B.C.CHAKRABARTI - (1.) THIS writ application under article 226 of the Constitution of India was originally filed before the High Court and has since been transferred to this Tribunal for disposal under the provisions of the West Bengal Taxation Tribunal Act, 1987.
(2.) IN this application the assessments for the period 1983-84 including the order for imposition of penalty under the Central Sales Tax Act, 1956 and the Bengal Finance (Sales Tax) Act, 1941 and order for payment of interest under the aforesaid Acts were initially challenged. At the time of hearing, however, the challenge was confined only to the order of imposition of penalty and the order charging interest. The facts leading to the case may be briefly stated thus : The applicant is engaged in the business of selling, inter alia, woollen carpets. It is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 (for short "the BFST Act" ). Rule 3 of the Rules framed under the BFST Act provided that a dealer liable to pay tax may deduct from his gross turnover, its turnover on the sales of various types of goods mentioned in the several sub-clauses of the rule. Clause (28), prior to April, 1975, related to sales of cotton fabrics, rayon or artificial silk fabrics, woollen fabrics, dyed or printed, and sales of mill-made cotton fabrics embroidered after they came out of the mill. By a notification bearing No. 1823-F. T. dated April 1, 1975, clause (28) of rule 3 was substituted with effect from April 7, 1975. The substituted clause is reproduced below : " 28 (a) Sales of all varieties of textile fabrics (other than satranchi, carpets and druggets) made wholly or partly of cotton, staple fibre, rayon, artificial silk or wool including handkerchiefs, towels, bed-sheets, bed spreads, table cloths, napkins, dusters, cotton velvets and velveteen, tapes, niwars and laces. Explanation.- In this sub-clause the expression 'textile fabrics' includes embroidered textile fabrics, but does not include pure silk cloth, rubberised cloth, belting and pipes including hosepipes. (b) Sales of tobacco other than cigarettes. Explanation.- In this sub-clause the expression 'tobacco' has the same meaning as attributed to it in the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944 ). " The result of the substitution of clause (28) in the manner aforesaid was that sales of carpets made by the applicant which was heretofore exempt from payment of any sales tax, became liable to sales tax at the rate of 15 per cent/11 per cent under the Schedule of the Act.
(3.) THE applicant filed a writ application before the High Court being C. R. No. 12324 (W) of 1975 challenging the said notification. A rule was issued and an interim order of injunction was passed restraining the sales tax authorities from giving effect to the said notification and from making any assessment or collecting any sum if already assessed. By the said order liberty was given to the applicant to submit returns showing the sales of carpets exempted from the payment of tax till the disposal of the rule. In terms of the said order the applicant filed its returns from time to time showing sales of carpets exempt under rule 3 (28) of the Rules. In the returns the gross turnover of sales of all goods including the carpets were shown but the sales of carpets were deducted with reference to rule 3 (28) for arriving at the taxable turnover. The said writ application was disposed of in November, 1979, by making the rule absolute. The notification by which rule 3 (28) was amended, was declared ultra vires and void. The sales tax authorities, however, preferred an appeal before the Division Bench against the said judgment and also prayed for interim orders before the appellate Bench. In March, 1981, the Division Bench directed the sales tax authorities to complete the assessment but restrained them from giving effect to or communicate the same to the applicant. The appeal eventually was dismissed in March, 1987, with certain modifications. The judgment of the trial Judge setting aside the impugned notification amending rule 3 (28) of the Rules, was set aside but it was held that the applicant was entitled to the declaration that carpets having more than 40 per cent wool by weight, could not be assessed to tax at a rate higher than the rate prescribed under section 15 (a) of the Central Sales Tax Act, 1956, that is to say, at a rate exceeding 4 per cent. The sales tax authorities not having preferred any appeal against the decision it has become final and binding between the parties.;