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TMI Blog2015 (7) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... der to augment the State's revenuefrom inter-State sales, issued a partial exemption notification dated 6.5.1986. The notification aforesaid reads as under:- "NOTIFICATION NO.F.4(72)FDGr.IV/8I-18 Dated 6/5/1986 - S.O.23.- In exercise of the powers conferred by S.8(5), CST Act, 1956, the State Govt. in supersession of the FD notfn. No.F4(72) FDGr/IV/81-36 dated 3.12.1985 [S.No. 584], hereby directs that, with immediate effect, any dealer, having his place of business and manufacturing goods in the State of Rajasthan, may claim partial exemption from the tax payable in respect of the sales by him of such goods in the course of inter-State trade or commerce by way of reduction at the rate of 50% of the tax so payable on increased sales upto 50% and at the rate of 75% of the tax so payable on increased sales made over and above the aforesaid 50%, in the manner and subject to the conditions as follows:- (1) Such reduction of tax shall be allowed to a dealer only after and in respect of the increase which is effected in the percentage of the quantum of goods sold in the course of inter- State trade or commerce out of the total quantum of goods sold within the State and in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re rods, squares strip sheets, and (2) Hot rolled and cold rolled coils (mis-rolls), slabs, plates, and end cuttings thereof : S.No.867 dated 19.12.1991. Departmental Circular : See S.No.653A dated 17.1.1987." From reading of the notification, it is apparent that - (1) it grants partial exemption from CST payable in respect of inter State sales i.e. sale of goods in the course of inter-State trade or commerce; (2) it extends an incentive to increase inter-State sales by reducing branch or stock transfers i.e. dispatch of goods to branches, depots or agents outside the State for effecting sales outside the State on which no tax is leviable in the State either under the Rajasthan Sales Tax Act (hereinafter referred to as 'the RST Act') or CST Act; (3) the object of the notification is to reduce the loss of revenue to the State by branch transfers. To achieve the object emphasis is given to increase the inter-State sales and at the same time reduction of branch/stock transfers. To compute partial exemption allowed under the notification dated 6.5.1986, it is necessary to determine percentage of increase in the inter State sales and corresponding decrease in the percentag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the consumers through inter-State sales. The correctness of the notice aforesaid is under challenge in DBCivil Writ Petition No.3620/2006. The writ petition aforesaid was admitted by this Court with an interim restrainment to proceed further with notices impugned. In relation to notices for subsequent assessment years on the same subject, the petitioner preferred another writ petition i.e. DBCivil Writ Petition No.4055/2010. For the assessment year 2007-08, relating to the same subject the respondents issued a notice for demand dated 21.3.2014 and that is underchallenge in DBCivil Writ Petition No.3340/2014. This petition for writ was admitted for hearing on May 29, 2014 with interim direction as under:- "Having regard to the fact that these are impending summer vacations beyond this week and until 29.06.2014 and the overall facts and circumstances as noticed hereinabove, so far the aspects relating to interim relief/arrangement are concerned, it is considered appropriate and hence ordered that from today and until next date in these matters, in case the respondents intend to take up coercive recovery proceedings against the petitioner in relation to the demand arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner provided in sub-section (1), he may any time, subject to the limit specified in sub-section (3), either direct the assessing authority or the officer authorized by the Commissioner, to assess the tax or the fee or other sum or himself proceed to assess the same. (3) No notice under under sub-sections (1) and (2) shall be issued in respect of any escaped assessment for any year after the expiry of five years, and no assessment under the said subsections shall be completed after the expiry of eight years, from the end of the relevant year; but this limitation shall not be applicable to any assessment to be made in consequence of, or to give effect to, any finding or direction contained in any order passed by an appellate authority or the Tax Board or a competent court. (4) The assessment, if any already made shall be subject to the assessment made under this section." As per the petitioner Section 26 of the VAT Act confers uncontrolled, unguided and blanket powers to the assessing authority to re-issue assessment notice. It is asserted that no safeguards and checks are given to control the powers of assessing authority, who while invoking the powers under Section 26 may rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfers can be determined on completion of assessment year. The scheme introduced under the notification dated 6.5.1986 allow reduction of tax to a dealer on basis of the achievements made by it in that year only. No dealer in any case can apprehend or presume exact quantum of sale in different categories at inception of the assessment year. This fact itself, as per learned counsel for the petitioner, is sufficient to indicate that benefit of partial exemption in terms of the notification is to be retained by the dealer being the partial exemption given under the notification dated 6.5.1986 is an incentive to increase inter State sales and decrease stock transfers which ultimately results into enhancement of State revenue. This incentive will go to the dealer who make efforts for enhancing inter State sales by decreasing inter State stock transfers. The incentive as given, if is not extended to the dealer, then no dealer shall make efforts to increase inter State sales by proportionate decrease of stock transfers and it shall frustrate the decision of the State Government to enhance its revenue by promoting inter State sales. In reply, while defending the action taken by the Commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprises & Ors. v. State of Karnataka & Ors. (supra). In these cases Hon'ble the Apex Court held that no law can be enacted or any order be issued by the Government to refund the tax realised by it from people in exercise of its sovereign powers, except when levy or realisation is contrary to a law validly enacted. A promise or agreement to refund tax which is due under the Act and realised in accordance with law would be fraud on the constitution and breach of faith of the people. Taxes like sales tax are paid by the people irrespective of their savings with participation in growth of national economy and development, hence its refund to a private person and manufacturer would be breach of trust of the people amounting to deception under law. Hon'ble the Apex Court also made a distinction in 'refund of tax' and 'exemption from tax'. The Court observed that 'exemption from tax' to encourage industrialisation is a different concept than to 'refund of tax'. An exemption is a concession allowed to aclass or individual from general burden for valid and justifiable reason. If an industry is exempted from tax then the ultimate beneficiary of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 6.5.1986 can be availed only if there is decrease in the percentage of branch transfers with simultaneous increase in inter State sales. A analytical consideration of the notification makes it clear that partial exemption is allowed to the dealers concerned to enhance State revenue by promotion of inter State sales with simultaneous decrease in branch transfers. Suffice to mention that in the event of transfers of goods from one State to other State without effecting sale i.e. by way of branch transfer, shall not earn any revenue for originating State i.e. State of Rajasthan in the instant matter. On the other hand, if, the manufactured goods are transferred from State of Rajasthan to any other State by way of inter State sale, then that shall generaterevenue for the State. The State Government allowed an incentive to the dealers on promotion of inter State sales by proportionate decrease in branch transfers with the object to have higher State revenue. It is also apparent that the inter State sale of the goods and the branch transfers of goods is absolutely within the domain of dealers and looking to this aspect partial exemption was allowed to get the dealers shifted towar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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