TMI Blog2005 (3) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... ate, and who holds an exemption certificate without payment of any fees issued to him on the recommendation of the Rajasthan Khadi and Village Industries Commission constituted under the Rajasthan Khadi and Village Industries Board Act, 1955, in respect of the sale by him from any such place of business in the course of inter-State trade or commerce, of the goods specified in the list appended hereto. The said list appended to the aforesaid notification annexure 6 dated March 6, 1978 included processing cereals and pulses. The petitioner has claimed exemption under the aforesaid notification under the Central Sales Tax Act in respect of processed wheat sold by him by way of inter-State sales. The cereal-wheat was sold by the assessee after processing the same by removing the stones, polishing and grading. The said exemption was allowed to the petitioner under the regular assessment under the Central Sales Tax Act by the assessing authority. However, the Commercial Taxes Officer (Anti Evasion), conducted a survey of assessee's premises on October 31, 2003. The CTO (Anti Evasion) was not the assessing officer of the assessee, and the assessee was being regularly assessed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1994. Thus, the challenge to notice was founded on the ground of lack of jurisdiction in Commercial Taxes Officer (Anti Evasion) and exercise of jurisdiction on non-existent fact on its face by the concerned authority. The notices exhibits 11 and 12 were issued on December 30, 2003 for reopening the assessment under the CST Act for the assessment periods. The assessee filed a reply to the show cause notice on January 15, 2004 taking aforesaid objection. He also informed that he has filed writ petition in the High Court on January 8, 2004 challenging the jurisdiction of the ACTO (Anti Evasion) to reopen the assessment and next date of hearing was fixed on January 23, 2004 and requested to await the outcome of hearing of writ petition. Show cause notice was issued by the learned single judge on January 23, 2004. However, meanwhile the assessing officer appears to have passed reassessment order on January 16, 2004 itself, the very day after written reply was submitted informing the respondents about challenge to his jurisdiction before this court. The assessment orders were not served on assessee until issue of show cause notice by this court. The respondents passed reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of jurisdiction vested in the assessing authority, if it is otherwise, not vesting in him. Moreover, the question being involved about the ambit and scope of exercise of delegated power by the State Government under one enactment when it happens to be delegate under two different enactments, one as a delegate of the State Legislature and another as a delegate of the Parliament is a question of substantial general importance, the existence of alternative remedy in the present case ought not to come in the way of courts to desist from deciding the issue on merit on undisputed facts. The fact that the notification under which the petitioner claims exemption and which has been allowed to him as being issued under the CST Act in exercise of power conferred on the State Government under section 8(5) of the CST Act and that notification dated March 6, 1978 as such, has not been revoked or cancelled is not in dispute. However the other notification which has been issued contemporaneously by the State Government in exercise of its power conferred for granting exemption from payment of tax leviable under the RST Act, has been subsequently substituted by another notification whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusion of certain definiteness. The circumstances of the fact which has been used as a vehicle for initiating proceedings under section 30 of the RST Act read with section 9 of the CST Act, as noticed above is issuance of the notification by the State Government on March 27, 1995 in exercise of power conferred under section 4(2) of the RST Act, 1954 whereas reassessment proceedings are initiated in respect of assessment under the CST Act. We may notice here that the Rajasthan Sales Tax Act, 1994 came into force with effect from October 1, 1995 after the above notification dated March 27, 1995 was issued prior to its commencement under the old Act. It has to be seen that State Legislature has no authority to legislate to levy tax on sale or purchase of goods in the course of inter-State trade or commerce or outside a State or in the course of import or export. Article 286 makes it clear that the Parliament alone is authorised to impose tax on sale or purchase of goods where such sale or purchase takes place in the course of inter-State trade or commerce, ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery. Penalty is in addition to tax and is a liability under the Act . . . . . penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax. In order to levy penalty under the Act, there must be special provision for that that purpose. The same view was reiterated in Manganese Ore (India) Ltd. v. Regional Assistant Commissioner of Sales Tax reported in [1976] 37 STC 489 (SC). This ultimately led to insertion of sub-section (2A) in section 9 retrospectively, with effect from January 5, 1957 vide Amending Act No. 103 of 1976. So also sub-section (5) of section 8 in its original form had enabled the Central Government to grant exemption or provide for tax at lower rate than otherwise leviable under the CST Act. It read Notwithstanding anything contained in this section, the Central Government may, if it is satisfied that it is necessary so to do in the public interest . . . direct that . . . no tax under this Act shall be payable by any dealer having a place of business in any union territory in respect of sale by him from such place of business . . . . or that the tax on such sales shall be calculated at such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation under which a delegate of particular legislation is usually subject to in the matter of grant and revocation of regular exemption. It has to be by same procedure. However, the exercise of power under the State Legislature does not affect the exercise of power under the CST Act or vice versa unless otherwise provided by respective laws. It is for this reason that while enacting the CST Act, the Parliament instead of providing an independent machinery for levy and collection of tax, made a provision under section 9 of the CST Act that the tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied or collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced. Thus, the site of levy of tax imposition became the territories of the States from which the movement of goods commenced in the inter-State trade or commerce. The levy is to be imposed by the Parliament and is to be collected by the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or with such condition as may be specified in the notification . The exemption of tax under section 4 of the Act of 1954 or for that matter under section 15 of the Act of 1994, which came into force with effect from October 1, 1995 is restricted to the extent of the subject relating to intra-State sale or purchase, the subject of imposition by the State legislation and not beyond. In exercise of power under section 4(2) of the Act of 1954 or section 15 of the Act of 1994, the State Government cannot grant exemption or concession in respect of inter-State sale and purchase over which the State Legislature has no authority to legislate. However, section 8(5) of the CST Act also envisages that notwithstanding anything contained in this section, the State Government may on the fulfilment of the requirements laid down in sub-section (4) by the dealer, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5), it cannot become inoperative through obsolescence or by an attempted disturbance of such State of affairs by a totally unconnected or different legislative body or its delegate. It is only the authority which can grant exemption or concession under section 8(5) that can withdraw or modify such exemption or concession through another notification issued under that very provision. The State Legislature has no say in the matter. In dealing with this aspect, reference may be made to the case of M. Ishwarlal Co. v. State of Madras reported in [1973] 32 STC 377 (Mad). The Madras High Court was to consider a case where exemption granted to inter-State sales of jaggery and gur by notification under section 8(5) of the Central Act was withdrawn on March 21, 1969. However, by another notification, exemption in respect of intra-State sale of jaggery and gur was withdrawn prior to it from January 1, 1968 vide Madras General Sales Tax (Amendment) Act (2 of 1968). A question was raised before the Madras High Court whether exemption in respect of inter-State sales of jaggery and gur after January 1, 1968 should be deemed to be withdrawn because of the legislative repeal of the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer is, can the local Legislature, by enacting an Act of its own, repeal a notification issued by a different legislative body under a different but Central enactment? I am afraid it cannot. A repeal of an Act or a rule can be effected either expressly or by necessary implication. Generally the repeal of the Act wipes out the prior law. But in the case of implied repeals, the authority claiming to repeal a pre-existing law should have the power to do so. It cannot be said that the Madras Legislature had the power to cancel a notification issued by the delegate of Parliament functioning under section 8(5) of the Central Sales Tax Act. It is accepted law that all Acts and Rules and notifications having the force of law do not age out or become obsolete by non-user or non-adoption. The principle emanating from M. Ishwarlal Co. case [1973] 32 STC 377 (Mad) has been summarised as under: (1) that the Madras Legislature had no power to cancel the notification issued by the delegate of Parliament functioning under section 8(5) of the Central Act and, therefore, inter-State sales of jaggery and gur between 23rd April, 1958 and 20th March, 1969 were exempt from payment of Central s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies case [1999] 115 STC 29, upheld that supervening public purpose was shown to exist for withdrawing exemption under incentive scheme under the States Act. In view thereof, as the notice under section 30 was issued on the basis of non-existing material, namely, the supersession of notification under the CST Act when there was in fact no withdrawal or supersession of notification under the CST Act under which the exemption to processed cereals and pulses was granted in respect of inter-State sales, the question of holding any opinion on the escapement of assessment of the turnover of sale or purchase because of wrongful availing of exemptions under the CST Act could not arise. It is to be noticed that the fact that goods which were sold by the assessee have undergone the processing is beyond doubt as per statement made in show cause notice itself. It has clearly been stated in the notice that assessee has only processed the goods but has not manufactured the goods . It cannot be doubted and disputed that the goods involved were the processed cereals. The exemption under notification dated March 6, 1978 under the CST Act extended to the sale of processed cereals or/and p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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