Rajasthan High Court - Jaipur
Nav Bharat Rice And General Mills vs Commercial Taxes Officer on 6 March, 2000
Equivalent citations: [2000]120STC593(RAJ), 2001(4)WLC795, 2000(3)WLN101
JUDGMENT Rajesh Balia, J.
1. These two revisions are filed by the same dealer registered under the Central Sales Tax Act, 1956, arising out of common order passed by the Rajasthan Tax Board, Ajmer, in Appeal Nos. 477/96/ CST/Ganganagar and 478/96/CST/Ganganagar relating to the assessment periods 1982-83 and 1985-86. The appeals were decided by the Board on January 16, 1999.
2. The question relates to levy of Central sales tax on the rice sold by the dealer in the course of inter-State trade or commerce, where the dealer has paid tax on paddy, from which rice is manufactured, at the rate of 3 per cent under the Rajasthan Sales Tax Act, 1954. At the time of assessment the assessee has claimed that he is entitled to exemption from the payment of tax on rice sold in course of inter-State trade or commerce in the present case because he is governed by Notification No. 324 F.4(67)FD/ Gr. IV/76-25 dated September 8, 1976 issued under Section 8(5) of the Central Sales Tax Act, 1956 (annexure-6). The assessee has claimed that he has paid full tax prescribed under the Rajasthan Sales Tax Act on the paddy at the rate of 3 per cent without reference to Section 5-C of the Rajasthan Sales Tax Act. He is not liable to pay any tax on the sale of rice sold in the course of inter-State trade or commerce under the aforesaid notification.
3. It has been case of the revenue that there is another notification of the same date (annexure 5) produced along with petition which provides where tax has been levied under the Rajasthan Sales Tax Act, 1954, in respect of paddy, the tax leviable under the said Act on rice procured out of such paddy, shall be reduced by the amount of tax levied on such paddy. According to revenue such turnover of rice was subjected to tax at the rate of 3 per cent and his liability was reduced by adjusting the amount of tax paid by the assessee on paddy under the Rajasthan Sales Tax Act. annexure 5 being the notification specially governing the tax on paddy and rice, the notification (annexure 6) is not applicable to the petitioner. Accordingly the assessing authority charged tax at 3 per cent on the turnover relating to sale of rice in the course of inter-State trade or commerce in question. The appeals against levy of tax on rice has been dismissed by the Deputy Commercial Taxes officer as well as by the Rajasthan Tax Board. Hence these petitions.
4. It would be appropriate at this juncture to reproduce relevant part of Notification No. 23 dated September 8, 1976 issued under Section 5 of the Rajasthan Sales Tax Act prescribing rate of tax on paddy, rice and wheat and other foodgrains.
"S. No. 322 F. 4(67) FD/Gr. IV/76-23 dated the 8th September, 1976.
S.O. 127.--In exercise of the powers conferred by Section 5, Rajasthan Sales Tax Act, 1954 (Rajasthan Act No. 29 of 1954), and in supersession of all previous notifications (S. No. 258-item 1 and others) issued in this behalf under this section, the State Government hereby notifies that with immediate effect the rate of tax payable by a dealer in respect of the goods specified in column 2 of the list annexed hereto shall be as shown against them in column 3 of the said list.
Sl. No. Description of goods Rate of tax 1 Paddy, rice and wheat in all their forms including atta (flour) and bran thereof but excluding maida, suji, wheat-flakes and sewaiyan Provided that where tax has been levied in respect of paddy, the tax leviable on rice procured out of such paddy, shall be reduced by the amount of tax levied on such paddy.
3 per cent.
Explanation. For the purpose of this entry, 'bran of rice'shall also include 'rice polish'.2
...................................3
...................................4
...................................5
...................................6
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5. The notification No. 24 dated September 8, 1996 (annexure 5) issued in exercise of powers conferred under Section 8(5) of the CST Act prescribes rate of tax chargeable on the said commodity under the CST Act and Notification No. 25 dated September 8, 1976 (annexure 6) was also issued by State Government in exercise of powers conferred under Section 8(5) of the CST Act directing that no tax shall be paid on commodities mentioned therein on the condition stated in the notification. The two notifica-tions read as under :
Annexure 5 :
"S. No. 323 : F. 4(67) FD/Gr. IV/76-24 dated the 8th September, 1976 as corrected by corrigendum dated September 18, 1976.
S.O. 128.--In exercise of the powers conferred by Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), hereinafter referred to as the said Act, the State Government being satisfied that it is necessary so to do in the public interest, hereby directs that the tax payable by any dealer having his place of business in the State, in respect of sale by him from any such place of business in the course of inter-State trade or commerce in respect of--
1. Paddy, rice and wheat in all their forms including atta (flour) and bran thereof but excluding maida, suji, wheat-flakes and sewaiyan shall be calculated at the rate of three per cent :
Provided that where tax has been levied under the Rajasthan Sales Tax Act, 1954, in respect of paddy, the tax leviable under the said Act on rice procured out of such paddy, shall be reduced by the amount of tax levied on such paddy ;
(Explanation.-- For the purpose of this item, 'bran of rice' shall also, include 'rice-polish').
2...................................
3...................................
4...................................
This shall have immediate effect.
Annexure 6 :
"S. No. 324: No. F. 4(67) FD/Gr. IV/76-25 dated the 8th September, 1976.
S.O. 129.--In exercise of the powers conferred by Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), hereinafter referred to as the "said Act" and in supersession of this department Notification No. F. 5(25) FD/CT/72-2 dated 26th April, 1972, the State Government being satisfied that it is necessary so to do in the public interest, hereby directs that no tax under the said Act shall be payable in respect of sale of paddy ............. in all their forms including .............. and bran thereof.......... by any dealer having his place of business in the State of Rajasthan, from any such place of business in the course of inter-State trade or commerce, on the condition that such dealer proves to the satisfaction of the assessing authority that tax in respect of the said goods under the Rajasthan Sales Tax Act, 1954 (Rajasthan Act 29 of 1954), has been paid otherwise than under Section 5C thereof.
(Explanation.--For the purpose of this notification, 'bran of rice' shall also include 'rice polish').
This shall have immediate effect."
6. Since the notifications have been issued under Section 8(5) of the CST Act and refers to tax paid otherwise than under Section 5C of RST Act the same may be noticed.
"Section 5C of RST Act reads during the relevant period :
Concessional rate of tax for raw materials.--(1) Notwithstanding anything contained in this Act, but subject to such restrictions and conditions as may be prescribed, the rate of tax payable on the sale to or purchase by a registered dealer of any raw material for the manufacture in the State of goods other than exempted goods for sale by him within the State or in the course of inter-State trade or commerce or in the course of export outside the territory of India shall be at a concessional rate of 2 per cent of sale or purchase price of such raw material.
Explanation.--For the purpose of this sub-section, 'exempted goods' means (i) goods exempted under Sub-section (1) of Section 4, and (ii) goods liable to additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and which are exempt from the payment of tax by or under the provisions of this Act.
(2) Where any raw material purchased by a registered dealer under Sub-section (1) is utilised by him for any purpose other than a purpose specified therein, such dealer shall be liable to pay as penalty, such amount, not less than the difference between the amount of tax on the sale of such raw material at the full rate applicable thereto under Section 5 and the amount of tax payable under Sub-section (1) but not exceeding one and one quarter times the amount of tax at such full rate, as the assessing authority may determine, having regard to the circumstances in which such use was made."
Section 8(5) of the Central Sales Tax Act reads as under :
"(5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the official gazette, and subject to such conditions as may be specified therein, direct--
(a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the 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 ;
(b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made in the course of inter-State trade or commerce, by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in subsection (1) or Sub-section (2) as may be mentioned in the notification."
7. Here it may be noticed that under Section 5C of the State Act the concessional rate of tax on raw material was 1 per cent until March 3, 1982 and thereafter it was substituted by 2 per cent vide Act No. 14 of 1982. With effect from March 8, 1988 by Act No. 3 of 1988, the concessional rate under Section 5C of the RST Act was increased to 3 per cent from 2 per cent. Entire period in question is within the span when general rate of tax on paddy was 3 per cent. Under notification No. 23 referred to above and concessional rate of tax under Section 5C was 2 per cent of the turnover of paddy as raw material for procuring rice.
8. Notifications, annexure 5 and annexure 6 if read in the light of statutory provisions there remains no doubt about the purport of aforesaid three notifications respectively.
9. Section 5 of the Rajasthan Sales Tax Act empowers the State Government to notify rate of tax payable by the assessee in respect of its turnover and in respect of different commodities. Notification No. 23 (annexure 2), is a notification prescribing rate of tax on sale of paddy, rice and other commodities, within State of Rajasthan. It has prescribed general rate of tax on rice at 3 per cent.
10. Section 8 of the Central Sales Tax Act governs the rate of tax payable under the Central Sales Tax Act. Under Sub-section (1) of Section 8 prescribes rate of tax at 4 per cent on sales by every dealer which is in the course of inter-State trade or commerce to Government and to registered dealers other than the Government in respect of the goods of the description referred to in Sub-section (3) of Section 8. Sub-section (2) of Section 8 provides rate of tax to be charged where the goods is not governed by subsection (1) of Section 8 and relates to the sale of goods in the course of inter-State trade or commerce in respect of declared goods, to be calculated (at twice the rate) applicable to the sale or purchase of such goods inside the appropriate State and in the case of goods other than declared goods, shall be calculated at the rate of 10 per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. However, Sub-section (5) of Section 8 which is relevant for the present purposes provides exception to levy of tax under the sub-sections (1) and (2) of the Section 8 of the CST Act. Sub-section (5) enables the State Government to grant concession in payment of tax leviable under sub-sections (1) and (2) in two ways. One by directing that no tax shall be payable under the CST Act by any reason having his place of business in the State in respect of such goods or class of goods as may be specified in the notification and secondly it also enables the State Government to direct the tax on inter-State trade or commerce shall be calculated at such lower rates than those specified in Sub-section (1) or Sub-section (2). There is no inhibition that State Government can exercise its power under Section 8(5) in only one of the ways in respect of any subject-matter of such concession. It can exercise its power both for providing lower rate of tax than what has been provided under sub-sections (1) and (2) of Section 8 of the CST Act as well as also direct that in certain circumstances tax at such lower rate may also be not paid.
11. We find that rate prescribed in Sub-section (1) is 4 per cent of the turnover and twice the rate in State on declared goods, and 10 per cent in case of other goods is the rate prescribed under Sub-section (2) of Section 8 of the CST Act. The State Government is empowered to prescribe lower rate of tax than the aforesaid limits, as well as it can direct that no tax shall be payable by any dealer.
12. Section 5C of the Rajasthan Sales Tax Act which has been omitted w.e.f. September 13, 1989 enabled any seller or purchaser who is dealer of any raw material for the manufacture in the State of goods other than exempted goods for sale by him at concessional rate of tax on the sale or purchase price of such raw material. Section 5C also envisages concession in rate of tax prescribed under Section 5 of the Rajasthan Sales Tax Act. Obviously concessional rate under Section 5C is lower than the rate prescribed generally under Section 5 of the RST Act.
13. In the present case as it is apparent from the three notifications noticed above that by first notification No. 23 (annexure 2) in the series of three Notifications issued on same date, viz., September 8, 1976, rate of tax on turnover of paddy as has been notified under Section 5 of the State Act is 3 per cent only and it would also be seen that the concessional rate prescribed under Section 5C of the RST Act was 2 per cent only during the relevant period in question. By second notification No. 24 in the series of notification dated September 8, 1976 (annexure 5), the State Government has directed that calculation of tax on the paddy, rice and wheat in all their forms including atta and bran thereof but excluding maida, suji, wheat flakes and Sewaiyan shall be made at the rate of 3 per cent. That is to say the State Government in exercise of its power conferred under Section 8(5) have directed to levy of tax at 3 per cent only which is lower than the rate that has been prescribed under sub-sections (1) and (2) of the CST Act. Apart from directing computation of tax at lower rate of tax by this notification it was also envisaged tax on rice procured out of paddy which has suffered tax under relevant law the actual amount of tax payable on turn-over of rice at the rate prescribed therein is to be reduced by amount of tax suffered on paddy from which rice has been procured. Lastly by third notification (annexure 6) No. 25 dated September 8, 1976 also in exercise of powers under Section 8(5) of the CST Act, the State Government has directed that no tax shall be paid in respect of sale of any commodity including rice where tax has been paid in respect of such goods under the RST Act otherwise than under Section 5C of that Act. Obviously this notification applies to cases where tax on the raw material from which commodity mentioned in the aforesaid notification, annexure 6, has been procured if the same has suffered tax as prescribed under Section 5 of the RST Act without availing the benefit of concession under Section 5C. That part of the turnover of a dealer in respect of sales of commodities referred to in annexure 6 is not to suffer any tax on such sale in the course of inter-State trade or commerce. This was in exercise of power for directing full exemption from payment of tax under the CST Act.
14. There is no incongruity in the three notifications which may appear if read without reference to the enabling provisions of the Act. All the three notifications have been issued in exercise of distinct powers and operate in their respective fields. Notification No. 23 governs general rate of tax on turnover of rice of sales within the State. Notification No. 24 directs computation of tax payable under the CST Act by providing rate of tax as well as amount to be adjusted to determine the liability of tax arising generally under the CST Act on sales of commodities referred to in the notification, and notification No. 25 envisages condition in which turnover of rice on sales in the course of inter-State trade or commerce is completely exempt from payment of tax which otherwise will be payable in terms of Notification No. 24.
15. The facts in the present case are not disputed that during the relevant period in question prescribed rate of tax on turnover of paddy was 3 per cent under Section 5 of the RST Act and the petitioner has paid within the State of Rajasthan tax on paddy at the rate of 3 per cent and not avail the benefit of concessional rate of tax at 2 per cent under Section 5C of the RST Act. Amount of tax on the turnover of rice procured from such paddy and sold in the course of inter-State trade or commerce, if these were to be taxed, the same had to be calculated at the rate of 3 per cent and amount of tax paid on paddy has to be adjusted before raising any demand under CST Act in terms of Notification No. 24. However, under Notification No. 25 direction of the State Government that no tax shall be paid on such sales of the rice where tax on paddy, out of which such rice has been procured, is paid at general rate without availing benefit of concession under Section 5C of the State Act. Thus liability determined under Notification No. 24 will become payable only in respect of such turnover where rice is procured from paddy which has suffered tax only at concessional rate of 2 per cent under Section 5C of the State Act, during the period in question but not otherwise. There is no dispute that dealer has not paid tax at 2 per cent under Section 5C of the RST Act, but has paid tax at 3 per cent as provided in notification under Section 5 of the RST Act.
16. The revenue authorities have concurrently erred in not correctly understanding the true import of scheme of the three notifications and in ignoring that State Government who has issued two notifications simultaneously cannot be presumed to have issued a redundant notification. Principle that special provision excludes application of general has no application to the present case. Moreover the State Government has itself issued such clarification on February 28, 1977.
17. As a result in the facts and circumstances of the case the petitioner was entitled to avail the benefit of Notification No. 25 (annexure 6) under Section 8(5) of the CST Act where direction was not to pay any tax on the sales of rice made in the circumstances in which the petitioner has made.
18. Accordingly these revisions are allowed. The orders of lower authorities are set aside.
There shall be no orders as to costs.