Dismissed

State of Hp v. Ms Techer Power Solutions Pvt. Ltd.

Himachal Pradesh HC16 May 2024CR/29/2018

Case brief

AI extract

What is this about?

Revision petitions by revenue against Tribunal decisions upholding a 2005 Himachal Pradesh notification granting concessional 1% CST on inter-State sales by IT and biotech units against CC forms. The High Court held the State Government retained exemption powers under Section 8(5)(b) despite the 2007 amendment and dismissed the revisions, permitting refund claims subject to proving tax burden was

What did the court decide?

Revisions dismissed; assessee may apply within six weeks to show tax burden not passed on; if entitled, refund with RBI fixed-deposit rate interest from due date till realization.

State of Hp Vs Ms Techer Power Solutions Pvt… — GST and Indirect Tax | Himachal Pradesh HC (2024)

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IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA

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C.R. No.29/2018 a/w C.R. Nos. 35/2021, 36/2021 & 64/2022

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Reserved on: 7.5.2024

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Decided on: 16.5.2024

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1. C.R. No. 29/2018

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The State of Himachal Pradesh & ors. …..Petitioners Versus M/s Techer Power Solutions Pvt. Ltd. ….Respondent 2. C.R. No. 35/2021 The State of Himachal Pradesh & ors. …..Petitioners Versus Tritronics India Pvt. Ltd. ….Respondent 3. C.R. No. 36/2021 The State of Himachal Pradesh & ors. …..Petitioners Versus Swelect Energy System Ltd. ….Respondent 4. C.R. No. 64/2022 The State of Himachal Pradesh & ors. …..Petitioners

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Versus

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M/s Net Web Technologies ….Respondent

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Coram:

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The Hon’ble Mr. Justice Tarlok Singh Chauhan, Judge . The Hon’ble Mr. Justice Sushil Kukreja, Judge.

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Whether approved for reporting?¹ Yes

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For the petitioner: Mr. Anup Rattan, A.G. with Mr. Ramakant Sharma, Ms. Sharmila Patial, Addl. A.Gs. and Mr. Raj Negi, Dy.A.G. For the respondents: Mr. Satish Kumar Avasthi, Advocate, for respondent in C.R. No. C.R. No. 29/2018. Mr. R. L. Sood, Sr. Advocate with Mr. Arjun Lall, Mr. Akash Thakur and Mr. Sahil Kumar, Advocates, for the respondent(s) in C.R. Nos. 35, 36/2021 and C.R. No. 64/2022.

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Justice Tarlok Singh Chauhan

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Aggrieved by the order passed by the Tax Tribunal Dharamshala, camp at Shimla, the revenue has filed the instant revision petitions.

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2 Since identical question of law and facts arise for consideration in all these petitions, they were taken up together for consideration and are being disposed of as such. However, for the sake of brevity and in order to maintain clarity, facts are being extracted from C.R. No. 35/2021.

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3 Brief facts of the case are that the assessing authority found the respondent(s) herein to be still conducting sale against CC forms and held that notification dated 30.6.2005, whereby the tax was payable under sub-section 2 of

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1 Whether reporters of the local papers may be allowed to see the judgment? Yes.

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Section 8 of the Central Sale Tax Act (for short, the CST Act) on the sale of goods made in the course of inter-state trade or commerce by the industrial units manufacturing information technology and bio technology goods to the non-dealers, to be calculated @ 1% subject to furnishing of declaration in form CC, had become inoperative by the Taxation Laws (Amendment) Act 2007, vide notification dated 28.3.2007 issued by the Ministry of Law and Justice (Legislative Department, New Delhi. The assessing authority thereafter held that the tax should have been paid by the respondents at VAT rate and not @ 1% against the CC-forms and accordingly levied differential amount of tax, interest and penalty upon the respondents leading to the impugned demand.

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4 The respondent(s) preferred writ petition(s) before this court, however the same came to be disposed of by directing the respondent(s) to avail of alternate remedy. The appellate authority thereafter rejected the appeal(s) that were preferred before it constraining the respondents to file the second appeal(s) before the learned Tax Tribunal, which was allowed by the Tax Tribunal, constraining the appellant-revenue to file the instant revision petition(s).

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5 All these revision petitions have been admitted on following substantial questions of law:-

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(i) Whether the finding of the Ld. Tribunal that the Taxation Amendment Act, 2007, by omitting the words "or the Government" and words "or Sub-Section 2", from Section 8(5) and retaining all other provisions of 8(5) (a) (b), it can clearly be said that the provisions which relate to the power of the State Government to grant total/partial exemption from tax payable have remained intact is not against the mandate of Law laid down by the Apex Court wherein it has been held that the provisions which are "substituted" or "omitted" must be considered as if they "had never existed" and any notifications or bye-Law made under the repeal provisions cease to have any validity if the amendments do not have any saving clause?

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ii) Whether the Ld. Tribunal has not failed to appreciate that the State Government after the Central Sales Tax Amendment Act, 2007 has been denuded of its erstwhile competence to issue notification under section 8(5) (b) reducing the rates of CST applicable under section 8(2) and is no longer empowered to reduce the CST rate applicable under section 8(2)?

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iii) Whether the notification dated 30.6.2005 issued prior to amendment of section 8(5) (b) does not run counter and has not become inconsistent with the legislative declaration and cannot prevail over the amending Act of 2007 and cannot override the efficacy of legislative will? iv). Whether the Ld. Tribunal has failed to appreciate that the aforesaid notification has now after the amendment to

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be read harmoniously with the amended provisions and to avoid its inconsistency with the amended provisions of the Act, as the notification cannot operate de-hors these provisions and travel beyond the parent and enabling provisions and it cannot now allow any concessional rate of CST levied under section 8(2) of the Act on sales made to the non-dealers, who are not now covered by section 8(5)(b)?

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6 Since all these questions of law are intrinsically interrelated and interconnected, therefore, they are taken up together for consideration and are being answered by common reasoning.

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7 It is vehemently argued by Mr. Anup Rattan,

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learned Advocate General, assisted by Mr. Ramakant Sharma, learned Additional Advocate General that since the words "or sub-section 2" of Section 8 of CST Act have been omitted in terms of the amendment made in 2007, therefore, the power of the State Government to issue any exemption notification in all cases, other than those relating to registered dealer, has been done away with.

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8 It is argued that this is in consonance with the statement of objects and reasons of the Taxation Laws (Amendment) Bill 2007. He further urges that by the omission

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of the words "or sub-section 2" from Section 8(5) of the CST Act, the intention is to restrict the grant of exemption only to registered dealers and the same was done because the CST Act was to be replaced and phased out with the proposed introduction of the GST Act.

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9 It is also argued that a similar attempt had been made at the time of amendments made to the CST Act in 2002, however, since the words "or sub-section 2" had not been omitted at the time of 2002 amendment, the objection of the revenue was rejected. But, with the introduction of the 2007 amendment, the said words stand omitted and the same can therefore only mean that the power of the State Government to grant exemption in the case of "unregistered dealers", stands excluded.

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10 Lastly, learned Advocate General has placed reliance on the observations made by the Bombay High Court in Prism

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Cement Limited vs. State of Maharashtra, (2012) SCC

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online Bom. 1262 to contend that since the observations therein state that the legislature had retained in Section 8(5), the words relating to power to grant exemption under Section 8(2) and which words "sub-section 2" stand now omitted, therefore by implication it must be understood that the power to

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grant exemption in case of unregistered dealers has been done away with.

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11 On the other hand, Mr. R. L. Sood, learned Senior Advocate assisted Mr. Arjun Lal, Advocate, representing the assessee would urge that when Prism Cement’s case (supra) was decided by the High Court of Bombay, by that time amendment of 2007 had already come into force. In fact, the same is recognized in para 32 of the judgment in Prism Cement’s case. To the contrary, it was the case of the revenue before the Bombay High Court that the amendment of 2007 was only clarificatory and it was contended that reference to the words "to any person or such class of persons as may be specified in the notification", no doubt creates difficulty in accepting the contention of the Revenue. Alternatively, it was sought to be argued by the Revenue that the aforesaid words must be treated as redundant and ignored as is evident from Paras 29, 30 and 32 of of judgment in Prism Cement’s case.

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12 It is urged by Mr. Sood that the issue in question is squarely covered by the judgment rendered by the Madras High Court in Diebold Systems (P) Limited Versus Additional Commercial Tax Officer 2010 SCC online Mad 6400 .

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13 Since the first category covers a registered dealer or government (government stands omitted in 2007), the latter category has to be a class of person other than a “registered dealer” .

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14 Thus, it cannot be said that the State Government has no power to reduce tax in respect of other classes except registered dealers. It is also pointed out that similar argument was raised by the Revenue before the Bombay High Court in Prism Cement’s case that the words "any person or to such class of persons as may be specified in the notification" in Section 8(5)(b) are referable to the registered dealers as is evident from para 56 and para 57 of the said judgment.

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15 Lastly, it is contended by Mr. Sood that it is well established principle in taxing statues that there is no room for any intendment and regard must have been given only to the clear meaning of the words and the language of the notification/amendment etc etc.

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16 We have heard the learned counsel for the parties and have also gone through the material place on record.

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17 The primary question that arises for consideration in

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all these petitions is whether in terms of the amendment introduced under the Finance Act of 2007, power to grant

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exemption in respect of categories other than “registered dealers” under Section 8 (5)(b) of the CST Act, has effectively been done away with by the assessing authority and appellate authority and the ancillary question that arises for consideration qua the scope of the expression “ to such person or class of persons as may be specified in the notification” as used in Section 8 (5)(b) of the CST Act and whether the scope of the same can only be limited to “registered dealers” as has been sought to be argued by the Revenue-appellant.

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18 At the outset, we may express our dismay and disapproval in the manner in which the State while drafting the petition(s) has quoted Section 8 (5)(b) clearly omitting therein relevant portion regarding “to such persons or class of persons as may be specified in the notification” .

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19 We have no hesitation to conclude that such extraction of Section 8(5)(b) of CST Act cannot be brushed aside as being reckless but rather appears to be a deliberate exercise. Be that as it may, we would like to leave this issue to rest here.

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20 In order to appreciate substantial questions of law, it shall be apposite to reproduce section 8 of the CST Act, which reads as under:-

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8. Rates of tax on sales in the course of inter-State trade or commerce.—

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[(1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be three percent, of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower:

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Provided that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section.

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(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State.

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Explanation— For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.];

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[***]

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(3) [The goods referred to in sub-section (1)]

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[***]

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(b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or

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processing of goods for sale or 7 [in the telecommunications network or] in mining or in the generation or distribution of electricity or any other form of power; (c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale; (d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in [***] clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause (c).

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[(4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority: Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit.]

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[(5) Notwithstanding anything contained in this section, the State Government may [on the fulfillment of the requirements laid down in sub- section (4) by the dealer] 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,—

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(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

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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 at such lower rates than those specified in sub-section (1) 5 [] as may be mentioned in the notification;

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(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 [to a registered dealer [] 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 sub-section (1) 8 [] as may be mentioned in the notification.]

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[(6) Notwithstanding anything contained in this section, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the course of inter-State trade or commerce to a registered dealer for the purpose of setting up, operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, reengineering, packaging or for use as packing material or packing accessories in a unit located in any special economic zone or for development, operation and maintenance of special economic zone by the developer of the special economic zone, if such registered dealer has been authorized to establish such unit or to develop, operate and maintain such special economic zone by the

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authority specified by the Central Government in this behalf.]

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(7) The goods referred to in sub-section (6) shall be the goods of such class or classes of goods as specified in the certificate of registration of the registered dealer referred to in that sub-section.

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(8) The provisions of sub-sections (6) and (7) shall not apply to any sale of goods made in the course of interState trade or commerce unless the dealer selling such goods furnishes to the [prescribed authority referred to in sub section (4) a declaration in the prescribed manner on the prescribed form obtained from the authority specified by the Central Government under sub- section (6) in subsection 5 duly filled in and signed by the registered dealer to whom such goods are sold.

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Explanation— For the purposes of sub-section (6), the expression "special economic zone" has the meaning assigned to it in clause (iii) to Explanation 2 to the proviso to section 3 of the Central Excise Act, 1944 (1 of 1944).

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21 If one was to advert to the scheme of Section 8 of the

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CST Act, it would show that insofar as sub-section (1) is concerned, the same provides for the rate of interest which is to be charged in case of inter-state sales made to “registered dealers” . Earlier, Section 8(1) also related to sales made to the "government" , however the same i.e. government was omitted after the amendment introduced in 2007.

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22 Section 8(2) of the CST Act provides for a rate of interest which is to be levied in respect of those cases which are not covered under Section 8(1).

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23 Noticeably, under the pre-amended provisions, interest had been specified e.g. @ 10% in certain instances. However, post amendment since the rate of tax payable is same as payable in the respective States, obviously no rate of tax has been specified and it is for this precise reason that the words "or sub-section 2" has been omitted in Section 8(5) (a) and 8(5)(b).

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24 Section 8(3) of the CST Act specifies the goods which are referred to in Section 8(1).

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25 Section 8 (4) of the CST Act specifically provides that the provisions of sub-Section shall not become applicable until and unless the dealer in question furnishes a declaration in the prescribed form.

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26 Noticeably, the Hon'ble Supreme Court in Digvijay Cements Co Ltd. vs State of Rajasthan (2000) 1 SCC 688

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had held that the applicability of Section 8 (1) is not dependent on the filling of form as provided under Section 8 (4) and it was to overcome and remove the basis of the judgment that the Parliament introduced an amendment in Section 8 (5) w.e.f.

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11.5.2002, wherein the requirements laid down in sub-Section 4 were held to be mandatory.

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27 Now as regards sub-Section 8 (5) of the CST Act, it is important to note that the same starts with a non-obstante clause, meaning thereby the same is effective dehors anything else that can be contained in Section 8.

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28 Insofar as Section 8(5)(a) CST is concerned, it specifically provides for a total exemption on payment of tax by any dealer, in respect of sales by him to a registered dealer or that the tax so payable shall be at rates lower than those specified in sub-Section (1). Therefore, in substance, section 8 (5)(a) is restricted to in its application only to “registered dealer(s)” . The words "or government" have been omitted by the 2007 amendment.

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29 The expression "or sub-section 2" as was used in Sections 8(5) (a) and 8(5)(b), is preceded by the words "or that the tax on such sales shall be calculated at such lower rate than those specified in sub-section (1) [sub-section 2 omitted] as may be mentioned in the notification" . Thus, relevance of specifying sub-section 1 and earlier sub-section 2, is/was for the limited purpose of specifying that in case a notification is issued under Section 8(5)(a) or 8(5)(b), then either no rate of interest shall be

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payable or the rate of interest payable shall be calculated at a

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lower rate than the rates specified in sub-section 1 or subsection 2, which now stands omitted.

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30 The omission of "sub-section 2" is for a specified purpose, as after amendment in 2007, there was no rate of interest mentioned in Section 8 (2).

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31 That apart, this is the provision under which the State Government has been empowered to issue an exemption notification, subject to the conditions that may be specified therein.

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32 In the instant case, it is applicability of Section 8 (5)(b) of the Act, which is in question. A reading of the first part of sub-Section (b) indicates that the same is made applicable in respect of sales of goods to a “registered dealer” , by any dealer having his place of business in the State.

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33 Second part of the definition expands the scope of application of the provision by making it applicable in respect of sales that may be made by any dealer or 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” .

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34 In our considered opinion, use of the phrase can only relate to all persons other than “registered dealers”.

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35 Noticeably, second part of Section 8(5)(b) has

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remained untouched even after amendment introduced on 1.4.2007.

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36 In such circumstances, obviously the Tribunal has rightly held that the amendment 2007 cannot be interpreted to mean that the State Government has lost power to grant exemption under Section 8(5)(b) of the CST Act either in the case of sales made to a registered dealer or specifically in case of sales made by and to such person or class of person as may be specified in the notification. The power of the State Government to grant total or partial exemption continues to be in force despite amendment.

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37 Sections 8(5)(a) and 8 (5)(b) empowered the State Government to grant total or partial exemption not only in respect of sales of any goods or class of goods to a registered dealer/government, but also empowered to grant total or partial exemption in respect of inter State sales to unregistered dealers of any person or class of persons specified in the notification.

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38 As observed above, Section 8(5)b) remains untouched even after the amendment of 2007, therefore, empowers the State Government to grant exemption in respect of categories other than registered dealers.

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39 In taking this view, we are duly supported by

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judgment of the learned Division Bench of Bombay High Court

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in Prism Cement Limited vs. State of Maharashtra, 2012

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SCC Online Bom 1262 , wherein it was held as under:

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56. The argument of the Revenue that the words 'any person or to such class of persons as may be specified in the notification' in Section 8(5) (b) are referrable to the registered dealers/Government specified in the notification cannot be accepted, because, Section 8(5)(b) distinctly refers to two separate notifications i.e. one notification specifying the names of the registered dealer / Government and another notification specifying the name of any person or class of persons to whom the State Government considers it necessary in public interest to grant total / partial exemption from tax payable under Section 8(1) or Section 8(2). It is relevant to note that the words 'any person or class of persons' were inserted to Section 8(5) by Central Sales Tax (Amendment) Act, 1972, with a view to empower the State Governments to grant in public interest total / partial exemption from tax payable under the CST Act as it was not possible to visualise in advance the cases in which such exemptions or reductions may be necessary. Therefore, when the power to grant exemption to any person or class of persons was conferred upon the State Governments to cater to the needs of unforeseen circumstances, it cannot be said that power has been taken away especially when Section 8(5) as amended by Finance Act 2002 specifically refers to the power of the State Governments to grant exemption from

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tax payable in respect of inter-State sales to any person or any class of persons. In other words, when the legislature with a view to meet the unforeseen circumstances had conferred power upon the State Governments to grant total / partial exemption from tax payable by any person or class of persons under Section 8(1) or 8(2), in the absence of any material to show that either the unforeseen circumstances have ceased to exist or the State Governments have misused such power or for any other reason it became necessary to withdraw such power, the self destructive argument of the Revenue that by 2002 amendment the powers of the State Governments to grant exemption to any person or class of persons has been taken away cannot be accepted, especially the language used in the amended Section 8(5) negates such argument of the Revenue.

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57. The alternative argument of the Revenue that the words 'sub- section (2)' as also the words 'to any person or to such class of persons' in Section 8(5)(a) and 8(5)(b) must be treated as redundant and ignored is equally unsustainable, because, it is well established in law that the intention of the legislature is to be gathered from the language used in the statute and if the language is clear and unambiguous then that meaning has to be adopted and it is not open to the Court to give a different meaning by treating the words used in the statute as redundant or superfluous. The object of 2002 amendment was to make it mandatory to comply with the requirements of Section 8(4) in respect of transactions covered under Section 8(1) and while keeping the powers already conferred upon the

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State Governments intact, the said object has been achieved by inserting necessary words to that effect by the 2002 amendment. Therefore, the argument of the Revenue that reference to the words 'sub-section (2)' and the words 'any person or class of persons' in Section 8(5) as amended by Finance Act 2002 are redundant or surplus cannot be sustained. In this view of the matter, we do not consider it necessary to deal with the decisions relied upon by the counsel for the Revenue in support of their contention that the redundant or surplus words in a statute must be ignored.

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40 To the similar effect is the judgment rendered by

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Madras High Court in Diebold Systems (P) Limited vs.

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Additional Commercial Tax Officer (Iac), Puducherry, 2010

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SCC Online Mad 6400 , wherein question No.3 was framed whether under Section 8(5)(b) of Central Sales Tax Act, 1956 Act, Government still had power to issue notification without requirement of form C in respect of sales "to any persons or class of persons, who were non-dealers” and while a nswering such question, the court observed as under:-

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“12. In respect of the last issue, whether under section 8(5)(b) of the Central Sales Tax Act, 1956 the State Government has power to issue any notification in respect of inter-State sales without requirement of form C, we have to consider the notification and also amended provision of section 8(5) of the Central Sales Tax Act.

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Earlier, the Government of Pondicherry has issued a notification dated October 1, 2001 in G. O. Ms. No. 37/2001/ F2 granting concessional rate of tax of two per cent without form C in respect of inter-State sale of computers, information technology products and accessories, which reads as follows:

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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), read with the Notification No. F.2/4/71UTL, dated the December 9, 1971 of the Government of India, Ministry of Home Affairs, New Delhi, the Lieutenant Governor, Pondicherry, being satisfied that it is necessary so to do in the public interest is pleased to reduce the rate of tax to two per cent without form C in respect of interState sale of computers, information technology products, their spares and accessories.

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2. This notification shall come into force with immediate effect.

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13. From a reading of the above, it is clear that any interState sale made relating to information technology product is subjected to two per cent tax without form C. The Petitioner/Assessee has availed of the benefit as per the notification and there is no dispute regarding the same. Later the Parliament amended the provision of section 8(5) of the CST Act. The said provision was introduced by the Finance Act, 2002 with effect from May 11, 2002. The said amended provision reads as follows:

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Notwithstanding anything contained in this section, the State Government may, on the fulfilment of the requirements laid down in Sub-section (4) by the dealer, if it is satisfied that it is necessary so to do in the public

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interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct,--

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(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, to a registered dealer or the Government 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,

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(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, to a registered dealer or the Government by any dealer having his place of business in the State or 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....

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14. Clause 145 of the notes on clauses reads as follows: Clause 145 seeks to amend section 8 of the Central Sales Tax Act, 1956 so as to--

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(i) provide that Central sales tax does not become greater than local sales tax in case of sale of goods to the Government and registered dealers;

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(ii) provide for exemption from Central sales tax in cases where goods are exempt from local sales tax;

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(iii) make furnishing of form C compulsory by the dealer except in respect of exempted goods;

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(iv) include 'telecommunication network' in the category of goods which can be specified in certificate of registration for the purposes of levy of tax, etc.;

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(v) withdraw powers of the State Government to waive the requirement of C form.

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15. Relying on the above amended provision and also the note on clause, the learned Special Government Pleader (Pondicherry) appearing for the Respondents submitted that the State Government has no power to grant concessional rates of tax without form C and by mainly relying on insertion of word on the fulfilment of the requirement laid down in Sub-section by the dealer. Subsection (1) and Sub-section (4) are applicable to sales made by dealer to registered dealer or Government and the dealer is also directed to comply with certain requirements as prescribed under the section. Therefore, insertion of the word as mentioned is applicable only to the inter-State sale made by dealer to the registered dealer or Government. Therefore, unless and until there is fulfilment of the requirement, they are not entitled to concessional rate of tax without producing form C. The conditions or requirements are confined to its applicability only to such person as capable of fulfilling it. It is relevant to consider section 8(5)(b) of the Act. It contemplates two categories of dealers or persons--(i) registered dealer or Government; (ii) by "any person" or "to such class of persons" as may be specified in the notification. Therefore, the latter category to any person or any such class of

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person cannot be "registered dealer" or "the Government". Certainly, they are different and distinct persons and we have to give different meaning to the same. We are conscious of the principle that in construing a provision or rule, every word occurring therein must be given its proper meaning and weight. When the dealer makes sale in the course of inter-State trade to a person other than a registered dealer or the Government, viz., to educational institutions, hospitals and bank, the State Government, in the public interest, can issue notification in respect of interState sales provided notification specifying "to any person or to such class of persons". In the present case, the first Respondent filed a counter and stated in paragraph 5 that the Government of Puducherry has not issued any notification specifically for the grant of any exemption or concession in the rate of tax for sales to any person or class of persons as the buyer under section 8(5)(b) of the CST Act. Therefore, it was contended that the Assessee is not entitled to any concessional rate of tax. The learned Special Government Pleader (Pondicherry) appearing for the Respondents also brought to our notice the notification issued by the other States under section 8(5)(b) of the CST Act granting concessional rate of tax to non-dealers like banks, educational and medical institutions. The Government of Himachal Pradesh issued a notification dated June 30, 2005 granting concessional rate of tax to non-dealers like banks, educational and medical institutions subject to certain conditions and the said notification reads as follows:

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¶144

Whereas the Governor of Himachal Pradesh is satisfied that it is necessary in the public interest to do so:

¶145

2. Now, therefore, in exercise of the powers conferred by Clause (b) of Sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act, No. 74 of 1956), the Governor of Himachal Pradesh is pleased to direct that tax payable under Sub-section (2) of section 8 of the aforesaid Act on the sale of goods made in the course of inter-State trade or commerce by the industrial units manufacturing information technology and bio-technology goods to the non-dealers like banks, educational and medical institutions, autonomous bodies, etc., shall be calculated at 1% subject to furnishing of following declaration in form CC by the purchaser, with immediate effect in the public interest.

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FORM CC

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Certified that we have purchased following goods from M/s. ...holding registration certificate No. ...under the Central Sales Tax Act, 1956 for our official use:

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Give broad description of goods here-

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Description of	Quantity	Sale price	No. and date
goods			of cash-
			memo
(1)	(2)	(3)	(4)

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I undertake to:

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(i) Comply with the provisions of the Central Sales Tax Act, 1956, the Rules framed and the notifications issued thereunder ; and

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(ii) utilise the goods so purchased for the purpose of which the same have been purchased.

¶153

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16. The Government of Uttaranchal Shasan Vitta Vibhag also issued notification dated January 9, 2006 after amendment of section 8(5) of the Central Sales Tax Act, 1956, which reads as follows:

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In exercise of the powers conferred by Sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Act No. 74 of 1956), read with section 21 of the General Clauses Act, 1897 (Act No. 10 of 1897), the Governor is pleased to direct in the public interest that with effect from the date of publication of this notification, the tax payable under Subsection (2) of section 8 of the said Act by any manufacturer having his place of business in Uttaranchal, in respect of the sales by him from any such place of business in the course of inter-State trade or commerce, of information technology goods as specified in annexure A, to non-dealer institutions specified in annexure B, shall, subject to the conditions and restrictions referred to in Sub-section (5) of section 8 of the said Act and also the conditions specified in this notifications, and on furnishing the declaration in form DD as per annexure C, be calculated at the rate of one per cent for a period of five years from the date of commencement of commercial production by the unit. CONDITIONS

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(i) The unit is registered under the Uttaranchal Value Added Tax Act, 2005 and the Central Sales Tax Act, 1956, and complies with provisions of the said Acts and Rules framed and the notification issued thereunder;

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(ii) The unit starts commercial production on or after January 7, 2003 but not later than March 31, 2007;

¶158

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(iii) The unit compulsorily makes available at least 70 per cent of its total manpower employment to the people of State of Uttranchal;

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(iv) The unit actually continues production for a period of at least three years after the concession/incentive period is over and in the event of default, the concession availed of shall be forthwith paid back to the Government and the assets created by it will stand forfeited to the Government; (v) The concession to the unit will be available only when the goods manufactured are sold by them and it shall not be available for finished goods purchased or acquired by the unit for sale.

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17. From a reading of the above notification issued by the other States, we are of the view that the State Government still has the power to issue specified notification, if it is necessary to do so in the public interest during the relevant period as law stands. The third issue is answered accordingly.”

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41 Accordingly, the questions of law are answered as

¶163

follows:

¶164

i) The Tribunal was right in concluding that under the Taxation Amendment Act, 2007, while omitting the words "or the Government" and words "or Sub-Section

¶165

2", from Section 8(5) and retaining all other provisions of 8(5)(a)(b), the State Government still has power to grant total/partial exemption from tax payable, which has remained intact even after the aforesaid amendment. ii) The Tribunal has rightly held that the State Government even after the Central Sales Tax

¶166

¶167

Amendment Act, 2007 has not been denuded of its competence to issue notification under section 8(5) (b). iii) The notification dated 30.6.2005 issued prior to amendment of section 8(5)(b) does not run counter and has not become inconsistent with the legislative declaration and, therefore, remains untouched even after Taxation Amendment Act, 2007.

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iv) The Tribunal has correctly appreciated notification dated 30.6.2005 and has construed it harmoniously with the amending provisions.

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42 Mr. Sood had argued that in the event of the

¶170

revisions petitions filed by the petitioner-revenue being dismissed, then the amount(s) deposited by the respondent(s/assessee(s) before the authority should be ordered to be refunded with interest.

¶171

43 We have considered the submission and find that

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the respondent(s/assessee(s) cannot automatically be held entitled to refund of the said amount unless the assessee(s) establishes that it has not passed on the tax liability to the

¶173

consumers as any person carrying on the activity of manufacture of goods utilizing some raw material which had already suffered some tax would normally include both the tax component and the cost of such raw material into the cost of

¶174

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the final product and pass on the same to the consumer of the manufactured product.

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44 In taking this view, we are duly fortified by the observations made by the Hon’ble Supreme Court in M/s Deccan Cements Ltd. vs. Asst. Director of Mines & Geology,

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2014 (9) SCALE 374 , which read as under:-

¶178

“17. In substance, this Court held that a person who passes on the burden of tax to some other person, either directly or indirectly is not entitled to claim the refund of tax, the levy and/or collection of which by the State is declared to be illegal or unconstitutional. Though it appears from the said judgment, their Lordships relied upon the language of Section 27 of the Customs Act in support of their conclusion. In our opinion, the existence or otherwise of such a provision makes no difference for the correctness of the above stated principle of law Any person carrying on the activity of manufacture of goods utilising some raw material which had already suffered some tax would normally include both the tax component and the cost of such raw material into the cost of the final product and pass on the same to the consumer of the manufactured product. Therefore, such a person would still not be entitled to claim refund of the tax which is otherwise illegally collected by the State unless he establishes to the satisfaction of the State that he had not passed on the tax liability whether directly or indirectly to some other person.”

¶179

45 For the above mentioned reasons, we do not see any

¶180

reason to interfere with the impugned judgment under revision.

¶181

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Consequently, the revision petitions are dismissed. However, it is open to the respondent(s)/assessee(s) to establish before the petitioner-revenue by adducing necessary evidence if the respondent(s)/assessee(s) had not really passed on the liability to a third party. The respondent(s)/assessee(s), if so advised, may make such a claim before the competent authority within a period of six weeks from today and adduce necessary evidence in accordance with law. If such an application is made by the respondent(s)/assessee(s), the petitioner-revenue is directed to dispose of such application(s) expeditiously and in no event later by 31.7.2024. In case the respondent(s)/assessee(s) is found to be entitled to refund of the amount or any part thereof, the same shall be refunded to respondent(s)/assessee(s) along with interest at the rate as notified by the Reserve Bank of India for the fixed deposit from time to time and on and from the due date till its realization. Pending application(s), if any, also stands disposed of.

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(Sushil Kukreja) 16.5.2024 Judge (pankaj)

State of Hp v. Ms Techer Power Solutions Pvt. Ltd.

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State of Hp v. Ms Techer Power Solutions Pvt. Ltd.

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