STATE OF RAJASTHAN AND ANR. versus SARVOTAM VEGETABLE PRODUCT ETC. ETC.

Citation: [1996] SUPP. 1 S.C.R. 129 · Decided: 09-04-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
• 
STATE OF RAJASTHAN AND ANR. 
v. 
SARVOTAM VEGETABLE PRODUCT ETC. ETC. 
APRIL 9, 1996 
(B.P. JEEVAN REDDY ANDS. SAGHIR AHMAD, JJ.] 
Central Sales Tax Act, 1956: Sections 8(4) proviso and 8(5) . 
Sales TUJc-lnter-State sales---Concessional rates of tax on-Exemption 
notificatiott-Conditions for entitlement to-Held: not only conditions men-
tioned in notification but also those melltioned in Section 8(4) must be 
satisfied-Central Sales Tax (Registration and Turnover) Rules 1957, Rule 
12( 1). 
A 
B 
c 
Sales Tcre-Inter-State Sales--Exemption notification-Benefit of-Sub-
D 
mission of Fonn C-&tension of time for-Supreme Court's decision in 
Hyderabad Asbestos Cement Production Ltd. case-Directed to be followed 
by authorities. 
The respondents--assesses were manufacturers and/or dealers in 
edible oils and stainless steel sheets. They effected a large number of E 
inter-State sales. They obtained C-forms vide Rule 12(1) of Central Sales 
Tax (Registration ad Turnover) Rules, 1957 from the purchasing dealers 
and submitted in their assessment proceedings. On survey and inquiry, it 
was found that many of the C-forms were either not valid or not genuine. 
Some of them were found to have been issued to dealers other than the F 
respondents. Notices were issued calling upon them to show-cause why 
additional tax and 11enalty be not levied and recovered from them. It was 
at that stage that the respondents approached the High Court by way of 
writ petitions contending that since the inter-State sales effected by them 
were covered hy the Exemption Notifications and because the said notifica-
tions did not require the production of a C-form as a condition for availing G 
the exemption provided thereby, they were under no obligation to produce 
the same and no action could be taken against them for producing alleged 
invalid or spurious C-forms. This contention of the assessee was upheld 
by the High Court. Aggrieved by the High Court's judgment the appellant-
State preferred to present appeal. 
H 
129 
130 
SUPREME COURT REPORTS [1996] SUPP. 1 S.C.R. 
A 
Allowing the appeal, this Court 
B 
HELD : l.l. Section 8(5) of Central Sal~s Tax Act, 1956 empowers 
the State Government to grant exemption from sales tax either wholly or 
partially. Sub-section (5) of Section 8 is an integral part of Section 8 and 
the Act as such. The said power of exemption has to be exercised in public 
interest. The power of exemption and its exercise is to be guided by and be 
consistent with the provisions of the Act. M~re important, the levy ~f 
central sales tax and the prescription of rate is not by the notifications but 
by the Act itself. Section 8(1)prescribes the rate and sub-section (4) the 
condition that has to be satisfied for availing of the rate in sub-section (i). 
C What the notifications do is to reduce the rate prescribed by Section 8(i) 
further, subject to certain conditions. The cojlditions prescribed by the 
notifications are the conditions prescribed for availing the further reduc-
tion of rate provided by the notification. The notifications merely reduce 
the rate of tax; they do not do away with the levy altogether. All that the 
D notifications have done is to reduce the rate of tax from 4% to 1-1/2% 
(2-1/2%, as the case may be). Separate conditions are prescribed for 
availing the rate (Which itself is a concessional rate) prescribed in Section 
8(i) and for availing the further reduction provided by the Notification. 
Those two sets of conditions are prescribed by Section 8( 4) and by the 
notifications respectively. [138-E-H; 139-A] 
E 
1.2. One cannot conceive of the aforesaid notifications independent, 
of, or apart from Section 8(1). They merely reduce the rate in Section8(1) 
as already mentioned. One must first satisfy the condition in Section 8(4) 
to become eligible for the concessional rate in Section 8(1). It is only 
F 
thereafter that he can claim the benefit of the said notifications, for which 
purpose again he has to satisfy the conditions prescribed in the Notifica-
tions. It is therefore wrong to think that Section 8(5) or the notifications 
are self-contained and operate de hors the other provisions of the 
Act/Rules. Hence production of C-form vide Rule 12(1), of Central Sales 
Tax (Registration and turn - over) Rules, 1957,is essential for availing the 
G benefit of the notifications. [139-B] 
1.3. As regards to extension of time for filing the C· forms is 
concerned the proviso to Section 8(4) o

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