TMI Blog2006 (5) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... otu revisional jurisdiction under section 40 of the Haryana General Sales Tax Act, 1973 (for short, the Act ) and revised the assessment holding that export sales had to be included in the turnover for the purpose of calculation of notional tax liability. This view has been upheld by the Tribunal by referring to proviso to rule 28-A(4)(a) of the Rules. The Tribunal, in the order in appeal, observed as under: This provision leaves no doubt that the benefit of tax exemption extends to gross turnover only, which as per the definition in the Act, includes sales in the course of export also. Therefore, while determining the tax benefit, the gross turnover which also includes export sales has to be considered and it cannot be excluded while calculating the tax benefit of finished goods. Learned counsel for the assessee submits that the view taken by the Tribunal is erroneous and export sales cannot constitute part of gross turnover. It is submitted that the State Legislature does not have competence to tax export sales. Once this is so, even for the purpose of calculation of notional tax liability for exemption, export sales cannot be included in the turnover. Turnover can inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal subsidy. Rule 28-A(2)(n), 28-A(4)(a) first proviso, (10) and (11) of the Rules: 28-A. Class of industries, period and other conditions for exemption/deferment from payment of tax (sections 13-B and 25-A). (1) The industries covered under this rule shall not be entitled to any deferment or exemption from payment of tax under any other provisions of these rules. (2) For the purpose 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 law but for an exemption computed at the maximum rates specified under the local sales tax law as applicable from time to time; and Explanation. The sales made on consignment basis within the State of Haryana or branch transfer within the State of Haryana shall also be deemed to be sales made within the State and liable to tax; (ii) amount of tax payable under the Central Sales Tax Act, 1956, on the sales of finished products of the eligible industrial unit made in the course of inter-State trade or commerce computed at the rate of tax app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it after having availed of the benefit, (i) shall continue its production at least for the next five years not below the level of average production for the preceding five years; and (ii) shall not make sales outside the State for next five years by way of transfer or consignment of goods manufactured by it. (b) In case the unit violates any of the conditions laid down in clause (a), it shall be liable to make, in addition to the full amount of tax benefit availed of by it during the period of exemption/deferment, payment of interest chargeable under the Act as if no tax exemption/ deferment was ever available to it: Provided that the provisions of this clause shall not come into play if the loss in production is explained to the satisfaction of the Deputy Excise and Taxation Commissioner concerned as being due to the reasons beyond the control of the unit: Provided further that a unit shall not be called upon to pay any sum under this clause without having been given reasonable opportunity of being heard. In every taxing statute, provisions are added which enable the State to grant incentives for promoting industrialisation and economic growth in the State. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is to be measured to match the entitlement. A plain reading of the provisions of rule 28-A of the Rules shows that the same have been framed in furtherance to the object sought to be achieved under sections 13-B and 25-A of the Act. Rule 28-A provides for period and other conditions for exemption from/deferment of payment of tax. What has been exempted under the Act and the Rules is the payment of tax by a class of dealers who have been issued eligibility and exemption certificates. As per the scheme of the Act, stage for payment of tax comes only when either the assessee pays tax on the basis of self-assessment at the time of filing of returns (section 25) or when the assessment is framed as per the provisions of the Act (sections 28 and 29) and some demand is created. The words payment of tax pre-suppose that liability to pay tax under the Act is existing, only then the stage of payment of tax would arise for exemption from/deferment of which the scheme in the form of rule 28-A has been framed under the Act. A judgment of the Constitution Bench of the honourable Supreme Court of India in the case of A.V. Fernandez v. State of Kerala [1957] 8 STC 561, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods outside the territory of India will be overridden by the plain language of section 12 of the Act, providing for non-imposition of tax on such turnover. So the turnover of export of goods outside the territory of country falls in the category on which no liability of tax is there as per the provisions of the Act. Reference to a recent judgment of the honourable Supreme Court of India in the case of Associated Cement Companies Ltd. v. State of Bihar [2004] 137 STC 389 would be quite relevant. In this case, the apex court, while considering as to when the question of exemption arises, held as under: Crucial question, therefore, is whether the appellant had any 'liability' under the Act. The answer to this lies in section 3 of the Act which is extracted above and is the charging section. In sub-section (1) subject of the provisions of the Part (i.e., Part I) sales tax or purchase tax, as the case may be, shall be paid by every dealer as provided in the section itself. Section 7 speaks of exemption. Sub-section (3) of section 7 stipulates that State Government may, by notification and subject to such conditions or restrictions as it may impose, exempt from sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be ultra vires to the Constitution of India and was struck down by observing as under: . . . The executive powers of the State executive is co-extensive with that of the State Legislature. Neither the State Legislature nor the State executive has any jurisdiction to levy sales tax directly or indirectly by enacting a fiction or otherwise, on branch transfers or consignment of goods outside the State. Neither the 'branch transfers' nor mere consignment of goods can be treated as 'deemed sales' as if exigible to sales tax even as a measure of computation of sales tax incentives availed of by the eligible unit nor for purpose of computation of the 'notional sales tax liability' as provided in clause 2 of the 1983 package scheme of incentives to the new industrial unit in the backward areas. The conditions of exemption stipulated under the said notification cannot be enlarged or modified merely by issue of a Government resolution or an executive fiat. The State Government is not entitled to curtail or whittle down the 'whole of tax exemption' by resorting to a device of converting non-sales into deemed sales in the garb of prescribing the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to an eligible industrial unit subject to certain conditions and on violation thereof either during the currency or after five years of availing the exemption, entire amount of tax exemption availed is recoverable. Clause (v) of sub-rule (10) of rule 28-A provides that on cancellation of eligibility certificate or exemption/entitlement certificate before it is due for expiry, entire amount of tax exempted/deferred shall become payable immediately in lumpsum. Subrule (11) of rule 28-A puts certain conditions on a unit availing benefit of rule 28-A for next five years after the benefit has been availed of. In clause (b) thereof, it is provided that in case the conditions put in clause (a) of subrule (11) of rule 28-A are violated, the unit shall be liable to make payment of the entire amount of tax benefit availed of during the period of exemption/deferment. The net effect of rule 28-A(10)(v) and rule 28-A(11)(b) would be that in case of any violation, the unit availing benefit or having availed of the benefit under rule 28-A would be liable to make payment of the entire amount of the benefit availed of. The procedure for assessment of a unit, availing benefit under rule 28-A i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on such transaction can be levied by the State Legislature. Secondly, in case of withdrawal of benefit under rule 28-A(10) or (11), the entire amount of benefit availed of becomes payable immediately which will include tax on branch transfers as well. The argument of the learned State Counsel is to the effect that as per first proviso to rule 28-A(4)(a), the benefit of exemption from payment of tax is to be calculated on the gross turnover of the dealer and the entire receipts, on whatever accounts received by the dealer, would be included in its gross turnover. In view of that, even the turnover of goods exported outside the territory of India will also form part of the turnover on which the quantum of benefit of exemption has to be calculated. While raising the argument, learned counsel lost sight of the overriding provisions of section 12 of the Act and statutory form ST-9 on which returns are to be filed by a dealer. This form clearly provides that gross turnover would be a result after deduction from the total receipts, inter alia, on account of export of goods outside the territory of India. Relevant part of the same is extracted below: Form ST-9 (See rule 17) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; [1989] Supp 2 SCC 523 and Bajaj Tempo Ltd., Bombay v. Commissioner of Income-tax [1992] 196 ITR 188 (SC); [1992] 3 SCC 78, the honourable Supreme Court in Commissioner of Sales Tax v. Industrial Coal Enterprises [1999] 114 STC 365; [1999] 2 SCC 607 held that in taxing statutes, provision for concessional rate of tax as well as provisions granting incentives to promote economic growth and development should be construed liberally and in a reasonable and purposive manner so as to advance the object of the provisions. The object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industries in the State. It will be useful to refer to the following observations of a judgment of the honourable Supreme Court of India in Sri Ram Saha v. State of West Bengal [2004] 11 SCC 497; AIR 2004 SC 5080, on the interpretation of statutes: It is well-settled principle of interpretation that a statute is to be interpreted on its plain reading; in the absence of any doubt or difficulty arising out of such reading of a statute de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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