Tata Motors Ltd. (earlier Known as "Tata Engineering and Locomotive Company Ltd.") vs The State of Jharkhand and Others

The petitioner M/s Tata Motors Limited has filed this writ petition assailing the order of the Commercial Taxes Tribunal, Ranchi, dated 10.07.2008, by which the petitioner has been directed to pay the amount accruing on account of the sale transactions, which had taken place by way of interstate sales as the goods produced by the petitioner had been sold outside the State of Jharkhand.

The admitted ground, inter alia, for challenge was whether the respondents are justified in claiming sales tax higher than 4% on the ground that the petitioner had not submitted the required forms in regard to the payment of the sales tax.

This writ petition has been admitted along with two other connected writ petitions bearing W.P.(T) No. 6040 of 2002 and W.P.(T) No. 1757 of 2008 and are to be listed for hearing on 20th January, 2009.

The petitioner at the time of admission had been granted liberty to seek interim protection if any coercive action was sought to be taken against the petitioner, insisting for payment of sales tax over and above the tax of 4%. The petitioner herein has filed this application for stay of the operation of the order dated 25.11.2008, marked as Annexure-12 to the Interlocutory Application, wherein, it has been directed to pay Jharkhand Sales Tax to the extent of Rs. 1,64,98,850/- as also under Central Sales Tax amounting to Rs. 38,70,68,197/-. The petitioner has sought protection from this Court from making the aforesaid order effective essentially on the ground that the respondent authorities had issued a notification on 30th January, 1993, marked as Annexure-11 to the compilation produced before this Court, which indicates as follows:

In exercise of the powers conferred by Clause (B) of Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (Act No. 74, 1956), the Governor of Bihar, after being satisfied that it is necessary to do so in the public interest, is pleased to direct that the Central sales tax payable in respect of sales in course of inter-State trade and commerce of chassis of heavy motor vehicles (bus and truck), all kinds of motor vehicles (excluding motor cycle, scooter and moped), excavators and other implements of that category, that is hydraulic excavators, clam-shell, dragline, rock-breaker, mini-excavators, crawler-cranes, wheeled-cranes, wheel-loaders, front-end loaders, shovels, breakhoe and articulated cranes from any place of business situated in the State of Bihar, shall be calculated at the rate of four per centum.

Notification No. S.O. 40, dated the 26th February 1992 (See [1992] 87 STC 109.) is hereby cancelled.

This notification shall come into force from the 1st February, 1993.

The aforesaid notification had been issued by the respondent-State of Bihar, which is applicable in the State of Jharkhand, in exercise of power conferred under Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956.

A perusal of the aforesaid notification, quoted hereinabove, clearly indicates that in respect of sales in course of inter-State trade and commerce of chassis and other components of the motor vehicles shall be calculated at the rate of 4%.

However, learned Counsel for the respondent-State has countered the submission of the learned Counsel for the petitioner and submitted that in view of Sub-section (4) of Section 8 of the Central Sales Tax Act, 1956, the petitioner should have filled in declaration signed by a registered dealer to whom the goods were sold containing the prescribed particulars in the prescribed form obtained from the prescribed authority and since it had failed to do so, it was liable to pay a higher amount of sales tax to the respondent-State. This, according to him, was legally essential as per Sub-section (1) of Section 8 and, therefore, it was submitted that the petitioner cannot claim the imposition of tax at the rate of 4% only.

So far as the claim regarding payment of tax at the rate of 4% is concerned, undoubtedly Sub-section (2) of Section 8 of the Central Sales Tax Act, 1956 lays down that the tax payable by any dealer at his turn over in so far as turn over or any part thereof relates to the sale of goods in course of inter-State trade or commerce not falling within Sub-section (1) shall be calculated at the rate of 10% or at the rate applicable to the sale or purchase on some of the goods inside the appropriate State. But this provision has been substituted by the notification dated 30th January,''1993, referred to hereinbefore, of the State indicating therein that in case of inter-State sale the amount to be paid by way of sales tax shall be restricted to 4% only and as already stated, this notification was issued in exercise of power conferred under Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956, which confers power on the State Government that if it is satisfied and it is necessary to do so in public interest, then subject to the condition as may be specified the tax payable under this Act by any dealer having its place of business in the State in respect of sale by it may be specified in the notification and that tax on such sales shall be calculated at such lower rates than those specified in Sub-section (1) or Sub-section (2) of Section 8, as may be mentioned in the notification.

This provision clearly lays down that the State has been authorized and empowered to issue notification in public interest to impose tax on a lower rate and for this purpose it is legally entitled to issue a notification. Since the notification dated 30th January, 1993 indicates that in case of inter-State trade and commerce of the motor vehicles, tax can be levied at the rate of 4% only The petitioner''s case obviously will be covered by the notification and the provision of Sub-section (2) of Section 8 which obviously stands substituted by the notification of the State dated 30th January, 1993. Prima facie, the petitioner''s case, therefore, is not covered under Sub-section (1) of Section 8 of the Central Sales Tax Act, 1956, as the transaction of sale in between the petitioner is not with the State Government or any unregistered dealer of the Government and therefore, this case clearly falls within Sub-section (2) of Section 8 of the Central Sales Tax Act, 1956. Sub-section (2) of Section 8 of the Central Sales Tax Act, 1956 having been modified by the notification dated 30th January, 1993, the petitioner has clearly made out a prima facie case in its favour that in case of inter-State sale also the tax would be levied at the rate of 4% and not 10%. Hence the order, which is sought to be stayed by the petitioner is accepted for the time being and the respondents are directed not to take coercive measures to realize central sales tax at the rate above 4% on the ground that the petitioner has not submitted the required forms. In so far as the amount indicated by way of Jharkhand Sales Tax is concerned, the same obviously would be payable by the petitioner and the amount, indicated in the column of C.S.T. will be enforced if it is found that the petitioner has not paid sales tax even at the rate of 4% meaning thereby that the petitioner obviously shall be liable to pay C.S.T. at the rate of 4% and whether, tax is payable over and above 4% shall be a subject matter of consideration at the stage of final hearing. The interim relief granted to the petitioner obviously shall be subject to result of this writ petition.

Before disposal of the Interlocutory Application, we appreciate the anxiety of the respondent-State that in case the petitioner fails and the writ petition is finally not allowed in its favour, the respondent-State shall be entitled to charge interest from the petitioner as it was pointed out that whenever the sales tax refund is granted in favour of the petitioners, the petitioners have been fighting tooth and nail claiming refund even by way of interest. Therefore, we observe that in case the petitioner does not succeed in establishing finally its case in the writ petition and any amount is finally held liable to be paid by the petitioner over and above 4%, then the question of interest will be allowed to be raised by the respondent-State and that will clearly lie within the domain of the Court at the appropriate stage whether to accept such contention.

I.A.No.3467 of 2008 is treated as disposed.

Let this case be listed for hearing along with W.P.(T) No. 6040 of 2002 and W.P.(T) No. 1757 of 2008 on 20th January, 2009.