Commissioner of Sales Tax, M.P. Vs. Madhya Bharat Papers Ltd.
Email(From the Judgment and Order dated 15.3.96 of the Madhya Pradesh High Court in M.C.C. No. 315 of 1990)
(From the Judgment and Order dated 15.3.96 of the Madhya Pradesh High Court in M.C.C. No. 315 of 1990)
Mr. A.K. Chitale, Senior Advocate, Mr. Niraj Sharma, Mr. Krishna-nand Pandey, Advocates with him for the Respondent.
Central Sales Tax Act, 1956
Section 7(1), (2) with M.P. General Sales Tax Act, 1958 and notification dated 29.6.82 – New industrial unit – Manufacture and sale of paper in trible area – Unit registered as “dealer” under both Acts – Eligibility certificate issued by Directorate of Industries on 19.2.85 that unit has gone in production on 10.1.84 i.e. after 1.4.81 – Exemption denied as dealer registered under Section 7(2) and not under Section 7(1) – If not entitled to exemption. Held that it is immaterial whether dealer is regis-tered under Sub-Section (1) or (2). Once registered, dealer is entitled to exemption.
The requirement is satisfied if the dealer is registered under the State Act and the Central Act-both; it is immaterial whether the registration under the Central Act is under sub-section (1) or sub-section (2) of Section 7. A registration under sub-section (2) of Section 7 is certainly a registration under the Central Sales Tax Act. Liability to pay tax arose on commencement of production and business on 10.1.1984 whereafter exemption from payment of sales-tax was claimed under the notification. Without regard to the fact whether the assessing authority was entitled to go behind the certificate of eligibility issued by the Directorate of Industries, the entitlement of the respondent for exemption from payment of tax under the notifi-cation was clearly made out as the requirements of Column (1) of the notification were also satisfied. (Paras 9 & 10)
1. In exercise of the powers conferred by sub-Section (5) of Section 8 of the Central Sales Tax Act, 1956, the Government of Madhya Pradesh issued a notification No.F.No.A3-41-81(31)-ST-V Dated the 29th June, 1982 allowing exemption from payment of tax to certain dealers subject to satisfying the requirements of the notification. The relevant part of the notification reads as under:-
NOTIFICATION
F.No.A3-41-81(31)-ST-V Dated the 29th June, 1982.
Whereas, the State Government is satisfied that it is necessary so to do in the public interest;
Now, therefore, in exercise of the powers conferred by sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (No.74 of 1956), the State Government hereby directs that no tax under the said Act shall be payable with effect from the Ist July, 1982, by the dealers specified in column (1) of the Sched-ule below, who have set up industry in any of the districts of Madhya Pradesh specified in the annexure to this notification (………..) in respect of sales in the course of inter-state trade or commerce of goods produced / manufactured by them, for the period specified in column (2), subject to the restrictions and conditions specified in column (3) of the said Schedule:-
SCHEDULE
_____________________________________________________________
Class of Period Restrictions and
dealers condition subject to which exemption has been granted.
(1) (2) (3)
______________________________________________________________
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2. Dealers who –
a)are reg- inthecase of The dealer
istered an industry specified
under the located in a incolumn (1)
Madhya district shall continue
Pradesh specified in to furnish the
General category ‘A’of prescribed
Sales Tax Part-II of the returns under
Act, 1958 Annexure, up to the Central
(No.2 of 1959) the date on Sales Tax
and the which period Act,1956
Central Sales of 3 years, (No.74 to
Tax Act, beginning from 1956). and
1956 (No. the date of 1956), shall
commence- produce
ment of before the
production, assessing
expires authority
at the time of his assess ment a certi – ficate issued by the ( I
dustries
Commissi-
oner) Madhya. Pradesh, or any officer au thorised by him for the purpose,
certifyingthat
suchdealer is eligible to claim the ex emption
from payment of tax and that he has optedfor the scheme of ex emption from payment of tax under the Madhya Pradesh Gen eral Sales Tax Act, 1958 (No.2of 1959) Under the separate Rev enue Depart ment Notifica tion No. A-3- 41-81(35)-ST-V dated 23.10.81.
xxx xxx xxx xxx
2. The respondent, a public limited company, is a new industrial unit engaged in manufacture and sale of paper at Champa in the backward tribal area of District Bilaspur in the State of Madhya Pradesh. It is not disputed that the respondent industrial unit satisfies the requirements of Columns (2) and (3) of the notification. It is also not disputed that the respondent was registered as a dealer under the M.P. General Sales Tax Act, 1958 as also under Section 7(2) of the Central Sales Tax Act, 1956. The registration under the Central Sales Tax Act is dated 12.11.1981. Having taken into consideration the two sales tax registrations as ‘dealer’ under the two Acts i.e., the State and the Central Acts, the Directorate of Industries issued a certifi-cate of eligibility dated 19.2.1985 for exemption from payment of sales tax whereby it was certified that the respondent was a new unit having gone into production on 10.1.1984 i.e. after 1.4.1981 and as such eligible for exemption from payment of sales tax. It was also certified that the unit being located in District Bilaspur – category Backward ‘A’, was eligible for exemption for the period upto 9.1.1987.
3. The Assistant Commissioner of Sales Tax formed an opinion that for the purpose of claiming benefit of the exemption notification a dealer registered under the State Act has also to be registered under sub-section (1) of Section 7 of the Central Sales Tax Act but the re-spondent was registered under sub-Section (2) and not sub-Section (1) of Section 7 of the Central Sales Tax Act and therefore was not enti-tled to the benefit of the exemption notification dated 29.6.1982. The Appellate Deputy Commissioner agreed with the Assistant Commis-sioner. In an appeal preferred by the respondent the Board of Revenue reversed the finding of the authorities below and held that on the basis of the certificate of eligibility issued by the Directorate of Industries, the respondent was entitled to exemption from payment of sales tax and therefore the assessment and consequential penalty were unwarranted.
4. At the instance of the Revenue the following question was stated for the opinion of the High Court under Section 44 of the M.P. General Sales Tax Act:-
“Whether on the facts and circumstances of the case, the Tribun-al was justified in holding that the dealer is eligible to avail of the exemption under Separate Revenue Department Notification No. A-3-41-81-(31)-ST-V, dated 29.6.82 in respect of the Inter State sale of goods manufactured by him by virtue of his holding an eligibility certificate in fulfilment of one of the conditions laid down in the said notification for eligibility, although he was not holding a Registration Certificate under sub-section (1) of Section 7 of the Central Sales Tax Act, 1956.”
5. The High Court of Madhya Pradesh has answered the question in favour of the respondent-assessee forming an opinion that the eli-gibility certificate issued by the Directorate of Industries was conclusive and binding on the assessing authorities and they could not go into the question whether the respondent-assessee was eligible for the benefit of exemption inspite of his holding the eligibility cer-tificate by entering into the question of the respondent’s registra-tion whether it was under sub- Section (1) or (2) of Section 7 of the Central Sales Tax Act. Feeling aggrieved the Revenue has come up in appeal before this Court.
6. It was submitted by the learned counsel for the appellant that on a full reading of the notification and placing a reasonable construction thereon the expression – “……registered under the Central Sales Tax, 1956”, as employed in the first column of the notification should be understood as meaning the registration under sub-Section (1) of Section 7 of the Central Sales Tax Act; registration under sub-Section (2) of Section 7 of the Central Sales Tax Act is not covered by the expression and is of no relevance for the purpose of claiming exemption under the notification.
7. Section 7 of the Central Sales Tax Act (relevant part thereof) reads as under:
Registration of dealers –
(1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed.
(2) Any dealer liable to pay tax under the sales tax law of the appro-priate State, or where there is no such law in force in the appro-priate State or any part thereof, any dealer having a place of busi-ness in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under this Act, apply for registra-tion under this Act to the authority referred to in sub-section (1), and every such application shall contain such particulars as may be prescribed.
Explanation – For the purpose of this sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law of the appro-priate state notwithstanding that under such law a sale or purchase made by him is exempt from tax or a refund or a rebate of tax is admissible in respect thereof.
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8. A bare perusal of the above quoted provision goes to show that every dealer liable to pay tax under the Central Sales Tax Act shall secure a registration under sub-Section (1) of Section 7. Such deal-ers as have a place of business in a State and are not liable to pay tax under the Central Act may still have themselves registered under sub-Section (2) of Section 7 of the Central Sales Tax Act if (i) they are dealers liable to pay tax under the Sales Tax law of the appro-priate State (notwithstanding the fact that the sales or purchases made by them are exempt from tax or a refund or a rebate of tax is admissible in respect thereof), or (ii) there is no State Legislation attracting liability to pay tax on such dealers. Such a prayer for registration shall be made to the same authority who grants registra-tion under sub Section (1). Registration under sub-section (1) is compulsory; registration under sub-section (2) is optional. For the purpose of securing a registration under sub-section (2) abovesaid the dealer need not necessarily be liable to pay any amount of tax.
9. The learned counsel for the appellant submitted that the dealers liable to pay tax under the Central Act have been dealt with only under sub-section (1) of Section 7; sub-section (2) refers to regis-tration under the sales-tax law of the appropriate State if there be one in force and in as much as the relevant notification dated 29.6.1982 deals with exemption from payment of tax under the Central Act, it is necessary that the dealer should have been registered under sub-section (1) of Section 7 of the Act. However, we find no merit in the contention. The language of the notification is plain and simple. It admits of no ambiguity. The requirement of Column (1) is satisfied if the dealer is registered under the State Act and the Central Act-both; it is immaterial whether the registration under the Central Act is under sub-section (1) or sub-section (2) of Section 7. A registra-tion under sub-section (2) of Section 7 is certainly a registration under the Central Sales Tax Act. This is clear from the language of sub- section (2) of Section 7 which speaks, inter alia, – “….may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act to the authority referred to in sub-section (1)….”
10. The learned counsel for the respondent-assessee has rightly point-ed out that the certificate of registration ‘valid from 12.11.1981 until cancelled’ was secured by the respondent though on the date of registration it was not liable to pay tax under the Central Act. Liability to pay tax arose on commencement of production and business on 10.1.1984 whereafter exemption from payment of sales-tax was claimed under the notification. Without regard to the fact whether the assessing authority was entitled to go behind the certificate of eligibility issued by the Directorate of Industries, the entitlement of the respondent for exemption from payment of tax under the notifi-cation was clearly made out as the requirements of Column (1) of the notification were also satisfied.
11. The appeal is held liable to be dismissed though for a reason different from the one assigned by the High Court. The question referred to for the opinion of the High Court is answered in favour of the assessee and against the Revenue. Accordingly, the appeal is dismissed. No order as to the costs.
