G R KULKARNI Vs. COMMISSIONER OF SALES TAX
HIGH COURT OF MADHYA PRADESH
COMMISSIONER OF SALES TAX
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(1.) THIS is a case stated by the Sales Tax Appellate Tribunal (Board of Revenue) referring to us the following question of law : Whether on the facts and circumstances of the case the assessment at 5 per cent, instead of two per cent, as prescribed by Notification No. 878-613/v/st dated 31st March, 1963, on the turnover arising out of supply of bricks, chips, rubble, flooring material, balast) stares etc. to the Railways was not in accordance with law?
(2.) THE facts stated are that the assessee who is a contractor supplied to the Engineering Department of the Railways under a contract bricks, chips, rubble, flooring material, balast etc. The assessee did not submit any return and a notice in Form No. XVI was issued to him. After enquiry, his taxable turnover was determined at Rs. 81,000 and a tax of Rs. 4,000 was assessed. A penalty of Rs. 440 was also imposed for the default in submission of returns. During the assessment proceedings the assessee raised the contention that he should not be assessed at the normal rate of five per cent, but at the concessional rate of two per cent, under the Notification No. 878-613/v/st dated 31st March, 1963. This notification reads as follows : In exercise of the powers conferred by Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959), the State Government hereby exempts in part the class of goods mentioned in column (1) of the Schedule below from the payment of tax so as to reduce it to the rate of tax mentioned in column (2) thereof for the period specified in column (3) and subject to the restrictions and conditions specified in column (4) of the said Schedule : Schedule Class of goods Reduced Period Restrictions and conditions rate subject to which exemption is granted. (1) (2) (3) (4) All classes of Two per cent. From 1st When sold by a dealer goods specified in of April registered under the M. P. Schedule II of the 1963, to General Sales Tax Act, Madhya Pradesh the 31st 1958 (No. 2 of 1959) to General Sales Tax March the Government of India Act, 1958, for which 1964 or any of its departments the rate of tax (both days for the purpose of official exceeds one per cent. inclusive ). use only, against a certificate in writing in the appended form. This reduced rate will not be applicable to sales to Government of India or any of its departments when engaged in a commercial activity and carrying on business. It would be seen that the notification on its own terms does not give the benefit of reduced rate of tax "to sales to Government of India or any of its departments when engaged in a commercial activity and carrying on business. " The claim of the assessee to get the benefit of the notification was negatived on the ground that as Railways are engaged in a commercial activity and carry on business, sales made by the assessee fell within the exception contained in the notification. On an application made by the assessee, the question of law which we have already set out has been referred to us for our answer.
(3.) THE argument of the learned counsel for the assessee is that Railways are not engaged in a commercial activity and do not carry on business and at any rate the Engineering Department of the Railways is not one engaged in a commercial activity and does not carry on any business and, therefore, the sales made to the Engineering Department did not fall within the exception contained in the notification.;
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