Law: Sales Tax Act, 1990

Section: 11

CUSTOMS ACT, 1969 (IV OF 1969)----Section: 196 - Sales Tax Act, 1990, Section: 11 - SRO. No. 1125(I)2011, dated 21.12.2011 - SRO. 154(1)/2013 dated 28.02.2013 - Assessment of tax and recovery of tax not levied or short levied or erroneously refunded - Import of Indian Raw Cotton - Release of consignment after payment of 20% tax giving benefit of SRO. 1125(I)/2011, dated 21.12.2011 - During audit it was found that importer was liable to pay 16% sales tax on the import of Indian Raw Cotton - Order-in-original passed for the recovery of deficit sales tax, and penalty - Appeal rejected by the Appellate Tribunal - Reference to High Court - FACTS The applicant imported Indian Raw Cotton and got released the consignment on payment of 2% sales tax taking advantage of SRO. 1125(I)/2011, dated 21.12.2011. After audit it was found that the import was liable to sales tax @ 16% - Tribunal rejected appeal of the applicant and he filed the instant reference application. ARGUMENTS The applicant’s counsel stated that sales tax @ 2% was payable which has been paid. He further contended that SRO. 154(I)/2013, is also applicable and that imported raw cotton is an industrial input used for further manufacturing by applicant and sales tax @ 2% is leviable as given in condition No. (iii) of SRO - Conversely, counsel for department submitted that SRO. 154(I)/2013 is applicable upon stages beyond spinning and there are two more stages between spinning and ginning. DECISION (a) Application of SRO 154- It is explicit from condition (ii)(a) that SRO 154(I)/2013 duly included the spinning stage (in textile sector) and argument of learned counsel for respondent-department that said Notification is applicable on the stage coming subsequent to spinning stage is totally misconceived. Through afore-referred SRO, the concession has been given on goods useable as industrial inputs (at spinning stage in textile sector) by charging sales tax @ 2%. Applicant is entitled to the benefit of SRO 1125(I)/2011, as amended by SRO 154(I)/2013. Therefore, our answer to the proposed question is in negative i.e. in favour of applicant and against respondent-department. (b) Interpretation of statutes - It is…

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