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TMI Blog2024 (3) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment dated 19th October 2006 passed by a Division Bench of Delhi High Court. In the exercise of powers under Section 4(1) of the Delhi Sales Tax Act, 1975 (the DST Act), the Government of Delhi issued a notification on 31st March 1999 stating that the rate of the State sales tax on silk fabrics was fixed at 3%. On 15th January 2000, another notification was issued by which silk fabric was included in Schedule I of the DST Act. Therefore, the State sales tax on silk fabric was increased to 12%. On 31st March 2000, silk fabric was shifted from Schedule I to Schedule II of the DST Act by amending the Schedules. Therefore, the sales tax became payable on silk fabric at 4%. An assessment order was issued to the appellant on 31st October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 no State is entitled to levy sales tax when it is entitled to share proceeds under the ADE Act. He relied upon paragraph 6 of a decision of this Court in the case of State of Kerala v. Attesee (1989) Supp.1 SCC 733 to support his contention that the Delhi Government was not entitled to levy sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d certain goods specified therein as of special importance in inter-state trade or commerce. Until 11th May 1968, item (xi) was incorporated in Section 14, which covered the item of "silk sarees". However, with effect from 11th May 1968, the said item was deleted by Act No. 19 of 1968. 6. Section 15(1) of the CST Act, as existed during the period for which the impugned assessment was made, provided that the local sales tax rate on declared goods should not exceed 4% of the sale or purchase price of such goods. So long as the silk fabric was a part of the list of declared goods 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sums shall be payable to that State under this paragraph in respect of that financial year, unless the Central Government by special order otherwise directs." 8. In the State of Kerala v. Attesee2, the issue was the interconnection of the three Acts: the CST Act, the ADE Act and the State Sales Tax Act. The appellant relied upon what is held in paragraph 6 of the said decision of this Court. Paragraph 6 of the said decision reads thus: "6. Article 286 of the Constitution of India imposed certain restrictions on the legislative powers of the States in the matter of levy of sales tax on sales taking place outside the State, sales in the course of import or export, sales in the course of interstate trade or commerce and sales of declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... listed as item 12 in the Schedule to the 1944 Act was not brought into the list in Section 14 till 1-10-1958 or that Silk fabrics was dropped from the list in Section 14 w.e.f. 11-6-1968 though it continues in the schedule to the 1944 Act does not alter the position that these three acts are interconnected and that certain goods taken out from the Schedule to the 1944 Act were to be subjected to the special treatment outlined in the CST Act and the 1957 Act." ( emphasis added ) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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