Madras High Court
M.Ramachandran & Bros vs The State Of Tamil Nadu on 3 January, 2019
Author: S.S.Sundar
Bench: S.S.Sundar, C.Saravanan
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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 03.01.2019
CORAM:
THE HON'BLE Mr. JUSTICE S.S.SUNDAR
AND
THE HON'BLE Mr. JUSTICE C.SARAVANAN
T.C.(MD)Nos.62 and 63 of 2009
T.C.(MD)No.62 of 2008:
M.Ramachandran & Bros.,
130, Chithirakara Street,
Madurai. ... Petitioner
Vs.
1.The State of Tamil Nadu,
Rep.by the Secretary,
Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench),
Commercial Taxes Buildings,
Dr.Thangaraj Salai,
Madurai 625 020.
2.The Deputy Commissioner (CT),
Madurai Division,
Commercial Taxes Buildings,
Dr.Thangaraj Salai,
Madurai 625 020.
3.The Commercial Tax Officer,
Chithirakara Street Circle,
Commercial Taxes Buildings,
Dr.Thangaraj Salai,
Madurai 625 020.
... Respondents
PRAYER: The revision case filed under Section 38 of TNGST Act, to
revise the order of the Sales Tax Appellate Tribunal (Additional
Bench), Madurai dated 11.03.2003 and passed in Madurai Tribunal
Appeal No.453 of 2002.
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T.C.(MD)No.63 of 2008:
M.Ramachandran & Bros.,
130, Chithirakara Street,
Madurai. ... Petitioner
Vs.
1.The State of Tamil Nadu,
Rep.by the Secretary,
Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench),
Commercial Taxes Buildings,
Dr.Thangaraj Salai,
Madurai 625 020.
2.The Deputy Commissioner (CT),
Madurai Division,
Commercial Taxes Buildings,
Dr.Thangaraj Salai,
Madurai 625 020.
3.The Commercial Tax Officer,
Chithirakara Street Circle,
Commercial Taxes Buildings,
Dr.Thangaraj Salai,
Madurai 625 020.
... Respondents
PRAYER: The case filed under Section 38 of TNGST Act, to revise
the order of the Sales Tax Appellate Tribunal (Additional Bench),
Madurai dated 11.03.2003 and passed in Madurai Tribunal Appeal
No.452 of 2002.
For Petitioner : Mr.R.D.Ganesan
For Respondents : Mr.A.Thiyagarajan, G.A.
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COMMON ORDER
(Order of the Court was made by C.SARAVANAN,J.) These Tax Revision Cases have been filed to revise the order of the Sales Tax Appellate Tribunal (Additional Bench), Madurai, dated 11.03.2003 in Madurai Tribunal Appeal Nos.453 and 452 of 2002.
2.The short point that arises for consideration, is whether "rice flour adai", which is a product of "rice flour', is exempted in terms of Entry 5 of Part - B of the III-Schedule of TNGST Act.
3.Entry 5 Part - B of III Schedule of TNGST Act read as under during the period in dispute:
"All cereals mentioned in item 1 of the Second Schedule and hand pounded rice, Parched (Beaten) rice, puffed rice, rice flour, rice bran and de-oiled rice bran, but excluding wheat products."
4. The Original Authority had classified the said product under the residual entry and demanded differential tax at 11% while the petitioner claimed exemption by classifying the product under the above Entry.
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5. Against the order of the Original Authority, appeals were preferred before the Appellate Commissioner. The petitioner's contention was accepted and the appeal was allowed by allowing exemption to the petitioner.
6.By the impugned common order dated 11.03.2003 in respect of AY 1997 - 1998 and 1998 - 1999, the Appellate Tribunal has concluded that exemption, available for “rice flour” cannot be extended to the product of "rice flour" viz., "rice flour adai".
7.Consequently, the order passed by the Appellate Authority was set aside and the order passed by the Original Authority was reaffirmed and restored.
8.Aggrieved by the said order of the Appellate Tribunal, the present Tax Case under Section 38 of the TNGST Act has been filed by the petitioner herein.
9.The learned counsel for the petitioner drew the attention to the decision of the Hon'ble Supreme Court in 1994 (93) SC 180
- SC (Krishna Chander Dutta (Spice) Pvt. Ltd., Vs. Commercial Tax Officer and others, wherein the Hon'ble Supreme Court has observed as follows:
http://www.judis.nic.in 5 "We are of the opinion that so far as whole black and white pepper and pepper powder are concerned, they are the same goods, whether applying the functional test or the test of common parlance / commercial parlance. The analogy of paddy and rice or of wheat and wheat powder is not apt. Nobody consumes paddy as it is. Similarly, no one eats whole wheat. They are consumed after milling them into rice or flour, as the case may be. But so far as the pepper is concerned, it is used equally in whole as well as powered form. It is for this reason perhaps that the entry in Notification No. 885-F.T. dated May 1, 1955, speaks of "Black and white pepper - whole, broken, ground or powdered or of any other form or description whatsoever." It is equally significant that the Notification No.1915- F.T. dated May 10, 1963, refers to these commodities as specified in Notification No.885-F.T. dated 1st May, 1955". Black and white pepper "as specified in Notification No.885" means black and white pepper, whether whole, powdered, broken or in any other form."
10.It was submitted, by applying the functional test and the test of common parlance / commercial parlance, the product viz., "rice flour adai" has to be treated as "rice flour" and therefore, exempted under Entry 5 of Part - B to the III Schedule to the Act.
11.The question in the present case is whether a product of rice flour viz., "rice flour adai" can be exempted as a “rice flour” in terms of Entry 5 of Part - B to the III Schedule to the Act. http://www.judis.nic.in 6
12.In our view, it cannot be as a “product of rice flour” is different from “rice flour”. Even as per the petitioner, these two products are commercially recognized differently in the trade.
13.In the cited decision of the Hon’ble Supreme Court, it is seen that the Notification No.885-F.T., dated 01.05.1955, dealt with about black pepper and white pepper – whole, broken, ground or powdered or of any other form or description whatsoever. Hence, as per the notification, the pepper powder was held to be the same product as that of pepper. The Supreme Court did not accept the analogy of paddy and rice or wheat and wheat powder to compare pepper and pepper powder.
14.As per the decision of the Hon'ble Supreme Court in Union of India v. Wood Papers Ltd. [(1990) 4 SCC 256 : 1990 SCC (Tax) 422], literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstones. In fact an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is http://www.judis.nic.in 7 construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. Therefore, the first exercise that has to be undertaken is if the production of packing and wrapping material in the factory as it existed prior to 1964 is covered in the notification.”
15.Therefore, only strict interpretation is permissible and liberal interpretation cannot be applied at the threshold. Therefore, we are not convinced with the argument advanced by the learned counsel for the petitioner.
16.In this case, the Tribunal has applied the functional test as well as the common parlance / commercial parlance test. The product namely, “rice flour adai" is prepared from rice by using http://www.judis.nic.in 8 water and other ingredients. While "rice flour" can have many purposes. “Rice flour adai” has a limited use as observed by the Tribunal.
17.The price of these two products are not comparable. Having regard to the fact that "rice flour adai" is a manufactured product out of rice flour by mixing water, heating, etc we are unable to find any error in the order of the Tribunal.
18.Even if commercial parlance test is applied, “rice flour adai” cannot be equated with “rice flour”. Similarly, even if user or functional test is applied, it is clear that “rice flour adai” cannot be used as a “rice flour” while “rice flour” can be used for making “rice flour adai”.
19.Therefore, orders dated 11.03.2003 passed by the Sales Tax Appellate Tribunal (Additional Bench), Madurai, in Madurai Tribunal Appeal Nos.453 and 452 of 2002 is hereby confirmed. The Tax Revision Cases are dismissed. No costs.
[S.S.S.R, J.] [C.S.N., J.]
03.01.2019
Index : Yes / No
Internet : Yes / No
Arul
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To
1.The Secretary,
Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Commercial Taxes Buildings, Dr.Thangaraj Salai, Madurai 625 020.
2.The Deputy Commissioner (CT), Madurai Division, Commercial Taxes Buildings, Dr.Thangaraj Salai, Madurai 625 020.
3.The Commercial Tax Officer, Chithirakara Street Circle, Commercial Taxes Buildings, Dr.Thangaraj Salai, Madurai 625 020.
http://www.judis.nic.in 10 S.S.SUNDAR,J.
AND C.SARAVANAN,J.
Arul T.C.(MD)Nos.62 and 63 of 2008 03.01.2019 http://www.judis.nic.in