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Saree Sansar vs. Govt. of NCT of Delhi & Ors.

Not available · 2024 INSC 240Decided 21 Mar 2024
Not available
Justice Abhay S. Oka · Justice Sanjay Karol

Background

A Delhi sari trader was assessed for State sales tax at 12% on silk fabric for a period in 2000, based on a Delhi Government notification that had temporarily moved silk fabric to a higher-tax schedule. The trader challenged the assessment before the Delhi High Court, arguing that since silk sarees were "declared goods" of special importance under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the State was barred from levying sales tax above 4%, or at all. The High Court dismissed the challenge, and the trader appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that the 4% cap on sales tax for "declared goods" under Section 15(1) of the Central Sales Tax Act only applied while silk fabric remained listed in Section 14 of that Act, but silk fabric had been removed from that list in 1968, well before the relevant assessment period, so the cap no longer applied. On the excise-duty argument, the Court found that although silk sarees appeared in the Excise Act's schedule, the additional duty payable on them was fixed at "nil," meaning Delhi received no revenue-sharing benefit that could bar it from separately levying sales tax; the law itself allowed states to levy sales tax when no such duty-sharing arrangement existed. The appeal was dismissed and the 12% sales tax assessment was upheld.

Lesson Learnt

A business cannot assume protection from state sales tax merely because a product also appears in a central excise law's list of "goods of special importance": the actual statutory conditions (such as whether a duty-sharing arrangement is genuinely in effect) must be checked before claiming an exemption.

Official source (sci.gov.in)View Judgment (PDF)

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