IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. VATAP No.73 of 2010 (O&M) & connected case being VATAP No.74 of 2010 (O&M) Date of decision: 2.2.2011 State of Punjab. -----Appellant. Vs. M/s Shreyans Industries Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Jaswinder Singh, DAG, Punjab for the appellant. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of VAT Appeal Nos.73 and 74 of 2010, as it is stated that both the appeals involve common questions. 2. VAT Appeal No.73 of 2010 has been preferred by the revenue under Section 68(2) of the Punjab Value Added Tax Act, 2005 (for short, “the Act”) against the order of the Punjab VAT Tribunal dated 18.9.2009 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 VATAP No.73 of 2010 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 31.03.1995? 2) Whether the Punjab VAT Tribunal has exceeded its jurisdiction by arrogating to itself the authority to render null and void the notification dated 31.03.1995 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 inter state sales to Government) sufficed to fulfill the condition of the notification dated 31.03.1995 even though the notification specified the condition of production of declaration made in ‘Form C’ and the State Government had no authority to 2 VATAP No.73 of 2010 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) w.e.f. 1-4-2002 and the notification in question was issued on 31-3-1995. 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 alongwith the Central Sales Tax (Punjab) Rules, 1957?” 3. The assessee is a manufacturer of papers and made sales to the Government departments against ‘Form D’ charging 1% CST. The Assessing Authority held that the assessee was liable to pay 4% 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 interstate sales on such paper 3 VATAP No.73 of 2010 be reduced from 4% to 1% w.e.f. 1-4-1995. 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 31-3-1995 but the sales made by the appellant to Government departments remain interstate sale of paper and appellant had even been collecting 1% CST, on such sales and depositing the sale. When the decision of the Cabinet was not subject to production of any type of Form and the sales made by the appellant remained interstate sale, then whether appellant obtained and produced D Forms against such sales or C Forms, will not be very immaterial. In fact the provisions of obtaining D Forms is regarding sale made to Govt. departments for which other Govt. 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 interstate 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 Supplies and Disposals had government department agree to 1% CST against C/D forms. In the invoices also, 1% CST is mentioned and charged against C/D forms. In the facts and circumstances of the case where the sales had been interstate sales and conscious decision was taken by the Government to 4 VATAP No.73 of 2010 reduce CST on interstate sales of papers from 4% to 1%, then appellant cannot be made liable to pay 4% on such interstate sales only because appellant had produced/obtained D Forms for sales made to Government Department and not C Forms, as mentioned in the notification.” 4. We have heard learned counsel for the appellant. 5. It is not disputed that rate of tax applicable at the relevant time was 1%, 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. (ADARSH KUMAR GOEL) JUDGE February 02, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 5