TMI Blog2024 (3) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... ods under Section 14 of the CST Act, the sales tax levy under the DST Act could not have exceeded 4% in view of Section 15(1) of the CST Act. However, silk fabric was deleted from the list contained in Section 14 of the CST Act, effective 11 May 1968. Therefore, during the relevant period for which the impugned assessment order was issued, as silk fabric was not a part of the list under Section 14, there was no embargo on levying sales tax on silk fabric at a rate exceeding 4%. Therefore, the argument based on Section 15(1) of the CST Act will not help the appellant. The second Schedule of the ADE Act provides that during each financial year, each State shall be paid a certain percentage of net proceeds of the additional duties levied and collected during the financial year in respect of the goods described in column (3) of Schedule I. However, no additional duty was made payable on silk fabric under the ADE Act. The proviso makes it clear that notwithstanding the ADE Act, there is no bar on the States levying sales tax - the argument that as silk fabric formed a part of Schedule I of the ADE Act, it disentitled the State Government from levying sales tax is fallacious and cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate sales tax on the said goods. He submitted that under the scheme of the ADE Act, the additional duties are levied on declared goods in lieu of the sales tax and after deducting 2.203% of the total proceeds for distribution to the Union Territories, the remaining proceeds are distributed among the States as per the prescribed percentage. He relied upon Articles 266 and 269 of the Constitution of India, containing the scheme of collection and distribution of net proceeds of taxes and duties received by the Government of India under the Consolidated Fund. He submitted that Article 269(2) makes it very clear that the proceeds attributable to the Union Territories are kept aside and would not form a part of the Consolidated Funds of India. He urged that Delhi was getting its share of ADE at the relevant time. Hence, the Delhi Government was debarred from levying sales tax on Silk Sarees . He submitted that the ADE Act has been brought on the statute book to bring uniformity in the duty/tax throughout the country on the goods of special importance . He relied upon a decision of this Court in the case of Godfrey Phillips India Ltd. v. State of U.P. (2005) 2 SCC 515 and submitted that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the sales tax levy under the DST Act could not have exceeded 4% in view of Section 15(1) of the CST Act. However, silk fabric was deleted from the list contained in Section 14 of the CST Act, effective 11 May 1968. Therefore, during the relevant period for which the impugned assessment order was issued, as silk fabric was not a part of the list under Section 14, there was no embargo on levying sales tax on silk fabric at a rate exceeding 4%. Therefore, the argument based on Section 15(1) of the CST Act will not help the appellant. 7. Now, we turn to the arguments based on the ADE Act. As stated earlier, silk sarees form part of item 50.05 of Schedule I of the ADE Act. However, the duty payable on the said item was shown as nil. The entire argument of the appellant is based on what is stated in the Second Schedule of the ADE Act, which reads thus:- During each of the financial years commencing on and after the 1st day of April, 1995, there shall be paid to each of the States specified in column (1) of the Table below such percentage of the net proceeds of additional duties levied and collected during that financial year in respect of the goods described in column (3) of the Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a rate exceeding 2 per cent or be levied at more than one point in a State. Before this section came into force, it was amended by Act 16 of 1957 which retained the first restriction and, so far as the second is concerned, provided that the tax should be levied only on the last sale or purchase inside the State and even that should not be levied when that last sale or purchase is in the course of inter-State trade or commerce as defined. Act 31 of 1958 amended Section 15 to impose certain modified restrictions and conditions with the details of which we are not here concerned. These restrictions clearly entailed loss of revenue to the States and it was considered expedient and desirable to compensate the States for the proportionate loss of sales tax incurred by them. Thus, even before Section 15 was brought into force, the Central Government decided to pass an Act to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of a part of the net proceeds thereof among the States in pursuance of the principles of distribution recommended by the Second Finance Commission in its report dated 30-9-1957. This proposal to levy additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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