii) The subsequent sale has to be to a registered dealer; iv) The goods should be of a description referred to in Section 8(3) of the CST Act; v) The E-1 Form is to be furnished by the petitioner; and vi) The C-Form obtained from the purchasing registered dealer has also to be furnished by the petitioner. In the present case, apart from these conditions, there are no other conditions which are discernible from a plain reading of the provisions of Section 6(2). 9. We now come to the argument raised by Mr Taneja that 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, secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le cannot be granted where the first sale has had the benefit of an exemption. 12. Since the impugned orders have not examined the question of availability of exemption to the petitioner in terms of the conditions specified in Section 6(2) of the CST Act and had rejected the petitioner‟s claim merely on the ground that since the first sale was exempted, the second and subsequent sale cannot be exempted from the CST Act, we find that the right course to follow would be to set aside the impugned assessment orders as well as the penalty orders and remand the matter to the Value Added Tax Officer to determine as to whether the conditions specified in Section 6(2) of the CST Act have been satisfied by the petitioner or not for the purposes of deciding as to whether the petitioner is or is not entitled to the grant of exemption. It is ordered accordingly. The petitioner would be entitled to file any further documents it wishes to rely upon within a period of four weeks. Thereafter, the Value Added Tax Officer shall pass the appropriate orders within two months. The writ petition stands disposed of. The parties are left to bear their respective costs. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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