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TMI Blog2009 (12) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... turers of picture tubes. The assessments, both under the U.P. Trade Tax Act, 1948 (hereinafter referred to as, "the U.P. Act") and under the Central Sales Tax Act, 1956 (hereinafter referred to as, "the Central Act"), for these assessment years, were completed by levying tax at 2.5 per cent. under the U. P Act and at two per cent. under the Central Act. Subsequent thereto the assessing officer realized that the tax should have been levied at 2.5 per cent. instead of two per cent. on the picture tubes under the Central Sales Tax Act and taking into consideration the notification dated October 10, 1995 being Notification No. TT-2-2473/11-6(1)/86-Act-74-56 Order 95, sought to reopen the assessments by invoking section 21 of the U.P. Act and where the assessment was barred by time, permission from the Additional Commissioner as required under section 21(2) of the U.P. Act was sought for and was granted. For certain assessment years, the assessment orders have been sought to be rectified by invoking section 22 of the U.P. Act by raising the rate of tax at 2.5 per cent. instead of two per cent. However, before the assessing authority could pass any order either under 21 or under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng argument on behalf of the petitioners. Shri Raj Nath N. Shukla and Shri Ashok Kumar, advocates adopted the arguments of the learned senior counsel. Shri U.K. Pandey, learned standing counsel, was heard in reply for the respondents. The petitioners submit that in view of the notification dated October 10, 1995 issued by the State Government under section 8(5) of the Central Act, on the sales made by the petitioner in the course of inter-State trade or commerce of electronic goods, tax will be calculated at two per cent. and was so levied. The Commissioner of Trade Tax wrongly interpreted the said notification of the State Government through its circular dated March 18, 2003 and therefore, the reassessment proceedings sought to be initiated are liable to be quashed being contrary to the statutory provisions. Elaborating the argument it was submitted that even otherwise a statutory notification issued in exercise of the power under section 8(5) of the Central Sales Tax Act in the public interest levying a tax at the rate of two per cent. on electronic goods cannot be modified, amended or changed on the basis of administrative circular dated March 18, 2002. In reply, the learned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which we are trying to bring home is that the sale of commodity in question was admittedly taxed at of 2½ per cent. in intra-State Sales and therefore, such commodity is liable to be taxed under section 8(2A) of the Central Act and not either under sub-section (2) or sub-section (1) of section 8 thereof. Having said so, we may have a look to the relevant notification issued under section 3A of the U.P. Act in this regard which is Notification No. 3402 dated October 1, 1994. Sl. No. Description of goods Point of tax Rate of tax 1 2 3 4 74(a) (i) Electronic components, that is to say all types of passive components, resisters, capacitors, diodes and other active components, transistors, integrated scale, large scale integration/very large scale integration chips, black and white picture tubes, colour picture tubes, power semi-conductors, audio tapes and video tapes, printed circuit boards/connectors, relays, up to electronic components, precision electronic components, magnetic media, microwave tube, television components, television glass shell, electronic transducers, actuators, display devices that is light emitting diodes/liquid crystal diodes, micro motors, cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods) on which the tax is payable under sub-section (2) of section 8 of the Central Sales Tax Act. Admittedly, the picture tubes and electronic components were taxed at 2½ per cent. including the surcharge in respect of intra-State sale. The said notification dated October 10, 1995 is not applicable, on the facts of the present case, as the picture tubes fall for tax purposes under section 8(2A) of the Central Act. The said notification is applicable in respect of electronic goods in respect of all other electronic goods not specified anywhere else in the Schedule or in any other notification as provided in the notification dated October 10, 1995. The notification dated October 10, 1995 under section 8(5) of the Central Act is referable to only inter-State sales and purchases falling under sub-section (2) of section 8 of the Central Sales Tax Act and it does not cover inter-State Sales and purchases falling under sub-section (2A) of section 8. Under sub-sections (1) and (2) of section 8 of the Central Act, the rate of tax on the goods sold is generally four per cent. against the declaration form C/D or 10 per cent. or more at the goods are liable to be taxed under State law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined the levy of additional tax/ surcharge, levied in the State in respect of intra-State sale or inter-State sales. In the case of Aysha Hosiery Factory (P) Ltd. [1992] 85 STC 106 (SC), the additional tax was levied on all taxable sales and charges in the State of Kerala, including the local sale of coir products, hosiery, etc. Under the Kerala Additional Sales Tax Act by providing that such goods were subjected to additional sales tax calculated at 10 per cent. of the rate of tax already imposed under the Kerala General Sales Tax Act, 1963, the result of it was that where the rate of tax was two per cent., the tax payable became 2.2 per cent. where it was three per cent. it was 3.3 per cent. and so on. The question for consideration in the case was as to whether the additional tax levied under the Kerala Additional Sales Tax Act is also to be considered as sales tax under the sales tax law of the State. The assessing authority therein in respect of inter-State sale held that a dealer was bound to pay the additional tax also in respect of inter-State sales, in addition to normal sales tax. The High Court disagreed with the said approach of the assessing officer and the matter wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the learned judges have accepted the interpretation placed by the learned single judge that in respect of a case where a notification has been issued under section 8(5) of the Central Sales Tax Act the amendment to the State Act will not have any effect on the notification. That should have been enough to dispose of the case but they have given an alternative reasoning which in our view is not correct and is against the provisions of section 8(2A) of the Central Sales Tax Act itself. For the purpose of applicability of section 8(2A) of the Central Sales Tax Act we have to look to the rate of tax applicable for the time being under the local Act and not a rate of tax which was applicable under the local Act at the time when Central Sales Tax Act was enacted. Any amendment in the local Act ultimately will have a reflection in the assessment of the inter-State sales. We have already discussed the scope of section 8(2A) of the Central Sales Tax Act in the light of those reasonings the passage extracted above in the judgment of the Division Bench is contrary to law and could not be accepted." In the aforestated case, the following observations of the apex court made with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modifies or altered or in any manner is in conflicts with the notification issued by the State Government dated October 10, 1995 under section 8(5) of the Central Act in respect of inter-State sale or purchases referable to section 8(2) of the Central Sales Tax Act. The submissions of the petitioners to the contrary therefore, is devoid of any substance and is liable to be rejected and is hereby rejected. To keep the record straight, although in the writ petition, it has been pleaded that no case for initiation of reassessment proceedings or as the case may be rectification proceedings has been made out by impugned notices but during the course of the argument no such argument except the argument noticed above were advanced in this regard. Section 3E of the U.P. Trade Tax Act provides levy of additional tax on certain dealers. In exercise of the powers under sub-section (3) of section 3E of the U.P. Trade Tax Act on August 1, 1990, the State Government issued Notification No. 1757 by providing that with effect from August 1, 1990 every dealer liable to pay tax under the Act, shall, in addition to the tax payable under the other provisions of the said Act in respect of the turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom payment of tax. Under sub-section (5) of section 8 of the Central Act, State Government cannot issue any notification in respect of goods which are liable to be taxed under the general law of the State at less than four per cent. The only power which can be exercised is to exempt the goods from tax. In the present case we find that under the U.P. Act the electronics goods is generally liable to be taxed at 2.5 per cent. including surcharge which is lower than four per cent. and the notification issued under section 8(5) prescribed the rate of tax at two per cent. Thus the case in hand would be covered by sub-section (2A) of section 8 of the Central Act and not by sub-section (1) or sub-section (2) of section 8. Our above view finds support from the phrase used "tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification". The use of words lower rates implies that rate of tax may be lowered down than the rate of tax as provided under the State Act. Further the reference of sub-section (1) or sub-section (2) is indicative of the fact that a notification can be issued only with respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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