@JUDGMENTTAG-ORDER
Adarsh Kumar Goel, J.@mdashThis order will dispose of VAT Appeal Nos. 73 and 74 of 2010, as it is stated that both the appeals involve
common questions. VAT Appeal No. 73 of 2010 has been preferred by the Revenue u/s 68(2) of the Punjab Value Added Tax Act, 2005 (for
short, ""the Act"") against the order of the Punjab VAT Tribunal dated September 18, 2009, claiming following substantial questions of law:
(i) Whether the Punjab VAT Tribunal, which is a creation of the CST Act, has erred in law by going against the mandate of section 8(5) of the
Act, wherein any reduction in the rate of tax qua a dealer or goods or classes of goods was to be done in public interest by the State Government
by way of a notification in the official gazette subject to the conditions as specified in the notification, and holding that the respondent was not
bound to produce a declaration in form C even though the same was a specific condition in the notification dated March 31, 1995?
(2) Whether the Punjab VAT Tribunal has exceeded its jurisdiction by arrogating to itself the authority to render null and void the notification dated
March 31, 1995 of the State Government by ignoring the mandate of the notification that the production of a declaration in form C specified in the
Central Sales Tax (Registration and Turnover) Rules, 1957 was a sine qua non for reduction of the rate of CST?
(3) Whether the Punjab VAT Tribunal has erred in law by holding vide its erroneous interpretation of the noting of the Council of Minister of the
State Government as having an overriding effect over the final detailed notification issued by the State Government by way of a notification in the
Official Gazette as prescribed by section 8(5) of the CST Act?
(4) Whether the Punjab VAT Tribunal, which itself is a creation of the CST Act, is bound by the notification issued by the State Government in the
Official Gazette as per procedure of section 8(5) of the CST Act, after following the due procedure of law?
(5) Whether the Punjab VAT Tribunal has erred in law by holding that the production of declaration made in form D (relating to interstate sales to
Government) sufficed to fulfil the condition of the notification dated March 31, 1995 even though the notification specified the condition of
production of declaration made in form C and the State Government had no authority to reduce the rate of CST qua sales to Government till the
amendment in the year 2002?
(6) Whether the Punjab VAT Tribunal has ignored the fact that section 8(5) of the Central Sales Tax Act prior to its amendment in 2002 whereby
the words to the Government were incorporated in it, allowed no authority to the State Governments to issue notifications allowing confessional
rates of tax on sales to Government Departments as Parliament allowed such authority to State Governments only after amending section 8(5) with
effect from April 1, 2002 and the notification in question was issued on March 31, 1995.
(7) Whether the Punjab VAT Tribunal has erred in law by passing an order which is not as per the provisions of the CST Act read with VAT Act
and the Central Sales Tax (Registration and Turnover) Rules, 1957 along with the Central Sales Tax (Punjab) Rules, 1957?
2. The assessee is a manufacturer of papers and made sales to the Government Departments against form D charging one percent CST. The
Assessing Authority held that the assessee was liable to pay four percent CST. The order of the Assessing Authority having been affirmed by the
appellate authority, the assessee moved the Tribunal. The Tribunal upheld the plea of the assessee as follows:
Here is a case where a decision was taken in the Cabinet Sub-Committee for reduction in the rate of tax on papers manufactured in the State of
Punjab that the rate of tax on inter-state sales on such paper be reduced from four percent to one percent with effect from April 1, 1995. There
had been no stipulation anywhere in the decision of the Cabinet Sub-Committee or Council of Ministers that it shall be against C/D forms.
Although the words subject to production of form C had been added in the notification dated March 31, 1995 but the sales made by the appellant
to Government Departments remain inter-State sale of paper and appellant had even been collecting one percent CST, on such sales and
depositing the same. When the decision of the Cabinet was not subject to production of any type of form and the sales made by the appellant
remained inter-State sale, then whether appellant obtained and produced D forms against such sales or C forms, will not be very material. In fact
the provisions of obtaining D forms is regarding sale made to Government Departments for which other Government Departments or the dealer
may be getting some benefit as compared to sale made to private parties but here in this case the contention of the counsel of the State appears to
be that appellant shall be put to disadvantage only because C forms were not taken. It comes out that when appellant had made inter-State sales to
private parties, then C forms were taken but Government Departments were issuing only D forms and not C forms. In the rate contract also, the
Director General of Supplies and Disposals had Government Department agree to one percent CST against C/D forms. In the invoices also, one
percent CST is mentioned and charged against C/D forms.
In the facts and circumstances of the case where the sales had been inter-State sales and conscious decision was taken by the Government to
reduce CST on inter-State sales of papers from four percent to one percent, then the appellant cannot be made liable to pay four percent on such
inter-State sales only because the appellant had produced/obtained D forms for sales made to Government Department and not C forms, as
mentioned in the notification.
3. We have heard learned counsel for the appellant.
4. It is not disputed that rate of tax applicable at the relevant time was one percent, as stated by the respondent. There was no requirement to
produce declaration form C, as held by the Tribunal. In these circumstances, the respondent could not be denied the benefit of reduced rate as
notified by the State Government. No substantial question of law arises. The appeals are dismissed. A photocopy of this order be placed on the
file of other connected case.
