Rajasthan High Court - Jodhpur
Lakshmi Cement vs C.T.O.,Spl.Circle,Pali on 17 April, 2009
Author: Vineet Kothari
Bench: Vineet Kothari
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
1/40
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
JUDGMEN T
Lakshmi Cement vs. Commercial Taxes
(A Division of J.K.Corp. Officer, Spl.Circle, Pali.
Ltd. (Now renamed as J.K.
Lakshmi Cemnt Ltd.),
Jaykaypuram, Distt. Sirohi.
S.B.CIVIL SALES TAX REVISION PETITION NO.613/2005
DATE OF JUDGMENT : 17th April, 2009
PRESENT
HON'BLE DR.JUSTICE VINEET KOTHARI
Mr.Dinesh Mehta and
Mr.Ramit Mehta, for the petitioner assessee.
Mr.Rishabh Sancheti for
Mr.Vinit Mathur for the Revenue.
REPORTABLE
BY THE COURT:-
1. The Assessee, a cement manufacturer within the State of Rajasthan has filed this revision petition under Section 86 of the Rajasthan Sales Tax Act, 1994 being aggrieved by the judgment of the Tax Board dated 23/9/2005 allowing the revenue's appeal and S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 2/40 holding that the assessee was not entitled to avail the partial exemption from sales tax under the Notification dated 6/5/1986 for the asssessment year 2001-02 because it had made some inter-state sales during the said year in question and had availed concessional rate of tax @ 6% under the later Notification dtaed 21/1/2000 which contained a condition No.3 that if the assessee avails such concessional rate of tax under the Notification dated 21/1/2000, he would not avail the benefit of partial exemption from sales tax under the Notification dated 6/5/86.
2. The assessing authority had imposed additional tax on the respondent assessee for the aforesaid period by the assessment order dated 26/8/2003 in view of the circular issued by the Commissioner of Commercial Taxes Department on 16/4/2001 which was issued by the Commissioner explaining the Notification dated 21/1/2000. The first appellate authority - Deputy Commissioner (Appeals) however allowed the first appeal filed by the assessee on 3/1/2004 and held that the assessee would be entitled to avail such partial exemption in respect of inter-state sales made on which concessional rate of 6% was not availed by him under the Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 3/40
3. The Revenue took the matter further before the Tax Board and the appeal of the Revenue was allowed by the learned Tax Board on 23/9/2005 and aggrieved of the same, assessee has come before this Court in the present revision petition.
4. I have heard learned counsels on both the sides at length and perused the relevant Notifications, impugned orders and judgments cited at the bar.
5. The case in hand involves interpretation of the Notification dated 6/5/86 and 21/1/2000 which are reproduced hereunder in extenso for ready reference:-
"NOTIFICATION DATED 6/5/1986 S.No.625 : F.4 (72) FD Gr.IV/81-18 Dated 6/5/1986 S.O.23.- In exercise of the powers conferred by S.8(5), CST Act, 1956, the State Govt. in supersession of the FD Notfn No.F.4 (72) FD Gr./IV/81-36 dated 3.12.1985(S.No.584), hereby directs that, with immediate effect, any dealer, having his place of business and manufacturing goods in the State of Rajasthan, may claim partial exemption from the tax S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 4/40 payable in respect of the sales by him of such goods in the course of inter-State trade or commerce by way of reduction at the rate of 50% of the tax so payable on increased sales upto 50% and at the rate of 75% of the tax so payable on increased sales made over and above the aforesaid 50%, in the manner and subject to the conditions as follows:-
(1) Such reduction of tax shall be allowed to a dealer only after and in respect of the increase which is effected in the percentage of the quantum of goods sold in the course of inter-State trade or commerce out of the total quantum of goods sold within the State and in the course of inter-State trade or commerce and dispatched to Head Office, Branch Office, Depot or agent outside the State for sale outside the State, during any accounting year as against such percentage during the accounting year 1984-85;
(2) in the case of a dealer who commenced the manufacture of goods in the State of Rajasthan on or after 1.1.1985, the average of the aforesaid percentages in respect of the other manufacturers in the State in the relevant industry during the accounting year 1984-85, calculated and determined by the assessing authority with the approval of the Commissioner, shall be deemed to be the percentage in respect of such dealer for the accounting year 1984-85;
(3) This increase effected in the percentage, as referred to in clause (1) above in respect of the sales in the course of inter-State trade or commerce, to be considered shall be limited to the extent of the decrease in the percentage in respect of the despatch of goods to Head Office, Branch Office, Depot or agent outside the State for sale outside the State, during the relevant accounting year as against such percentage during the accounting year 1984-85; and S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 5/40 (4) No claim for such reduction of tax shall be allowed in respect of levy-cement.
NOTIFICATION DATED 21/1/2000 S.No.1301 : F.4 (1) FD/Tax Div/99-266 dated 21.1.2000 S.O. - In exercise of the powers conferred by S.8 (5), CST Act, 1956, the State Govt. hereby directs that the tax payable under sub-sections (1) and (2) of the said section, by any dealer having his place of business in the State, in respect of sale of cement made by him from any such place of business in the State, in the course of inter-State trade or commerce, shall be calculated at the rate of 6% on the following conditions, namely:-
1. That the dealer shall record the correct name with full and complete address of the purchaser in the bill or cash memorandum for such inter-State sale to be issued by him;
2. That the burden of proof that the transaction was in the nature of inter-State sale shall be on the dealer; and
3. That the dealer making inter-state sales under this notfn shall not be eligible to claim benefits provided by notfn No.F.4(72)FD/Gr.IV/81-18 dated 6.5.86 as amended from time to time (S.No.625)"
6. Mr. Dinesh Mehta and Mr. Ramit Mehta, learned counsels appearing for the petitioner assessee submitted that akin to the Notification dated 21/1/2000 earlier also the State Government has S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 6/40 issued a Notification on 7/3/1994 following which the Commissioner had issued a Circular dated 15/4/1994 explaining the said Notification dated 7/3/1994 and which explanation given by the Head of the Department namely the Commissioner, Commercial Taxes Department, was correct interpretation of the Notification and the assessee was continued to be given the benefit of partial exemption under the Notification dated 6/5/1986, notwithstanding the notification dated 7/3/1994 which contained same condition no.3 as contained in the Notification datd 21/1/2000 and the assessment was made in the case of assessee upto the year 2000-2001 and, therefore, for the assessment year 2001-02 involved in the present revision petition, the Revenue cannot take a different stand that assessee is not entitled to similar benefit of partial exemption in respect of inter-state sales made by it other than those covered by the Notification dated 21/1/2000. They submitted that since the Notification dated 6/5/1986 granted partial exemption in the form of reduction of tax payable under the Central Sales Tax Act depending upon the increase of inter-
state sales made by the assessee during the particular year compared with the base year 1984-85 and such exemption was given under the Notification dated 6/5/1986, to encourage the assessee having place S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 7/40 of manufacture within the State of Rajasthan to make inter-state sales taxable under the Central Sales Tax Act as against the branch transfers or depot transfers on which no CST was payable, the State gave this partial exemption depending upon such shift from branch transfers to inter-state sales by the assessee and the quantum thereof, therefore, this partial exemption could not be curtailed by a later Notification providing for a concessional rate of tax under the CST Act subject to condition like the condition no.3 in the Notification dated 7/3/1994 or Notification dated 21/1/2000 and at least those inter-state sales on which tax @ 6% was not charged by the assessee under the said Notification dated 21/1/2000, the increase in the inter-
state sales in comparison to the base year 1984-85 should be allowed to be computed under the Notification dated 6/5/1986 and the benefit of partial exemption should be given accordingly.
7. Learned counsel for the assessee further submitted that the assessee is claiming benefit of partial exemption only in respect of such inter-state sales made by it which are not covered by the Notification dated 21/1/2000 and, therefore, the benefit of partial exemption cannot be hit or prohibited totally in view of condition S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 8/40 no.3 in the Notification dated 21/1/2000. In other words, Mr.Mehta submitted that condition no.3 of the Notification dated 21/1/2000 operated only for inter-state sales made under the said Notification availing the benefit of concessional rate of tax of 6% and the said condition could not enlarge or expand the said Notification dated 21/1/2000 and prohibit the assessee from availing the partial exemption, under the Notification dated 6/5/1986 altogether.
8. In order to appreciate the controversy, it is also considered appropriate to reproduce the previous Notification dated 7/3/1994 and ensuing circular issued by the Commissioner on 15/4/1994 also for ready reference.
"NOTIFICATION DATED 7/3/1994 S.No.928 : F.4(8) FD Gr.IV/94-70 dated 7.3.1994 S.No.200.- In exercise of the powers conferred by S.8 (5), CST Act, 1956 and in supersession of this deptt notfn No.F.4 (72) FD Gr.IV/82-34 dated 27.6.1990 (S.No.806), the State Govt. hereby directs that the tax payable under sub-sections (1) and (2) of the said section, by any dealer having his place of business in the State, in respect of the sales of cement made by him from any such place of business in the S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 9/40 course of inter-State trade or commerce shall be calculated at the rate of 4 per cent without furnishing of declaration in form "C" or certificate in form "D"
on the following conditions, namely; -
(i) that the dealer shall record the name and full and complete address of the purchaser in the bill or cash memorandum for such inter-State sale to be issued by him;
(ii) that the burden to prove that the transaction was in the nature of inter-State sale, shall be on the dealer; and
(iii) that the dealer making inter-State sales under this notification shall not be eligible to claim benefit provided for by the notfn No.F.4 (72) FD/Gr.IV/81-18, dated 6.5.1986 as amended from time to time (S.No.625).
This notification shall come into force from 1.4.1994 and shall remain in force upto 31.3.1997."
CIRCULAR DATED 15/4/1994
"करन त पररपत स.2/94/-95
र जस न सरक र
वण ज क कर ववभ ग
कम क : प.16 (बजट) कर/आ क/94-95/108 द"न क : 15 अप%ल, 1994
समस उप क, व ण ज क कर
समस सह क आ क व ण ज क कर
समस व ण ज क/सह क व ण ज क कर अध*क र+
पररपत
र सरक र द र अध*सच - न सख प. 4(8) एफ.ड ./गप-4/94-
70, द"न क 07.03.1994 ज र+ कर 1 अप%ल, 1994 स% 31 म च4, 1995 क स म5 ट क6 अन र 4ज क ववक पर क%न8+ बबक6 कर क6 "र प रप S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
10/40
"ग" म5 घ<ष प रप "घ" म5 पम -पत द"ए बबन सश 4 4% क6 गई
ह@ । इस अध*सच - न क% अ* न अन र 4ज क ववक करन% व ल
व वह र सम -सम सश<ध*क अध*सच - न स. एफ.4(72)
एफ.ड ./गप-4/81-10, द"न क 06.05.1985 द र उपलब* कर % ग % फ "% क " व करन% क प त नह+ ह<ग ।
इस समबन* म5 सपष कक ज ह@ कक स म5 ट क6 घ<ष पपत
स ड क% सम न 4 पर क6 गई अन र 4ज क बबक6 "र सम -सम
सश<ध* अध*सच - न स. एफ.4(72) एम.ड ./गप-4/01-10, द"न क
06.05.1986 द र उपलब* कर % ग % फ "% प प हIग%, ल%ककन बबन घ<ष पपत स /ड क% क6 गई अन र 4ज क बबक6 पर उक फ "% प प नह+ हIग%।
सह+/-
(स .क%.म%थ )-
आ क, व ण ज क कर ववभ ग, र जस न, ज पर।
कम क : प.16(बजट) कर/आ क/94-95/102 द"न क : 15.04.1994 पत ललवप :-
(1)समस अनभ ग, मख ल ।
(2)मह ल%ख क र, र जस न, ज पर (20 पत I म5) (3)सधचव, र जस न वव* न सभ (20 पत I म5) (4)श ज%.क%.स म5 ट वरस4: उनक% पत स"भ4 JKCW/JP/24 द". 29 म च4, 94.
सह+/-
(एम.एल.मगल) अत ररक आ क (कर), व ण ज क कर ववभ ग, र जस न, ज पर।"
9. The circular dated 15/4/1994 quoted above was withdrawn by the Commissioner, Commercial Taxes Department on 16/4/2001 after the Notification dated 21/1/2000 was promulgated. The said circular of Commissioner, Commercial Taxes Department issued on 16/4/2001 is also reproduced hereunder for ready reference:-
"Kar-Niti Prapatra No.2001/1 S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 11/40 GOVERNMENT OF RAJASTHAN COMMERCIAL TAXES DEPARTMENT No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001 All Dy. Commissioners All Assistant Commissioners All Commercial Taxes Officers.
All Assistant Commercial Taxes Officers.
CIRCULAR A question has been raised as to the applicability of Finance Department notification No.F.4(72)FD/Br.IV/81-18 dated 06.05.1986 vis-a-vis notification No.F/(8) FD/Gr.IV/94-70 dated 07.03.1994 and similar subsequent notification dated 12.03.1997 and the existing notification dated 21.01.2000. The issue has been examined and it is clarified that a dealer can avail the benefit of either of these two notifications in any financial year. For instance, if he opts for benefit under notification dated 06.05.1986 for the financial year 2000-2001, he would not be entitled to claim simultaneous benefit in the same year under the notification providing for reduce rate of tax on cement in course of inter- state trade or commerce without any supportive Form C or D. Consequently, if the benefit of notification dated 06.05.1986 is being availed in any financial year, the dealer shall be debarred from claiming any benefit under notification dated 6.5.1986 for the same assessment year.
Keeping in view the above status, the Circular No.F.16 (Budget)Tax/CCT/94-95/108 dated 15.04.1994 is hereby withdrawn and the dealers will be entitled to claim benefit of either of the two notifications in any financial year. Action may be taken accordingly.
Sd/-
(P.K.Deb) Commissioner S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 12/40 Commercial Taxes, Rajasthan, Jaipur"
10. Learned counsel for the petitioner assessee also submitted that similar Notification besides cement industry as quoted above were also issued on different occasions for other commodities also subject to the same condition no.3 and few such Notifications are S.No.1335 F.4(1)FD/Tax Div/2000-303 dated 30.3.2000, as corrected on 24.4.2000, S.No.1436 F.4(12)FD/Tax Div/2001-28 dated 29/3/2001 & S.No. 1563 F.4(3)FD/Tax Div/2002-175 dated 22/3/2002, as corrected by corrigendum effective from 22.3.2002.
Since, however, no controversy is raised before this Court by any of the dealer of those commodities and the condition in those Notifications are also similar to the Notification already reproduced herein above, there is no need to reproduce these Notifications also.
11. Learned counsel for the petitioner assessee also brought to the notice Court that for the preceding year 2000-2001 the petitioner had filed a writ petition in this Court challenging the notice for rectification given by the assessing authority in pursuance of the S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 13/40 Circular dated 16/4/2001 issued by the Commissioner and that writ petition no.6192/2003 came to be disposed of by the learned Single Judge of this Court in the following manner. The said order is quoted below:-
"Heard the learned counsel for the parties. After hearing the arguments from the counsel for the petitioner, departmental representative Mr. Harphool, Dy.Commissioner (Commercial Taxes) was called by the Government Advocate for his assistance. After hearing the arguments of the parties, it clearly bears out that Annexure-5 was withdrawn on 16.04.01. Prior to this date, the assessee was entitled to the benefits which the assessee is claiming as was conferred by the clarification dated 15.04.94. Thus, the notice dated 19.08.03 pertaining to the assessment year 2000- 01 for rectification does not appear to be justified. Instead of making interference in writ jurisdiction, the petitioner is directed to appear before the authority issuing notice as aforesaid and will put forward his case set up by him. The authority will consider the notification in right perspective.
While deciding the case, it will also clarify its position as to why the notification which could only be S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 14/40 prospective and effective after 16.04.01, a rectification notice was issued him for the assessment year 2000-01. The clarification will be sent to this Court.
The writ petition is disposed of and would be treated to be pending for the purpose of considering the explanation of the assessing officer.
Sd/-
(B.Prasad), J."
In pursuance of the said order, the assessing authority had dropped the rectification proceedings vide order dated 24/11/2003 and accordingly the said writ petition came to be finally disposed of with the additional order passed by the same learned Single Judge on 13/5/2004 in the following terms:-
"13/5/04 Hon'ble Mr.B.Prasad, J.
Mr.R.Mehta, for pet.
Mr.B.S.Bhati, for Resp.
Perused the explanation.
Explanation is accepted.
No further order is required to be passed. The matter is disposed of finally."
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 15/40
12. Learned counsel for the assessee, therefore, submitted that the Tax Board has erred in holding that the petitioner assessee was not entitled to avail the benefit of partial exemption under the Notification dated 6/5/86 and, therefore, the revision petition deserves to be allowed for the assessment year 2001-02 also.
13. Per contra, Mr. Rishabh Sancheti for Mr.Vinit Kumar Mathur for the Revenue vehemently submitted that on a plain construction of condition no.3 of the Notification dated 21/1/2000, quoted above, it was clear that the petitioner assessee was not entitled to avail any benefit under the Notification dated 6/5/86 in view of clear stipulation made in condition no.3 of the Notification dated 21/1/2000 and it not open to the assessee to segregate the inter-state sales made by him in two parts, one covered by Notification dated 21/1/2000 and other not so covered.
14. He further submitted that it is well settled that the provisions of taxing statutes, particularly exemption notifications have to be strictly construed as per well settled legal position in this regard and the plain language of the Notification, without attributing any redundancy, has S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 16/40 to be literally construed and there is no scope for any intendment. He submitted that though Notification dated 6/5/1986 continued to operate during the year in question i.e. 2001-02 also but since the assessee had admittedly made inter-state sales and availed the concessional rate of tax @ 6% which otherwise in the absence of furnishing prescribed declaration form in Form `C' as required under Section 8(1) (2) of the CST Act was not available, the assessee was bound to be deprived of the benefit of partial exemption under the Notification dated 6/5/86 and the assessee cannot contend that those inter-state sales in respect of which he has not availed 6% rate of tax under the Notification dated 21/1/2000 should still be eligible for partial exemption from tax under the Notification dated 6.5.86.
15. Mr. Sancheti very emphatically explained the condition no.3 and submitted that if what the assessee contended was right, the words, "the dealer making" in the condition no.3 of the Notification dated 21/1/2000 would be rendered otiose and redundant because then only it could be construed to mean that on the inter-state sales under this Notification (namely Notification dated 21/1/2000) the assessee shall not be eligible to claim benefits provided by S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 17/40 Notification dated 6/5/1986. To explain, the said condition no.3 is reiterated below by the aforesaid three words marked in bold.
"3. That the dealer making inter-state sales under this notfn shall not be eligible to claim benefits provided by notfn No.F.4(72)FD/Gr.IV/81-18 dated 6.5.86 as amended from time to time (S.No.625)"
16. Mr. Sancheti relied upon the decision of Hon'ble Surpeme Court in the case of State of Jharkhand & Ors. vs. Ambay Cements & Anr. - (2005) 1 SCC 368, Commissioner of Central Excise, Chandigarh-I vs. Mahaan Dairies - 2004 (166) E.L.T. 23 (S.C.) in support of his contention that the exemption provision in a taxing Statute has to be construed strictly and not liberally and the Court cannot grant exemption under the Industrial Policy ignoring the eligibility condition prescribed therein in the exemption Notification.
17. Having heard the learned counsels and after giving my thoughtful consideration to the rival contentions raised at the bar, this Court is of the opinion that the present revision petition of the petitioner-assessee deserves to be dismissed and the assessee cannot S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 18/40 be held entitled to the benefit of partial exemption under the Notification dated 6.5.86 for the assessment year year 2001-02 in question. The reasons are as follows.
18. It is well, nay, settled that the eligibility criteria for availing exemption under the taxing statutes have to be strictly construed and the plain language of the Notification has to be given its literal meaning as per the golden principle of interpretation that plain language should be construed literally without any intendment or interpretation. It is equally well settled that there is no equity or intendment about tax.
19. It would be worthwhile to refer to a recent Supreme Court decision in the case of Tata Cummins Ltd. vs. State of Jharkhand & Ors. - 2006(16) Tax up-date 199 in which Hon'ble Supreme Court dealt with the clause 28 of the Industrial Policy of the State of Bihar which stipulated that the new industrial units as well as existing units which are not availing of any of the facilities deferment or tax free purchases or sales under any notification announced earlier, shall be allowed to opt for set-off of Jharkhand sales tax paid on the purchases S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 19/40 of raw material within the State. The assessee who were availing the benefit of deferment scheme on the effective date given in the said clause 28 approached the Court and claimed that the said benefit of deferment under a separate scheme operated in a different field and that could not prevent the assessee from availing the benefit of set-off of Jharkhand sales tax on the purchases of raw material in terms of clause 28 of the Industrial Policy. Negativing the said claim, the Apex Court held as under:-
"The Industrial Policy mentions the Commercial Tax Reforms in Clause 28 on the said Policy. Clause 28.1 reads as under :
"28.1 New Industrial Units as well as existing units which are not availing any facility of Tax-deferment or Tax free purchases of tax free sales under any notification announced earlier, shall be allowed to opt for set off, of Jharkhand Sales Tax paid on the purchases of raw materials within the State of Jharkhand only against Sales Tax payable either JST or CST on the sale, excluding stock transfer or consignment sale outside the state, of finished products made out from such raw materials subject to limitation of six months or the same financial year from the date of purchase of such raw materials."
The question in this case is whether the appellant S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 20/40 is entitled to the benefit of Clause 28.1.
Admittedly, the appellant had been granted the benefit of Sales Tax-deferment for a period of eight years from 1995 to 31.12.2003 under the Old Bihar Industrial Policy, 1995 read with Notification S.O. No.478 and 479 both dated 22.12.1995.
Thus, it is an admitted case that on the effective date i.e. 15.11.2000 the appellant was actually availing the facility of Tax-deferment under the Notification announced earlier. Hence in our opinion on a plain reading of Clause 28.1 of the Industrial Policy, which was introduced on 15.11.2000 in the State of Jharkhand, the appellant is not entitled to the benefit under Clause 28.1.
Learned counsel for the appellant contends that if we hold that Units which were actually availing the facility of Tax-deferment on 15.11.2000, will not be given the benefit under the Clause 28.1, the consequence will be that hardly any unit will get the benefit of Clause 28.1 because almost all the units of State of Jharkhand were enjoying the Sales Tax- deferment on 15.11.2000. Hence he submitted that such an interpretation should be avoided.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 21/40 We are afraid we cannot accept this plea. It is well settled that when the plain and grammatical meaning of the provisions in an Act or Notification are clear then the literal rule of interpretation has to be applied. In the present case, in our opinion, Clause 28.1 is clear. The word used there are "not availing any facility of Tax-deferment". Thus the present continuous tense has been used in Clause 28.1. In our opinion, Clause 28.1 means that the benefit therein will be available only if the facility of Tax-deferment is not actually being availed of on the date of the Notification of the Industrial Policy, which is 15.11.2000. It is well settled when the meaning of a provision is clear, we cannot depart from the literal rule of construction."
20. Dealing with the similar kind of controversy arising under the Rajasthan Sales Tax Incentive Scheme, 1987 and subsequent Sales Tax New Incentive Scheme for Industries, 1989 the Hon'ble Supreme Court in the case of M/s Vividh Marbles Pvt. Ltd. vs. Commercial Tax Officer - 2007 (17) Tax up-date 307 held as under:-
"It is not in dispute that the State formulated two Schemes; one in the year 1987 and another in 1989. S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 22/40 The said Schemes provided for different nature of incentives. Although 1989 Scheme was framed during pendency of 1987 Scheme, as noticed hereinbefore, the same was given a retrospective operation in terms whereof the entrepreneurs were given a choice to opt either for 1987 Scheme or 1989 Scheme. Appellant was aware thereabout. It opted for 1989 Scheme. The sanction of eligibility provided that a formal eligibility certificate as per law would be granted to the appellant. The investment for capital, however, was determined at Rs.66.49 lacs. The said sanction did not amount to a grant of a certificate. The eligibility certificate, as indicated hereinbefore, was granted only on 07.12.1996, in terms whereof clearly 1989 Scheme was applied. It was so explicitly stated in the eligibility certificate also. It may be true that the Assessing Authority committed a mistake in referring to the 1987 Scheme in its order of assessment, but thereby the appellant cannot be permitted to derive any benefit to which it was not entitled under the law. Appellant indisputably was eligible for grant of exemption in terms of both the Schemes. It had opted for the latter Scheme. While doing so, it must have taken into consideration the benefits under both the Schemes separately. Having opted for the 1989 Scheme, in our opinion, now the appellant cannot be S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 23/40 permitted to turn round and contend that it should have been granted the benefit of 1987 Scheme, only because at a later stage it found the same to be more beneficial."
21. In State of Rajasthan v/s. J.K.Udaipur Udyog Ltd. & Anr. - (2004) 137 STC 438, the Hon'ble Supreme Court again dealing with the case arising under the Rajasthan Sales Tax/Central Sales Tax Exemption Scheme for Industries, 1998 held that the concession or exemption given by the Government is a defeasible right of the industry and if by a later notification, the State reduced the exemption, the assessee had no right to claim that the State should not recover from the dealer the tax which the dealer has lost opportunity to recover from its customer. The Court further held that what is granted can be withdrawn unless the Government is precluded from doing so on the ground of estoppel, which principle is itself subject to considerations of equity and public interest. Para no.25 and 26 of the said judgment are opportune in this regard and, therefore, they are quoted below:
"25 An exemption is by definition a freedom from an S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 24/40 obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an advantage not available to others. An exemption granted under a statutory provision in a fiscal statute has been held to be a concession granted by the State Government so that the beneficiaries of such concession are not required to pay the tax or duty they are otherwise liable to pay under such statute. The recipient of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the concession during the period of its grant. This right to enjoy is a defeasible one in the sense that it may be taken away in exercise of the very power under which the exemption was granted. [See: Shri Bakul Oil Industries & Anr. V.State of Gujarat; 1987 (1) SCC 31; Kasinka Trading v. Union of India (1995)1 SCC 274; Shrijee Sales Corpn. v. Union of India (1997) 3 SCC 398].
26. In this case the scheme being notified under the power in the State Government to grant exemptions both under Section 15 of the RST and Section 8(5) of the CST in the public interest, the State Government was competent to modify or revoke the grant for the same reason. Thus what is granted can be withdrawn unless the Government is precluded from doing so on the S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 25/40 ground of promissory estoppel, which principle is itself subject to considerations of equity and public interest. [See: Sales Tax Officer v. Shree Durga Oil Mills (1998) 1 SCC 572]. The vesting of a defeasible right is therefore, a contradiction in terms. There being no indefeasible right to the continued grant of an exemption (absent the exception of promissory estoppel), the question of the respondent companies having an indefeasible right to any facet of such exemption such as the rate, period etc. does not arise."
22. In another judgment in MRF Ltd. Kottayam vs. Asstt.Commissioner (Assessment) Sales Tax and Ors. - (2006) 8 SCC 702 relied upon by the learned counsel for assessee-petitioner, another Division Bench of the Supreme Court dealt with the similar controversy. The statutory notification amending the earlier exemption notification adversely effecting the rights already accrued was challenged by the assessee on the principle of promissory estoppel. From the facts obtaining before the Supreme Court it would appear that original notification granting exemption for expansion in manufacture of certain products including rubber based goods was promulgated and relying thereon the assessee manufacturer S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 26/40 commenced commercial production after investing huge amount and it also obtained eligibility certificate from the competent authority. The assessee under the said scheme was entitled to exemption for a fixed period of seven years in respect of rubber based goods manufactured by it. During the currency of the period of exemption the State Government issued another notification excluding the formation of compound rubber from the definition of `manufacture' for the purpose of the original exemption notification. Such subsequent notification was challenged by the assessee on the ground that it was hit by the principle of promissory estoppel as well as by doctrine of legitimate expectation and the assessee could not be prematurely deprived of the exemption under the original notification. Upholding the contention of the assessee, the Court held in para no. 43 as under:-
"Under Section 10(1) of the Kerala General Sales Tax Act, 1063, the State Government has the power to make an exemption or reduction in rate either prospectively or retrospectively in respect of nay tax payable under that Act. However, the power of the Government under Section 10(3) by notification in the S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 27/40 gazette to cancel or vary any notification issued under Section 10(3) cannot be exercised retrospectively. That was the view taken by a Single Judge of the Kerala High Court, which was later approved by a Division Bench. The appeal preferred by the State of Kerala in Dy.Commr.(Law) case, (2000) 9 SCC 286 was dismissed and the judgment of the High Court has therefore become final. Accordingly, it was held that Section 10(3) does not confer the power to withdraw an exemption with retrospective effect. The effect thereof is that the amendment Notification SRO No.38/98 has to be read so as not to take away or disturb any manufacture's pre-existing accrued right of exemption for a period of 7 years. If SRO No.38/98 is construed as now contended by the respondent, then the inevitable consequence would be that SRO No.38/98 would itself be rendered ultra vires Section 10(3) of the Act, and therefore, illegal, bad in law and null and void."
However, no such plea of promissory estoppel has been raised in the present case against issuance of the later Notification dated 21/1/2000 and rightly so, therefore, this case law does not apply in the facts of the present case.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 28/40
23. In State of Jharkhand vs. Ambay Cement - (2005) 1 SCC 368 cited by the learned counsel for the Revenue also, the Hon'ble Supreme Court held that in order to avail exemption the unit had to fulfill eligibility criteria and the requirement to obtain permission from the Industries Department of the State Government before 31/8/2000 was a condition precedent for such units to be eligible to exemption and in the absence of the unit having obtained that permission, the High Court exercising its jurisdiction under Article 226 of the Constitution of India could not direct grant of exemption to the writ petitioner-industrial unit, overlooking the mandatory statutory conditions prescribed therefor, particularly in the absence of any challenge to the validity of such condition. In para no.24, 25 and 26 of the said judgment, the Court held as under:
"24. In our view, an exception or an exempting provision in a taxing statute should be construed strictly and it is not open to the Court to ignore the conditions prescribed in the Industrial Policy and the exemption Notifications.
25. In our view, the failure to comply with the requirements renders the writ petition filed by the S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 29/40 respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule.
26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non- compliance of the same must result in canceling the concession made in favour of the grantee-the respondent herein."
24. In G.P.Ceramics Pvt. Ltd. vs. Commissioner, Trade Tax, Uttar Pradesh - (2009) 2 SCC 90 the Apex Court has reiterated in para no.29 of the judgment that it is now a well established principle of law that various eligibility criteria laid down in an exemption S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 30/40 notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally.
25. From the conspectus of the above legal authorities, it is clear that the condition no.3 of the Notification dated 21/1/2000 has to be given its plain and clear meaning and cannot be restricted only to the specific transaction of sale covered by the said Notification dated 21/1/2000 itself, irrespective of circulars issued by the Commissioner which in any case could not override, nor they can expand the scope of statutory notifications. The said condition no.3 in its own term is very clear. Once the assessee avails the benefit of concessional rate of tax under the Notification dated 21/1/2000, condition no.3 would apply in its full force and logically. The said condition no.3 in clear terms stipulates that dealer making inter-state sale under this notification shall not be eligible to claim benefits (emphasize plurality benefits) provided by the Notification dated 6/5/86 as amended from time to time is very clear and it cannot be said that even though the assessee had availed benefit of concessional rate of 6% under the Notification dated 21/1/2000, it should still be further eligible for S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 31/40 partial exemption from CST payable in respect of other inter-state sales made by him during the same year under Notification dated 6/5/86.
There is considerable force in the submission made by the learned counsel for the Revenue that words " the dealer making" in condition no.3 cannot be read as omitted or redundant, if what assessee was claiming was true in law.
26. One cannot lose sight of the fact that both the Notifications dated 6/5/86 and 21/1/2000 provide for exemption or concession to the assessee, a manufacturer of cement. While the Notification dated 6/5/86 does not specify any dealer or type of manufacturer, the later Notification dated 21/1/2000 applies to manufacturers of cement. As noted above, for other commodities manufacturers, other similar notifications were also issued by the State Government. Therefore, the State Government cautiously wanted not to apply or allow the benefit of Notification dated 6/5/86 to those manufacturers or specified dealers for which subsequent notifications like the one in hand dated 22.1.2000 was issued, if they make sales and avail benefit S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 32/40 of concessional rate of tax under these notifications issued under Section 8(5) of the CST Act. Therefore, dissecting this condition and still allowing the benefit of partial exemption under the Notification dated 6/5/86 would be doing violence to the condition no.3 which was never intended by the State Government. It is for the assessee to opt either for availing benefit of concessional rate of tax under the Notification dated 21/1/2000 or not to do so altogether. Once, he does so and opts for the same, the applicability of the notification dated 6/5/86 is excluded altogether and not in piece meal. Therefore, it cannot be contended by the assessee that in respect of other inter- State sales, still partial exemption may be allowed in terms of Notification dated 6/5/86, applicability of which stands excluded. Doctrine of exclusion and eclipse would apply in such cases rather than doctrine of liberal construction.
27. The contention of learned counsel for the assessee that since the Circular dated 15/4/1994 which was withdrawn later on on 16/4/2001 clarified that such benefit of Notification dated 6/5/86 would be applicable in respect of inter-state sales, if such sales were made against declaration in Form `C' or `D' but not when such inter-
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 33/40 state sales are made without furnishing of declaration in form `C' or `D' as specified in Notification dated 7/3/1994 and all assessments of assessee were completed accordingly and on this ground for the assessment year 2001-02 also similar benefit may be extended to the assessee does not impress this Court. The principles of res judicata do not apply in tax matters and all assessment years are independent and moreso, the controversy for assessment year 2001-02 is after new Notification dated 21/1/2000 and Circular dated 16/4/2001came into being, which materially altered the situation which obtained while previous Notification dated 7/3/1994 and Circular dated 15/4/1994 prevailed.
28. The contention of the learned counsel for the petitioner- assessee that the Notification dated 6/5/86 contained a scheme of exemption applicable to all kinds of dealers whereas the Notification dated 21/1/2000 is transaction specific and, therefore, condition no.3 applicable to a transaction specific Notification cannot undo the benefit available to a dealer under a scheme notified under Section 8 (5) of the Act is also devoid of merit. Section 8 (5) of the CST Act which is reproduced hereunder does not empower the State S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 34/40 Government to grant any exemption to any class of dealer or a dealer as such and the power to grant exemption given to the State Government under the Central legislation namely CST Act, 1956 is restricted to be transaction specific only, namely inter-State sale i.e. the taxable event covered under CST Act. Therefore, it is wrong to contend that Notification dated 6/5/86 exempted a class of dealer or manufacturer. Partial exemption granted is also relating to taxable event in the form of taxable inter-state sales only and the rebate or remission or partial exemption granted under the Notification dated 6/5/86 cannot and does not travel beyond the scope of Section 8(5) of the CST Act and, therefore, the question is only whether the subsequent Notification dated 21/1/2000 deprives the benefit of partial exemption under the Notification dated 6/5/86 or not, which it does, in the opinion of this Court, in view of condition no.3 of the later Notification dated 21/1/2000.
"Section 8 (5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 35/40 direct,-
(a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter- State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification;
(b).........."
29. The principles of res judicata or estoppel do not apply in taxing statutes. There is hardly any need to re-emphasize these principles. There is no estoppel against statute. It is also well settled that the Circulars issued by the Commissioner do not have any statutory force and they can neither restrict or expand the scope of statutory Notification. The confusion on account of different interpretations given in the Circulars dated 15/4/1994 & 16/4/2001, cannot enure to the benefit of assessee, in view of clear terms of condition no.3 in the Notification dated 21/1/2000 at least after 16/4/2001, when previous Circular dated 15/4/1994 was withdrawn. As a matter of fact, the S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 36/40 Hon'ble Supreme Court as well as this Court have consistently deprecated the practice on the part of Commissioner, Commercial Taxes Department to issue these kind of Circulars which directly impede or interfere with the quasi-judicial discretion of the assessing authority and force them to take a particular view of the law or statutory notification. It would be opportune to refer to the judgment of this court in the case of CTO Vs. M/s Bombay Machinery Store - 2007 (19 ) Tax up-date 315. This court in para no.12 quashed such circulars issued by the Commissioner in respect of period prescribed for constructive delivery for the purpose of Section 6(2) of the CST Act and it was held as under;-
"12. Therefore, the proposition of law by the learned Commissioner in the impugned circulars that "as per legal position, `transit' gets over as soon as a reasonable time elapses for the consignee to elect whether he would take the goods away or leave them in the transporters premises, because at the conclusion of reasonable time there is deemed to be a constructive delivery of goods from the transporter to the consignee", cannot be said to be a correct legal position. The subsequent Circular dated 15.04.1998 S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 37/40 purportedly issued to ameliorate the situation for dealers created by previous circular dated 16.09.1997, merely ended up extending the time limit of days to 30 days by propounding a particular view of constructive delivery. Commissioner giving a particular interpretation of law purported binding on all the assessing authorities is doubtful. There is no specific provision in the Sales Tax Act, either under the RST Act or under the CST Act, empowering the Commissioner to issue such circulars, as against such powers conferred under Section 19 of the Income Tax Act on the Central Board of Direct Taxes. Even Section 119 of the Income Tax Act, which empowers the way of its proviso restricts and provides that no such order, instruction or direction shall be issued so as to require any Income Tax authority to make a particular assessment or dispose of a particular case in a particular manner and such orders or instructions shall also not interfere with the discretion of the Commissioner(Appeals) in exercise of its appellate functions. Therefore, this court cannot countenance the issuance of such circulars by the Commissioner of Sales Tax, which unduly fetter with the quasi-judicial discretion of the assessing authorities, who are expected in law to give their findings of fact and interpret the statutory law in their own quasi-judicial S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 38/40 discretion in accordance with the law as interpreted by the Supreme Court or jurisdictional High Court. The circulars issued by the Commissioner in the aforesaid manner like done vide Circulars dated 16.09.1997 and 15.04.1998 are likely to hamper and throttle such quasi-judicial discretion which vests with the assessing authorities. Therefore, the aforesaid circulars issued by the Commissioner aforesaid on 15.04.1999 (S.No.1132A) and 16.09.1997 (S.No.1115B) are in conflict with the Division Bench decision of this Court in Guljag Industries Ltd's case (supra) and even otherwise they are found to be without any authority or law. Consequently, both these circulars are found to be ultra vires and are hereby quashed.
13. In view of aforesaid, since there was no basis for the learned Commissioner to stipulate the time frame of 10 days or 30 days and, thereafter to require the assessing authority to invoke the concept of constructive delivery so as to deny the exemption of CST on subsequent sales made by transfer of documents of title to the goods made under Section 6 (2) of Act, though requisite conditions of Section 6(2) of the Act are fulfilled by the dealer and such circulars have already been held to be ultra vires and have been quashed and in absence of any other material justifying S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 39/40 the denial of exemption under Section 6(2) of the Act to the assessee, the impugned order of the Tax Board allowing such exemption to the assesee is not required to be interfered with in the present revision petitions filed by the Revenue."
30. Therefore, even though the assessee's assessments might have been completed in accordance with the Circular dated 15/4/1994 issued by the Commissioner and even the assessment of preceding year 2000-01 in terms of the order passed by this Court in earlier writ petition filed by the assessee as quoted above, the same does not furnish a valid ground to allow petitioner-assessee to avail benefit of partial exemption contrary to the condition no.3 of the Notification dated 21/1/2000 for the assessment year 2001-2002, involved in the present case.
31. Thus, this Court is of the considered opinion that the Tax Board was perfectly justified in holding the assessee to be not entitled to partial exemption under the Notification dated 6/5/86 for the assessment year 2001-02 in question and the revision petition filed by the petitioner-assessee is sans merit and is liable to be dismissed. The S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009 40/40 same is accordingly dismissed with no order as to costs.
(DR.VINEET KOTHARI), J.
item no.5 baweja/-