The Supreme Court held that the Tax Administration Authorities cannot give their own interpretation to legislative provisions on the basis of their own perception of trade practice.
The respondent-assessee Bombay Machinery Store had purchased electricity motors and its parts in the said financial year out of the State and sold them to purchasers within the Kota region of the State of Rajasthan. For such sales, they obtained the benefit of exemption under Section 6(2) of the Central Sales Tax Act, 1956. These goods had remained with the transport company upon arrival in Kota for more than a month.
Revenue’s case is that after importing these goods into Rajasthan, the sale was effected through transport receipt on obtaining separate orders. Such sale, it is the revenue’s case, constituted sale within the State and hence taxable @12% per annum under the Rajasthan Sales Tax Act, 1954.
The claim of benefit under Section 6(2) of the 1956 Act was rejected and tax along with interest and penalty was imposed under the State Act by Commercial Tax Officers.
The supreme court issued the clarification on the question of law that whether as a condition of giving the benefit of Section 6(2) of the Central Sales Tax Act, 1956, the tax authorities can impose a limit or timeframe within which delivery of the respective goods has to be taken from a carrier when the goods are delivered to a carrier for transmission in course of the inter-state sale.
The division bench consisting of Justice Deepak Gupta and Justice Aniruddha Bose observed that if the authorities felt any assessee or dealer was taking unintended benefit under the aforesaid provisions of the 1956 Act, then the proper course would be a legislative amendment.
“The Tax Administration Authorities cannot give their own interpretation to legislative provisions on the basis of their own perception of trade practice. This administrative exercise, in effect, would result in supplying words to legislative provisions, as if to cure omissions of the legislature,” the bench said.
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