1. The petitioner, a limited company registered under the Indian Companies Act, 1956 with registered office at 130, P.B.Marg, Worli, Mumbai and having regional offices at Chennai, Calcutta, New Delhi and Mumbai, has come up before this Court challenging the constitutional validity of Rule 11B(2)(c) of the Central Sales Tax (Kerala) Rules, (‘Rules’ for short) and Exs.P8 to P10 orders of assessment and for other incidental reliefs.

2. The learned Single Judge admitted the writ petition on prayer No.1 alone by which a declaration that Rule 11B(2) (c)of the Central Sales Tax (Kerala) Rules, 1957 as invalid and ultravires was sought. The petitioner was relegated against the statutory remedies of the appeal against Exts.P8 to P10 orders which was later confirmed in intra court appeal.

3. The only prayer in this writ petition is to declare Rule 11B(2)(c) of the Central Sales Tax (Kerala) Rules,1957 as invalid and ultravires being inconsistent with the Central Sales Tax (R&T) Rules framed by the Central Government and beyond the power conferred on the State Government under sub sections (3) and (4) of Section 13 of the Central Sales Tax Act, 1956.

4. In the counter filed by the respondent State, they would contend that Rule 11B(2)(c) was introduced to avoid the misuse of statutory forms, without actual movement of goods. According to the respondents, the Central Sales Tax Rules are drafted by virtue of delegated authority under Section 13(3) of the Central Sales Tax Act. According to the respondents, as per sub section (c), the State is entitled to make rules related to sale or delivery of goods. Since bogus claims are possible in relation to sale in transit, the Government enacted Rules to ensure that goods are actually carried and negotiated before delivery. This, according to the respondent, is only a provision, that is incidental and ancillary to the main object of taxation and it is not in conflict with the Central Rules. Therefore, the respondent prayed for dismissal of the petition.

5. I have heard the learned counsel for the petitioner and the learned special Government Pleader in the matter.

6. The main argument advanced by the learned counsel for the petitioner was that the power conferred on the State Government under Section 13(3) of the Central Sales Tax Act is only to make rules not inconsistent with the provisions of the Act and Rules made under sub section (1) to carry out the purposes of the Act.

7. According to the learned counsel for the petitioner, Section 6(2) read with the first proviso of the CST is a complete code by itself providing exemption from payment of tax on any subsequent sale effected during the movement of goods from one state to another subject to production of certificate and declaration prescribed therein.

8. Section 6 of the Central Sales Tax Act, 1956 (as it stood before the amendment which came into effect on 1.4.2007 i.e. when this writ petition was filed) reads as follows:

“6. Liability to tax on inter-State sales.-

(1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified:

Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5 is a sale in the course of export of those goods out of the territory of India.

(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-

State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate