The issues raised in the writ petitions being common, these writ petitions were heard together and are disposed of by this common judgment treating WP(C) No. 9920/08 as the leading case.

2. Petitioner in WP(C) No. 29919/08 is a Co-operative Society and the petitioner in WP(C) No. 29920/08 is a company incorporated under the Companies Act. Both the petitioners are engaged in the business of cardamom auction for which they have obtained necessary licence from the Spices Board, Kochi. They are also assessees under the Central Sales Tax Act on the file of the 1st respondent in these cases.

3. For the financial year 2007-08, the tax payable under the Central Sales Tax Act was @3%. While so, in the budget speech for the year 2008-09, the Union Minister for Finance made a proposal in Parliament that following the agreement between the Central Government and the State Government, the Central Sales tax was reduced from 4% to 3% for the financial year 2007-08 and that it was proposed to reduce the rate to 2% from 01/04/2008. It was also stated that consultations are under way and that once the agreement is reached between the Central Government and the States, the new rate will be notified. The relevant portion of the budget speech, produced as Ext.P1, reads thus;

"CST and a Roadmap towards GST 183. Following an agreement between the Central Government and the State Governments, the rate of Central Sales Tax was reduced from 4 per cent to 3 percent in this financial year. It is now proposed to reduce the rate to 2 per cent from April 1, 2008. Consultations are underway on the compensation for losses, if any, and once agreement is reached the new rate will be notified. I am also happy to report that there is considerable progress in preparing a roadmap for introducing the Goods and Services Tax with effect from April 1, 2010."

4. According to the petitioner, acting upon the budget speech, during April and May 2008, they effected sales collecting 2% as tax. However, the notification as contemplated in the budget speech was issued only on 30th of May 2008 and a copy of which is Ext.P4. By this notification, issued under Section 8(1) of the CST Act, the Central Government reduced the rate of tax from 3% to 2% w.e.f. 1st June 2008. In the meantime, as the petitioner paid tax only @2% for the period prior to 1/6/2008, they were issued Exts.P2 and P3 notices under Section 8 of the CST Act directing them to remit the balance 1% CST and interest for April and May 2008 and were informed that on failure thereof, penalty will be imposed and provisional assessment will also be completed.

5. Subsequently, they were also issued Ext.P9 notice under Section 8 on 27/9/08 informing them that on account of paying tax at 2% instead of 3%, there occurred evasion of tax and that they should pay the tax evaded with interest within 7 days. They were also threatened with penalty for offence under Section 9(2) of the Act. It is in this background WP(C) No. 29920/08 has been filed with a prayer to quash Exts.P2, P3 and P9 mentioned above and to declare that the petitioner is liable to pay central sales tax under the Act @2% during the period from 01/04/2008 to 31/5/2008.

6. In the counter affidavit filed on behalf of respondents 1 and 2, the stand taken by them is that tax payable was 3% and that the same was reduced as provided under Section 8(1) of the Act to 2% only w.e.f. 1/6/2008. It is stated that, therefore for the period prior to 1/6/2008, petitioners have the liability to pay tax at 3% and that therefore they are bound to pay the evaded tax also.

7. When the matter was taken up for hearing, the argument advanced by the learned senior counsel for the petitioner is that for the previous year viz., 2007-08 also, tax was reduced from 4% to 3% and that notification dated 29/3/2007 was issued reducing tax w.e.f. 01/04/2007. It is also stated that following the notification, circular was issued implementing the reduction of tax. Having regard to the above and