Cus- SAD - Notfn. 22/99-Cus - It is not goods which is significant for charging sales tax but it is area where tax should not be chargeable: CESTAT
By TIOL News Service
MUMBAI, SEPT 02, 2016: DURING the year 1999, the appellant imported 28 consignments of Polyester Chips and availed exemption of SAD in terms of Notification No. 22/99-Cus dated 28.02.99. The appellant sold those goods to M/s. JBF Industries Ltd without payment of sales tax against form ST XI.
Inasmuch as on account of the above, the benefit of Notification No. 22/99-Cus, was denied and SAD was demanded since the exemption claimed was allegedly in contravention of the condition provided under Sr. 5 of the table annexed to the Notification No. 22/99-Cus.
The proviso reads -
Provided that the rate specified herein shall not apply if the importer sells the said imported goods from a place located in an area where no tax is chargeable on sale or purchase of goods.
The appellant is before the CESTAT.
It is submitted that the goods were sold from Silvassa area which is not a non-taxable or a territory exempted from payment of Sales Tax. In fact, there is no exemption in particular area but exemption is only available if the buyer provides the form ST XI. Furthermore, in the notification the exclusion from exemption is provided only if the area from where the goods sold or purchased no sales tax is chargeable, which is not the fact in the present case. If form ST XI is not provided by purchasing dealer the goods are liable for charging sales tax, therefore, area from where the goods were sold by appellant is not exempted area, the appellant added.
It is also submitted that demand is barred by limitation for the reason that the import was made in 1999 whereas the show cause notice was issued on 10/9/2003.
The AR justified the order of the lower authority.
The Bench extracted the notification 22/99-Cus& observed -
++ From the proviso it is unambiguous that exemption shall not be applicable for sale or purchase of the goods if it is taken place from a place located in an area where no tax is chargeable. This clearly shows that it is not goods which is significant for charging sales tax but it is area where tax should not be chargeable.
++ The exemption from sales tax can be two types, one is on the area based exemption and second is conditional exemption to particular goods or based on end use. If the entire area or territory declared by the government as exempted from payment of sales tax and if any imported goods is sold from that exempted area, the exemption under notification no. 22/99-Cus shall not be applicable but if the area otherwise is a taxable territory where in normal sale purchase, the tax is leviable but for particular sale based on certain condition if the sale tax is not chargeable that exemption is different from the first area based exemption.
++ We find that the present case clearly falls under the Second category of exemption and not falls under area based exemption. The sales tax exemption in the present case is by way of deduction in the turnover in the hands of the seller for the reason that sales tax is not chargeable on the sales which made against form ST XI. In other words if the buyer is unable to provide form ST XI, the goods are otherwise chargeable to sales tax that itself shows that in particular area of the appellant sales tax is chargeable but only by virtue of form ST XI sales tax is not chargeable.
++ As per the sales provision as submitted by the ld. Counsel there is no dispute that there is no area based exemption in Dadra and Nagar Haveli. The form ST XI was issued by the buyer which is permissible only in respect of goods which are for the purpose of use in the manufacture of final product. That means if the goods is purchased for re-trading, exemption from sales tax is not available to the buyer and in such case seller has to charge sales tax unavoidably.
Holding that even though sales tax was not charged from the area from where the goods were sold, the same could not become a non-taxable territory so as to apply the proviso of sr. no. 5 of Notification 22/99-Cusand that in view of the decisions of the Division Bench in the cases in G H Shaikh & Jindal Photo Films the issue is no more res integra and the appellant is entitled for the exemption claimed under notification no. 22/99-Cus, the impugned order was set aside and the appeal was allowed with consequential relief.
(See 2016-TIOL-2289-CESTAT-MUM)
