TMI Blog2012 (4) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of India. The same rice, if it is sold within the State, would become liable to tax, though no tax would be payable because of the exemption granted under Section 6(1) of the Act. It is competent for the State Legislature to make amendment or modify the entries in the First Schedule to the Act to either withdraw the exemption granted to the goods or add more items that would be exempt from tax or change the conditions and exceptions set out therein, subject to which the exemption is granted. Such modifications or amendments cannot, however, be made to Section 7(c) of the Act by the State Government to provide for levy of tax on the sale of the goods, even though they are mentioned in the First Schedule to the Act, if they are made in the course of export of the goods out of the territory of India, because of Article 286(1). - Decided in favor of the assessee - STA NOS. 11 AND 12 OF 2011 - - - Dated:- 23-2-2012 - SANJIV KHANNA AND R.V. EASWAR, JJ. Ms. Prem Lata Bansal, Ruchir Bhatia and Varun Dubey for the Appellant. A.K. Babbar for the Respondent. JUDGMENT R.V. Easwar, J. These are two appeals filed by M/s Jaishree Exports which is a dealer registered u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T authorities, the appellant also relied on the "working guide" issued by the VAT Department in support of the claim for refund. 3. In the default assessment made under the Act by order dated 23.09.2008, the assessing authority (hereinafter referred to as "VATO") rejected the claim of the appellant in the following words: - "The dealer has claimed ITC for Rs. 55003/- against purchase of packing material and claimed refund thereof. As per entry No. 46 of First Schedule of DVAT Act 2004, rice is a tax free item and as per Section 9(7)(b) of said Act no input tax credit is allowed. Hence total demand of Rs. 61883/- is assessed along with interest. The dealer is hereby directed to pay tax of an amount of Rupees 76379/- (Seventy six thousand three hundred seventy nine only) and furnish details of such payment in Form DVAT-27A along with proof of payment to the undersigned on or before 24-11-2008 for the following tax period: Tax Period Amount (Rs.) Tax Interest Total FOURTH QUARTER, 2006-07 61883 14496 76379 Worksheet and Assessment Summary are enclosed for ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter referred to as "the tribunal"). By a consolidated order dated 18.3.2011, which is the impugned order, the tribunal upheld the view taken by the VAT authorities. In this order, the claim of the appellant in respect of the entire dispute was dealt with by the tribunal. A perusal of the order of the tribunal shows that there is not much of discussion as to the merits/ de-merits of the claim of the appellant though the contentions of the appellant have been recorded in detail in paragraph 11 of the impugned order. All that the tribunal has stated in paragraph 17 of its order is that the ld. VATO was justified in disallowing the claim of input tax audit on purchase of packing material but the liability of the appellant to deposit tax equivalent to the input tax-audit claim could not be upheld. Identical observations have been made in paragraphs 18 and 19, in which different segments of the tax period in dispute have been dealt with. 7. Aggrieved by the aforesaid order passed by the Tribunal, the appellant has preferred the present appeals. 8. By order dated 14.10.2011 the following substantial questions of law were framed for adjudication. ( i ) Whether a dealer register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act or the rules made thereunder shall be deemed to impose or authorise the imposition of tax on any sale of goods when such sale takes place - ( a ) in the course of inter-state trade or commerce; or ( b ) outside Delhi; or ( c ) in the course of import of the goods into or export of the goods out of, the territory of India. ( d ) in accordance with the notification issued by the Central Government in exercise of its powers under section 3 of the Foreign Aircraft (Exemption from Taxes and Duties on Fuel) Act, 2002 (36 of 2002), no tax shall be levied on sales of the fuel and lubricants which are filled into receptacles forming part of any aircraft registered in a country other than India, if- ( i ) the said country is a party to the Convention on International and Civil Aviation, 1944; and ( ii ) the said country has entered into an Air Services agreement with India; and ( iii ) the aircraft is operating on a scheduled or non-scheduled service to or from India.] Explanation . - Sections 3, 4 and 5 of the Central Sales Tax Act, 1956 (74 of 1956) shall apply for determining whether or not a particular sale takes place in the manner indicated in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A dealer is entitled to tax credit under Section 9(1) in respect of the purchases made by him during the tax period, which are used by him, directly or indirectly for the purpose of making sales which are liable to tax under Section 3 of the Act and also to effect sales which are not liable to tax under Section 7. Section 3, which is the charging section, imposes tax on every dealer in respect of every sale of goods effected by him. Some of the goods which are listed in the First Schedule to the Act are granted exemption from the levy of sales tax under Section 6(1). The sales which are referred to in Section 7 are not liable to tax at all. Such sales are outside the purview of the Act and they cannot be brought under the purview of the Act at all. Section 9, however, allows tax credit in respect of inputs used to effect both types of sales, that is, sales which are liable to tax and which are not liable to tax. Ex-hypothesi, sales which are merely granted exemption under the provisions of Section 6(1) of the Act do not enjoy the benefit of input tax credit under Section 9(1) of the Act. The First Schedule to the Act lists several goods, the sale of which are merely exempted from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant are used for packing rice which are exported out of India. In such a factual situation, the VAT authorities were not justified or correct in law in holding that the appellant-dealer was not entitled to the tax credit in respect of turnover of purchases of the packing material in the tax period under dispute. 14. It is now necessary to refer to Article 286(1) of the Constitution of India. It says that no law of a State shall impose, or authorize the imposition of tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State and (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Clause (2) enables Parliament to make law formulating the principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). Therefore, a State Government is not competent to impose a tax on the sale or purchase of goods which takes place in the course of import of the goods into or export of the goods out of, the territory of India. When the Legislature of a State is thus not competent to levy tax in the above circumstances, it hardly needs mention th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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