THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE NOUSHAD ALI Writ Petition No. 16926 of 2006 23-03-2010 Between: M/s. Mohanlal Mahendra Kumar & Co., Guntur ……….Petitioner And The Commercial Tax Officer, Lalapet, Guntur and another. ………Respondents THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE NOUSHAD ALI Writ Petition No. 16926 of 2006 ORDER : (Per Hon’ble Sri Justice Goda Raghuram) Heard Sri Bhaskara Reddy Vemireddy, the Learned Counsel for the petitioner and Sri A.V. Krishna Kaundinya, the Learned Special Standing Counsel for Commercial Taxes. 2. G.O.Ms.No.558, Revenue, dated 13-06-1967 issued by the 2nd respondent in purported exercise of powers under Section 8(5) of the Central Sales Tax Act, 1956 (for brevity ‘the C.S.T. Act’) is challenged in this writ petition. Also challenged an assessment order dated 27-03-2006 passed by the 1st respondent, under the C.S.T. Act and in respect of the assessment year 2002-2003. 3. To the extent and relevant material, the impugned G.O. orders that in cases falling under sub-section (1) or clause (b) of sub- section (2) of Section 8 of the C.S.T. Act, no dealer having his place of business in this State shall be liable to pay any tax under the said Act in respect of sales made by him to the dealer belonging to the countries of Nepal, Bhutan and Sikkim in the course of inter-State trade or commerce; Provided that it is proved by such selling dealer to the satisfaction of the assessing authority by producing the specified certificates as to such sales. 4. Section 9 of the CST Act sets out provisions relating to levy and collection of tax and penalties in respect of sales of goods in the course of inter-state trade and commerce and other provisions connected therewith. Section 8 (5) of the CST Act, fortified by non- obstante clause qua, any other provision of Section 8, enables the State Government, if satisfied that is necessary to do so in the public interest by notification in the official gazette and subject to conditions as may be specified in such notification, to direct and no tax under this Act shall be payable by any dealer having a place of business in the State in respect of sales made by him, in the course of interstate trade or commerce to a registered dealer 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 on such lower rates then those specified in sub section (1) as may be mentioned in the notification. 5. On a true and fair construction, the provisions of Section 8 (5) of the C.S.T. Act authorize the State Government to issue a notification, to exempt a dealer from the liability to payment of tax in respect of sales of goods in the course of inter-state trade and commerce, and to the extent and subject to the conditions as may be specified in the notification. Section 8 (5) does not however delegate to the State Executive the authority to occupy a subject reserved exclusively for the Parliament under the fields of legislative enumerated in List-I of the VII Schedule to the Constitution of India. Contextually or a constitutional authority, Section 8 (5) does not authorize the State Executive to issue executive orders covering the field of foreign trade. 6. Faced with the constitutional and legal limitations on the exercise of State power under Section 8 (5) of the C.S.T. Act, the learned Special Standing Counsel for Commercial Taxes, Sri A.V.Krishna Kaundinya, fairly concedes the legal position that the notification issued by the 2nd respondent in G.O.Ms.No.558, dated 13- 06-1967 is incompetent and traverses beyond the area authorized by Section 8 (5) of the C.S.T. Act or the residuary executive power of the State, under Article 162 of the Constitution. 7. In view of the analysis and submissions above, G.O.Ms.No.558 Revenue dated 13-06-1967 is unsustainable, is set aside and declared void ab initio. Consequently, the order of assessment dated 29-03-2006 passed by the 1st respondent in respect of the petitioner for the assessment year 2002-2003, under the C.S.T. Act, 1956, inasmuch as it is on the basis of the orders in G.O.Ms.No.558, dated 13-06-1967, cannot be sustained and is consequently quashed. It would, however be open to the 1st respondent to pass appropriate orders in accordance with law. 8. The writ petition is allowed as above. There shall be no order as to costs. ___________________________ JUSTICE GODA RAGHURAM Dated: 23-03-2010 ________________________ JUSTICE NOUSHAD ALI KVR