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TMI Blog2008 (8) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... ity certificate. Under the notification, exemption is granted at ten per cent of the rate of tax normally applicable under the Central Sales Tax Act to the goods concerned. The aforestated notification was amended subsequently by notification No. 1228 dated March 31, 1992. The amending notification provides that in column 4 of the earlier notification for the word "Act" the words "U.P. Sales Tax Act, 1948" shall be substituted. In other words, for the purpose of calculation of the exemption under the amended notification, the rate of tax as applicable to the goods in question in the State of U.P. would be applicable. P.V.C. sheets manufactured by the dealeropposite party are taxable at the rate of ten per cent in the State of U.P. The dealer-opposite party claimed that in respect of inter-State sales of P.V.C. sheets against form C to registered dealer, dealer is liable to pay tax at the rate of four per cent. The said plea was not found favour either by the assessing authority or by the first appellate authority. The Tribunal, however, by the order under revision, accepted the contention of the dealer-opposite party and held that the dealer-opposite party is liable to pay tax at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the parties and perused the record. It is apt at this stage to have a look to the Notification No. 1094 dated July 27, 1991. Relevant extract is reproduced below: "Whereas the State Government is of the opinion that for promoting the development of certain industries in the State, it is necessary to grant exemption from or reduction in rate of tax to new units and also to units which have undertaken expansion, diversification or modernization; Now, therefore, in exercise of the powers under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Act No. 74 of 1956) (hereinafter referred to as the "Act") the Governor is pleased to declare that: (1-A) In respect of any goods manufactured in a 'new unit', other than the units of the type mentioned in annexure II established in the area mentioned in column 2 of annexure I, the "date of starting production" whereof falls on or after first day of April, 1990 but not later than March 31, 1995, no tax shall be payable, or, as the case may be, the tax shall be payable at the reduced rates, as specified in column 4 of annexure I, by the manufacturer thereof on the turnover of sales of such goods, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, whichever is higher. Sub-section (1) of section 8 thus provides that the sale of goods other than declared goods to a registered dealer is settled at the rate of four per cent if sale transaction is covered by form C otherwise it is taxable at the rate of ten per cent. Section 8(5) of the Central Sales Act which is material for our purpose, opens with a non obstante clause and provides that if the State Government is satisfied that it is necessary to do so in the public interest it may, by notification in the official gazette and subject to such condition as may be specified therein, direct that no tax or reduced rate of tax under the Central Sales Tax Act shall be payable by a dealer. The aforestated two notifications were issued undoubtedly in exercise of powers conferred on the State Government under section 8(5) of the Act. It may be noted that the power given to the State Government is for specific purpose, i.e., to reduce the rate of tax or to exempt goods from levy of tax. It has no power to raise the rate of tax on the sale of goods which takes place in the course of inter-State trade or commerce. No such power vests with the Government of India also. Sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fg. (Wvg.) Co. Ltd. v. Assistant Commissioner of Sales Tax [1974] 33 STC 219; AIR 1974 SC 1660, the Supreme Court upheld the validity of section 8(2)(b) of the Central Sales Tax Act, 1956, and ruled, that Parliament, with a view to prevent evasion of tax, can make a provision that Central sales tax shall be levied at the same rate at which sales tax is levied under the State Act. This case has been followed in International Cotton Corporation (P.) Ltd. v. Commercial Tax Officer, Hubli [1975] 35 STC 1 (SC); AIR 1975 SC 1604 and in State of Kerala v. Attesee (Agro Industrial Trading Corporation) [1989] 72 STC 1 (SC); AIR 1989 SC 222. Parliament as a policy decided that State can grant reduction or exemption from Central sales tax if it so deemed fit in the public interest. This policy of Parliament as laid down in section 8(5) cannot be transgressed or violated by the State Government while exercising its delegated power and thus cannot enhance the rate of tax. It has been held in reference to, article 143, Constitution of India, Rajnarain Singh v. Chairman, Patna Administration Committee AIR 1954 SC 569 that power given under delegation can be exercised when it supplements or modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, the liability to pay the tax is four per cent against form C. Anomalous position would be created. A person who is availing of the benefit of concessional rate, will have to pay more, a situation not envisaged by the Legislature. Keeping in view the object and purpose of enactment of section 8(5) of the Act, the notifications have to be interpreted harmoniously with the main provisions, i.e., section 8(5) of the Act. Interpretation of statute is not mechanical and literal exercise. One has to look into the attending circumstances and find out the real intention and purpose of law. "Inconsistency" and "repugnancy" should be avoided. It has been said time and again that it is the duty of the court of avoid "head on collision" between two sections of the same Act and effect should be given to both by adopting harmonious construction. A construction that renders one of the provisions to a useless lumber or dead letter is not a harmonious construction. The recent trend of the courts while interpreting a statute is to give a purposive interpretation. Reference can be made to the following cases: (1) P. Vainkunta Shenoy & Co. v. P. Hari Sharma AIR 2008 SC 416. (2) Standard Char ..... 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