The 1st petitioner is an Association of Small Scale Tread Rubber Manufacturers in the State of Kerala. The 2nd petitioner is one of the members of the 1st petitioner Association. The petitioners are essentially aggrieved by the terms of Ext.P2 notification dated 21.11.2002, made effective from 1.6.2002, to the extent it takes away the benefit of the concessional rate of tax under the Central Sales Tax Act, 1956, hereinafter referred to as the 'CST Act', of 4% that was made applicable to inter-state sales effected by the petitioner in accordance with Ext.P1 notification dated 4.11.1993. Although in terms of Section 8(1) of the CST Act, the petitioner dealer, who was effecting inter-state sales of tread rubber was liable to pay tax only at the concessional rate of 4%, the benefit of the said concessional rate was applicable under the CST Act only if the sales was effected against C Form obtained from the purchaser outside the State. The requirement of making sales against C Form was dispensed with in the case of small scale industrial units by way of Ext.P1 notification dated 4.11.1999, and they were given the benefit of effecting inter-state sales at concessional rate of 4% without the necessity of obtaining C Form from the purchaser outside the State. This benefit was available to the petitioner under Ext.P1 notification till Ext.P2 notification dated 21.11.2002 was issued. Ext.P2 notification superseded Ext.P1 notification and prejudicially affected the petitioners, in that, in Ext.P2 notification, the benefit of concessional rate of 4% without 'C' Form was not made applicable to inter-state sale of tread rubber. Further, Ext.P2 notification was given retrospective effect from 1.6.2002, which meant that for the period between 1.6.2002 and 21.11.2002, the petitioners were also deprived of the benefit that they had been enjoying under Ext.P1 notification. It is pointed out that, subsequently by Ext.P3 notification, the Government made Ext.P2 notification effective only from 21.11.2002 taking into account the difficulties faced by dealers in the agricultural sector. By the said notification, it was clarified that in respect of specified goods falling in the agricultural sector, Ext.P2 notification would be deemed to come into force only on 21.11.2002. In the writ petition, while the petitioners challenge Ext.P2 notification, to the extent of retrospectively given to it with effect from 1.6.2002, the petitioners also have an alternate contention that they be extended the benefit of Ext.P3 notification, which is expressly stated to apply to only those products mentioned in the said notification, tread rubber not being one of the products expressly mentioned. 2. I have heard Sri.Harisankar V. Menon, the learned counsel appearing on behalf of the petitioner as also Smt.Lilly.K.T., the learned Government Pleader appearing on behalf of the respondents.
3. On a consideration of the facts and circumstances of the case, as also the submissions made across the Bar, I am of the view that the writ petition, in its challenge against Ext.P2 notification must necessarily fail. As per Section 8(1) of the CST Act, as it stood during the relevant time, the rate of tax payable under the sub section by a dealer effecting inter-state sales of tread rubber effected by it was to be at the rate of 4% if the dealer effected the sale against a C Form obtained from the purchasing dealer outside the State. By virtue of Ext.P1 notification issued under Section 8(5) of the CST Act, as it then stood, the petitioners being a small scale unit were entitled to the benefit of concessional rate of 4% on inter-state sales effected by them even without the necessity of obtaining C Form to cover the said sales transactions. It is relevant to note that at the time when Ext.P1 notification was issued, in exercise of the powers available to the State under Section 8(5) of the CST Act, the said provision read as follows:
8. Rates of tax on sales in the course of inter state trade or commerce:-
(1) xxxxxxxxxxxxxxxx
(2) xxxxxxxxxxxxxxxx
(3) xxxxxxxxxxxxxxxx
(4) xxxxxxxxxxxxxxxx
(5) Notwithstanding anything contained in this section, the State government may, if it is satisfied that it is necessary so to do in public interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct,-
(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:
(b) that in respect of all 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 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) or sub-section (2) as may be mentioned in the notification.
The aforementioned provisions was amended by Central Act 20 of 2002 and the opening sentence in Section 8(5) was amended to read as follows:
8. Rates of tax on sales in the course of inter state trade or commerce:-
(1) xxxxxxx xxxxxxxxx
(2) 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 public interest by notification in the official gazette and subject to such conditions as may be specified therein, direct,-
xxxxxxx xxxxxxxxx The effect of this amendment to Section 8(5) of the Act was that, for the period subsequent to the amendment, the State Government could issue a notification under Section 8(5) only if the requirements of sub section (4) of Section 8 had been complied with. One of the requirements specified in sub section (4) of Section 8 is that the concessional rate of tax of 4% would 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 the necessary declaration in Form C. Thus, with the amendment to Section 8(5), any notification issued by the State Government under Section 8(5), including in the instant case, Ext.P1 notification, had to be interpreted in a manner consistent with Section 8(5) and, thereby, would have to necessarily be seen as incorporating a term therein to the effect that the concessional rate of tax under the notification would be available only subject to compliance with the condition regarding production of declaration in Form C. In that view of the matter therefore, the amendments that are stated to have taken effect in Section 8(5) of the CST Act, with effect from 1.6.2002, would govern the exemption available to the petitioner under Ext.P1 notification with effect from 1.6.2002 and in that sense, for the period from 1.6.2002 to 21.11.2002 when, by Ext.P2 notification, the benefit of concessional rate of tax of 4% was taken away in respect of tread rubber, the petitioners could not have enjoyed the benefit of concessional rate of tax of 4% as envisaged in Ext.P1 notification. In that view of the matter therefore, the contention of the petitioners against the retrospectively given to Ext.P2 notification with effect from 1.6.2002 is a futile one insofar as, even as per the statutory provisions under the CST Act, the petitioners could not have claimed the benefit of concessional rate in terms of Ext.P1 notification after 1.6.2002. For the same reason, the petitioners cannot also claim the benefit of Ext.P3 notification issued by the State Government in respect of various agricultural commodities. That apart, the said notification was not expressly made applicable to tread rubber. Thus, the prayers sought for in the writ petition cannot be granted in view of the express provisions of the Statute. The writ petition therefore fails, and is accordingly dismissed.
A.K.JAYASANKARAN NAMBIAR JUDGE prp