No collection of CST at higher rate if rate of tax on Intra-State sales of same goods was reduced unconditionally

Where rate of tax on intra-state sale of Hydraulic Excavators was reduced by way of an unconditional exemption to 2 per cent, Inter-State sale of such goods without C-Form could not be charged to a higher rate, viz., 4 per cent and would be liable to tax at 2 per cent

The assessee was engaged in sales of Hydraulic Excavators and was paying tax at rate of 2 per cent on such sales as per Notification, dated 30-3-2000. The Department found that the assessee had made Inter-State sales of such goods and rate of tax on such Inter-State sales without C-Form was at 4 per cent, as per Notification dated 27-8-1992 and, accordingly, raised demand.

The High Court held assessee liable to tax at 2 per cent with the following observations:-

1.    Notification dated 27-8-1992 issued under section 8(5) of the Central Sales Tax Act, 1956 provided for rate of tax at 4 per cent on Inter-State sales without C-Form. However, Notification dated 30-3-2000 issued under section 15 of the Rajasthan Sales Tax Act, 1994, which was general and unconditional in nature, provided for exemption from tax and provided for rate of tax on said goods at 2 per cent without any condition as to furnishing of C-Form.

2.    Once rate of tax for Hydraulic Excavators was provided under Notification dated 30-3-2000 at 2 per cent, there was no occasion for assessee to obtain 'C-Form' so as to pay tax under section 8 of the Central Sales Tax Act, 1956, which was at 4 per cent.

3.    Hence, fact that sale was an Inter-State transaction and assessee had not furnished 'C-Form' was of no consequence.

4.    Since rate of tax was reduced to 2 per cent by way of exemption, notification dated 27-8-1992 had no application to case. Accordingly, the demand was set aside - Assistant Commissioner v. Telco Construction & Equipment Co. Ltd. [2014] 41 taxmann.com 130 (Rajasthan)