PRISM CEMENT LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) This writ petition is filed to challenge the three trade circulars issued by the Commissioner of Sales Tax, Mumbai ('Commissioner' for short) on 27 th May 2002, 20 th July 2002 and 8 th February 2007 respectively and various notices issued by the Deputy Commissioner of Sales Tax in the month of February 2009 under Section 38 of the Bombay Sales Tax Act, 1959 (BST Act for short) for revising the assessments made for Assessment Years 2002 2003 to 20042005. While admitting the above writ petition on 25 th September 2009, further proceedings under the impugned notices have been stayed by this Court.

(2.) By the aforesaid three trade circulars, the Commissioner has informed the trade that under Section 8(5) of the Central Sales Tax Act, 1956( 'CST Act' for short) as amended by Finance Act 2002 with effect from 11 th May 2002, the State Governments are empowered to grant exemption only in respect of interState sales to the registered dealers or to the Government covered under Section 8(1) of the CST Act unless such sales are supported by declarations in form 'C' or 'D' respectively as provided under Section 8(4) of the CST Act. By the said circulars, the traders are further informed that as a result of the amendment, any Notification issued under Section 8(5) of the CST Act prior to 11 th May 2002, which is contrary to the amended Section 8(5) shall stands amended accordingly. In other words, according to the Commissioner, Section 8(5) of the CST Act as amended by the Finance Act 2002 restricts the power of the State Government to grant exemption from payment of tax in respect of sales of goods covered under Section 8(1) subject to fulfilling the conditions of Section 8(4) of the CST Act and, therefore, any Notifications issued to the contrary under Section 8(5) as it stood prior to its amendment by Finance Act 2002 shall stand modified to that extent so that, on amendment of Section 8(5), tax becomes payable in respect of sales which are not covered under Section 8(1) of the CST Act.

(3.) Based on the above interpretation of the amended Section 8(5) of the CST Act and based on the impugned trade circulars, proceedings have been initiated to recover tax on sales of goods effected in the course of inter State trade or commerce by the unit of the petitioner No.1 to the dealers or persons other than the registered dealers / Government covered under Section 8(1) of the CST Act during the period 20022003 to 20042005. In other words, the impugned proceedings are initiated to recover tax in respect of sales of goods covered under Section 8(2) at the rates specified therein as according to the Revenue, after the 2002 amendment, the State Governments do not have powers to exempt tax payable under Section 8(2).