The Notification under Section 8(5) of the CST Act operates independently, allowing a reduced tax rate without the conditions of Section 8(4) applying.

ORDER :

(Order of the Court was made by Dr.ANITA SUMANTH., J)

PRAYER : PETITION filed under Article 226 of the Constitution of India praying for the issuance of Writ of Certiorari calling for the records on the file of the respondent herein in CST 146752/2001-02 dated 26.12.2003 and quash the same in so far as levy of higher rate of tax of 10% on the petitioner's inter-state sales turnover of polyester fibre yarn of Rs.1,20,64,407.00 as against the Notification No.II(1)/CTRE/43(d-7)/98 issued in G.O.Ms.No.111, Commercial Taxes and Religious Endowments, dated 7.4.98 as amended in Notification No.II(1)/CT/40(a-4)/99 issued in G.O.Ms.No.61, Commercial Taxes, dated 17.3.99 reducing rate of tax to 2% on the inter-state sale of polyester fibre yarn by any dealer who does not have any branch transfer or consignment transfer during the year.

The assessment in this matter relates to the period 2001-02 (period in question). The impugned order of assessment dated 26.12.2003 has been passed under the provisions of the Tamil Nadu General Sales Tax Act, 1959 (in short 'TNGST Act').

2. The petitioner is a manufacturer and dealer in polyester fibre yarn. In respect of the period in question, it had offered to tax the turnover from the sale of polyester fibre yarn at the rate of 2% taking the benefit of Notification in G.O.Ms.No.111, Commercial Taxes and Religious Endowments, dated 07.04.1998 (in short 'Notification'), which reads as follows:

REDUCTION OF TAX PAYABLE ON SALE OF MANMADE STAPLE FIBRES, ETC. UNDER CENTRAL SALES TAX ACT

(G.O.Ms.No.111, Commercial Taxes and Religious Endowments, 7th April 1998). No.II(1)/CTRE/43 (d-7)/98.

In exercise of the powers conferred by sub-Section (5) of Section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Governor of Tamil Nadu having been satisfied that it is necessary so to do in the public interest hereby directs that the tax payable by any dealer who does not have any branch transfer or consignment transfer during the year, shall be calculated at the reduced rate of two percent in respect of the sale effected by him in the course of inter-state Trade or Commerce of manmade staple fibres, fibres yarn, filament yarn and waste of any of them.

2. This Notification shall come into force on the 7th April 1998 and shall remain in force upto and inclusive of the 26th March 1999.

3. The Notification, issued under Section 8(5) of the Central Sales Tax Act, (in short 'CST Act') was issued alongside the then existing rate of tax of turnover from sale of polyester fibre yarn, being 8% under Entry 27, Part B of Schedule I upto 17.08.2001 and 4% against 'C' forms from 18.08.2001 under Entry 94 Part B of Schedule I.

4. The petitioner's claim of 2% was based on the Notification that did not stipulate any other conditions barring that the dealer in question should not have engaged in branch/consignment transfer during the relevant year.

5. The impugned assessment has come to be completed bringing to tax the turnover at the rate of 10%, as the assessing officer was of the view that the petitioner is entitled only to the rate of tax stipulated under the Schedule read with Section 8(4) of the CST Act. Since no 'C' forms had been filed by the petitioner, the assessing authority has proceeded to bring to tax the turnover at the rate of 10%.

6. The submissions made by Mr.Chandrasekaran, learned counsel for the petitioner are that the Notification would run in parallel with the stipulations under the relevant schedules. Relying on the judgments in Deputy Commissioner of Sales Tax V. Aysha Hosiery Factory (P) Ltd. (85 STC 106) and Sri Ayyanar Spinning and Weaving Mills Limited V. State of Tamil Nadu (109 STC 205), he would point out that the assessing authority has erred in imposing the condition relating to 'C' form over and above what has been contained in the Notification. In any event, there is no basis for the levy of tax at the rate of 10%.

7. Per contra, Mr.Prashanth Kiran, learned Government Advocate would def