State Taxation Tribunal - Tamil Nadu
Elgi Equipments vs Assistant Commissioner Of Commercial ... on 20 August, 2001
Equivalent citations: [2004]136STC215(TRIBUNAL)
ORDER
L. Palamalai, Administrative Member
1. The prayer in the petition is to quash the proceedings of the respondent/assessing authority in TNGST 1880011/98-99 dated June 20, 2001 as invalid, illegal and violative of Articles 14 and 141 of the Constitution of India.
2. The brief facts leading to the present petition are as follows :
The assessing authority issued a pre-assessment notice for the assessment year 1998-99 by proposing a taxable turnover of Rs. 32,44,16,090 which, among others, included the taxable turnover proposed under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act") at Rs. 2,97,67,856. Subsequently, a revised notice was issued on June 1, 2001 indicating that in fixing the taxable turnover under Section 3(4) of the Act, the formula prescribed in the year 1996 was adopted. However, on a re-examination of the issue, it was found that a new formula prescribed by the Principal Commissioner and Commissioner of Commercial Taxes vide circular in Acts Cell-I/D.Dis/65969/99 dated September 28, 1999 has to be applied and according to this formula, taxable turnover under Section 3(4) of the Act has to be fixed as indicated below :
Total purchase value by issue of form XVII for the manufacture of the products.
X Sale value of final product exported to other country or despatched to other State as stock transfer Total sale value of the product manufactured including stock transferred, export sales out of form XVII purchases.
3. If this formula is adopted, the taxable turnover has to be fixed at Rs. 3,95,45,521 at two per cent as against Rs. 2,97,67,856 as originally proposed. By issuing the notice, objections were called for and the petitioner in his letter dated June 15, 2001 contended that the circular dated September 28, 1999 is to be given prospective effect from the assessment year 1999-2000 onwards and not for earlier years. As per the circular in Acts Cell-I/5232/96 dated March 15, 1996, export sales are not considered in arriving at the turnover under Section 3(4) of the Act. Therefore, the adoption of the formula prescribed on September 28, 1999, which has prospective effect, is not in order. On considering the objections, the assessing authority observed that though the circular dated September 28, 1999 was issued during the year 1999-2000, still the fact remains that the final assessment of the petitioner-company for the year 1998-99 was taken up only subsequent to the circular dated September 28, 1999 and therefore there is no incorrectness in adopting the formula. As a result, the impugned order dated June 20, 2001 was passed by fixing among others, the turnover under Section 3(4) of the Act at Rs. 3,95,45,521. Hence, the present petition.
4. Mr. T.V. Lakshmanan, the learned counsel for the petitioner, contended that during the assessment year 1998-99, the petitioner has manufactured goods by utilising the raw materials purchased against form XVII declaration and sold the manufactured end-product within the State of Tamil Nadu, on inter-State sale and also as branch transfers and export sales. The revised pre-assessment notice was based on a circular dated September 28, 1999 of the Commissioner of Commercial Taxes. Earlier the Commissioner of Commercial Taxes had issued circulars dated February 25, 1994 and March 15, 1996 apart from other circulars. According to the circular in Acts Cell-I/8354/94 dated February 25, 1994, the taxable turnover under Section 3(4) of the Act in terms of formula II has to be arrived at as indicated below :
Net purchase value of goods X Turnover of goods transferred to other State Net Manufactured goods sold during the year However, in the circular dated September 12, 2000, the formula has been changed as indicated below :
Total purchase value by issue of form XVII for the manufacture of the products X Sale value of final product exported to other country or despatched to other State as stock transfer Total sale value of the product manufactured including stock transferred, export sales out of form XVII purchases.
The difference between the earlier formula and the later formula is that while the earlier formula did riot take into account the export sales for the purpose of Section 3(4), the later circular took export sales into account. Though the petitioner filed objections to the revised notice by stating that the circular in Acts Cell-I/8354/94 dated February 25, 1994 was binding till the assessment for the year 1998-99 and that the new formula prescribed on September 12, 2000 has to be adopted only for the assessment year 1999-2000, the assessing authority has ignored the binding nature of the circular dated February 25, 1994 which was withdrawn or revised only on September 12, 2000. In such circumstances, the assessment order passed on June 20, 2001 has to be quashed. The Supreme Court of India, in a line of cases has categorically held that the persons administering the sales tax, excise and other taxes and duties are bound by the circulars and instructions, whether statutory or non-statutory, given by the head of the department or the board and cannot adopt a line of approach contrary to the circular or clarification.
5. With reference to the following cases decided under the Excise Act, it was contended that the authorities are bound by the circular and instructions issued by the Central excise authorities under Section 37B of the Central Excise Act, 1944 :
1. British Machinery Supplies Co. v. Union of India (1996) 86 ELT 449 (SO.
2. Ranadey Micronutrients v. Collector of Central Excise (1996) 87 ELT 19 (SC).
3. Collector of Central Excise, Patna v. Usha Martin Industries [1998] 111 STC 254 (SC); (1997) 94 ELT 466 (SC).
4. Collector of Central Excise, Bombay v. Kores (India) Limited (1997) 89 ELT 441 (SC).
5. Collector of Central Excise, Bombay v. Jayant Dalai Private Ltd. (1996) 88 ELT 638 (SC).
6. Paper Products Ltd. v. Commissioner of Central Excise (1999) 112 ELT 765 (SC); (1999) 6 JT 185 (SC).
6. Similarly a Constitution Bench of the Supreme Court in Navnit Lal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Income-tax Bombay reported in [1965] 56 ITR 198 (SC); AIR 1965 SC 1375 has held that a circular issued by the Central Board of Direct Taxes under Section 5(8) of the Income-tax Act, 1922 would be binding on all the officers and persons who were employed in execution of that statute. This view was followed in the case of Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal [1971] 82 ITR 913 (SC); AIR 1972 SC 524. The decisions of the Supreme Court are binding on all courts and quasi-judicial authorities under Article 141 of the Constitution of India. In the case of S.K. Natesam Pillai v. Deputy Commercial Tax Officer reported in [1971] 28 STC 517 (Mad.), it has been held that executive instructions which confer a certain benefit to a dealer and relieve him from the burden of taxation have to be liberally interpreted and that Article 14 of the Constitution has to be observed even in cases where courts are concerned with the interpretation of executive instructions. The binding nature of a circular instruction was also affirmed in the case of Commissioner, Sales Tax, U.P., Lucknow v. Narayan Automobiles reported in [1994] 92 STC 555 (All.). Even in terms of Section 3(4) of the Act, the petitioner is not to be taxed if the goods are exported and only if the goods are despatched to a place outside the State, either by branch transfer or for sale on consignment basis, such transactions could be brought within the purview of Section 3(4) of the Act. Section 3(4) of the Act has not specifically indicated export sales as has been done in the case of branch transfer or consignment sales. Therefore, exports cannot be brought under the purview of Section 3(4) of the Act by implication. Thus, the circular dated February 25, 1994 has correctly interpreted the legal position. As observed in Poulose and Mathen v. Collector of Central Excise AIR 1997 SC 965, when two circulars give two different views, then one which favours the assessee should be followed. In any event, the circular dated September 12, 2000 can operate only prospectively and therefore for the assessment year 1998-99, the formula prescribed in the circular should not have been followed. As the assessment has been made on the circular of the Commissioner of Commercial Taxes, the petitioner will not get relief by approaching the Appellate Assistant Commissioner in this case. As the statutory remedy is not an effective remedy in this case, the order of the assessing authority may be quashed and the observations in the case of Filterco v. Commissioner of Sales Tax, Madhya Pradesh reported in [1986] 61 STC 318 (SC) ; AIR 1986 SC 626 and A.V. Venkateswaran v. Ram Chand Sobhraj Wadhwani reported in AIR 1961 SC 1506 support this proposition. Therefore, the proceedings in TNGST 1880011/98-99 dated June 20, 2001 may be quashed as prayed for.
7. On perusing the records, it is seen that the petitioner effected raw material purchases at concessional rate of tax by furnishing declaration forms and on manufacture of end-products, sold the same not only locally and on inter-State but also on export and as branch transfers outside the State. Section 3(4) of the Act contemplates levy of purchase tax if the manufactured goods by availing concessional rate of tax under Section 3(3) of the Act are not sold but despatched to a place outside the State either by branch transfer or by transfer to an agent for sale, or any other manner, except as a direct result of sale or purchase in the course of inter-State trade or commerce. The relevant section as it stood for the assessment year 1998-99 reads as follows :
"(4) Where any dealer, after availing the concessional rate of tax under Sub-section (3), does not sell the finished goods but despatches them to a place outside the State either by branch transfer or by transfer to an agent, by whatever name called, for sale, or in any other manner, except as a direct result of sale or purchase in the course of inter-State trade or commerce shall pay, in addition to the concessional rate of tax already paid under Sub-section (3), tax at two per cent on the value of goods so purchased."
8. There is no dispute regarding the liability to tax under Section 3(4) of the Act insofar as the despatch of the manufactured goods as branch transfer to outside the State for sale. The dispute is in regard to the levy of purchase tax under Section 3(4) of the Act in respect of export of the manufactured goods. The learned counsel for the petitioner Mr. T.V. Lakshmanan strenuously contended that the circular instruction prescribing the formula to arrive at the tax payable under Section 3(4) of the Act is binding on the assessing authority and therefore any modification of the circular has to take effect prospectively only. In Acts Cell-I/8354/94 dated February 25, 1994, the circular instruction has been issued to work out the tax payable under Section 3(4) of the Act when branch transfer on consignment sale takes place. The whole circular is confined to the method of working out of the taxable turnover attributable to branch transfer or consignment sales. For the sake of convenience, the entire circular is reproduced below :
"CIRCULAR Sub : Tamil Nadu General Sales Tax Act, 1959--Purchase of goods at a concessional rate under Section 3(3)--
Payment of tax under Section 3(4)--In pecified circumstances--Difficulties in computation of turnover--Instructions--Issued--Reg.
Ref : This office Acts Cell-1/87679/87 dated July 8, 1987.
The following circular is issued with reference to Section 3(4) :
According to Section 3(4) of the TNTST Act, 1959, if a dealer after purchasing the goods availing the concessional rate of tax at 3 per cent against form XVII fails to sell the manufactured goods either locally or in the course of inter-State trade, but despatches them to a place outside the State either as stock transfer or to an agent for sale there, is liable to pay tax at 2 per cent in addition to the concessional rate at 3 per cent under Section 3(3) on the value of the goods so purchased. The provisions have come into force from March 12, 1993.
It has come to notice that there are practical difficulties in arriving at the value of goods for the purpose of Section 3(4).
For example a manufacturer may purchase or procure raw materials from different sources as detailed below :
(i) By local purchases against form XVII. (ii) Inter-State purchases against "C" declaration forms.
(iii) Receipts from head office or branches outside the State. It will therefore be practically difficult to tax the purchase of a particular raw material with the end-product in particular.
It is considered that it will not be proper to impose the additional levy of 2 per on the entire value of goods purchased against form XVII. The turnover liable to tax at 2 per cent can be determined on proportionate basis with reference to purchases and sales as below :
Formula I. -- (Straight cases where all purchases are used in manufacture and all goods manufactured are disposed) Form XVII purchase Form XVII purchase X Branch transfer on consignment sales Total purchase Formula II.--(Goods purchased availing concessional rate of tax are partly used in manufacture of goods ; and such manufactured goods are disposed in part and the rest held in stock.) Step I : To arrive at the value of the form XVII purchase : Opening stock of form XVII purchases from 12-3-1993 for 1993-94.
Add: Purchases availing concessional rate: Deduct: Closing stock of purchases availing concessional rate.
Net purchase value of goods purchased after availing concessional rate.
Step II : To determine the turnover of branch transfer of goods manufactured out of raw materials, etc. Purchase against concessional rate. Manufactured goods held in opening stock. Add : Goods manufactured in the year. Deduct : Goods held in stock. Net manufactured goods sold during the year.
Step III:
Net purchase value of goods (as in step I) X Turnover of goods transferred to other State Net manufactured goods sold during the year.
In a case where there is manufacturing activity in a year but no branch transfer (but manufactured goods are sold locally in part and the remaining held in stock) there will be no liability to tax under Section 3(4).
The above instruction may be followed by all the officers.
The Deputy Commissioners and Assistant Commissioners should bring these instructions to the notice of all the assessing officers.
The receipt of the circular may be acknowledged early."
9. Thus the whole circular dated February 25, 1994 is confined to the method of working out the tax under Section 3(4) of the Act when manufactured goods are sold on branch transfer or on consignment basis outside the State. Subsequently, representations were received on January 12, 1996 to the effect that in certain cases by adopting formula I, the turnover under Section 3(4) of the Act exceeded the purchases made against form XVII. On considering the representation in Acts Cell-I/5232/96 dated Juno 15, 1996, the following modified formula has been prescribed to workout the taxable turnover under Section 3(4) of the Act :
Consignment sale or branch transfer X Purchase against Form XVII Total sales Or Consignment sale or branch transfer X Net purchase value of form XVII purchase (Provided the dealers had maintained separate details of opening stock purchase and closing stock for form XVII purchase).
Total sales
10. Thus, the formula suggested by the association has been accepted in the circular dated June 15, 1996. Subsequently, representations were received by the Commissioner of Commercial Taxes to the effect that the assessing officers are misrepresenting the term "total sales" to be adopted in the formula. It was also brought to the notice of the Commissioner of Commercial Taxes that some assessing officers have adopted the "total sales" figure by restricting it to the outright sales, excluding the consignment sales/export sales/stock transfer, etc. Therefore the formula was amplified in circular Acts Cell-I/18576/99 dated August 20, 1999 as indicated below :
The total purchase value of goods made against Form XVII declaration total sale value of the goods (including stock transfer, consignment sales and export sales) manufactured out of form XVII.
X The value of goods sent to an agent or branch in other State and to other country by export.
11. On the basis of a doubt raised by a dealer, as to whether the formula can be applied to one of the many products manufactured by him, it was clarified in circular Acts Cell-I/65969/99 dated September 28, 1999 that if the dealer maintains separate accounts and was able to furnish purchase details separately for each product, the turnover liable for assessment under Section 3(4) of the Act can be calculated for each of the final product separately. Further, it was clarified that if the manufactured products by utilising purchases against form XVII have been disposed of only as local sales, then no liability under Section 3(4) of the Act arises. On that occasion, the following formula has also been indicated to work out the tax liability under Section 3(4) of the Act.
Total purchase value by issue of form XVII for the manufacture of the products X Sale value of final product exported to other country or despatched to other State as stock transfer.
Total sale value of the product manufactured including stock transfer, export sales out of form XVII purchases.
12. Finally, in the circular in D. Dis. Acts Cell-I/22402/2000 dated September 12, 2000, these aspects have been indicated and finally the following instructions have been issued.
"All the Deputy Commissioners are requested to bring the above clarification to the notice of the assessing officer and instruct them to apply their mind and adopt the formula correctly without any unnecessary hardship to the dealers while arriving at the taxable turnover under Section 3(4) of the Act."
13. In short, on various occasions, on the basis of representations from the dealers, the Commissioner of Commercial Taxes has issued instructions indicating the formula, that could be adopted so as to work out the turnover under Section 3(4) of the Act. While the circulars dated February 25, 1994 and June 15, 1996 were with reference to working out the taxable turnover when manufactured goods out of raw materials against declarations are despatched to outside the State as branch transfer or consignment sales, the circulars dated August 20, 1999, September 28, 1999 and September 12, 2000 were in respect of manufactured goods by utilising purchases against form XVII declaration and sold both on consignment sales and export sales. In all these cases, the circular instructions issued earlier have not been cancelled, but based on clarification sought by the dealers, certain modified formulae have been given without changing the principle. In the circular dated February 25, 1994 and June 15, 1996, the instruction was with reference to branch transfer or consignment sales only. However, later only, when clarification was sought in respect of export sales also, it was clarified that the same formula has to be adopted by including the export sale value both in total sales and in the value of the goods sent other than by way of inter-State sales. Thus, there was no cancellation of any circular as presumed, but the circulars are clarificatory or explanatory in nature on the basis of representation received from the dealers. In such circumstances, these circulars cannot be equated to the statutory circulars as contemplated under the Central Excise Act or the Income-tax Act. It is true that in the case of Paper Products Ltd. v. Commissioner of Central Excise reported in (1999) 112 ELT 765 (SC); (1999) 6 JT 185 (SC), the Supreme Court after tracing out the earlier cases on circulars issued under Section 37-B of the Central Excise Act as narrated by the counsel for the petitioner has categorically held as follows :
".....that the circulars issued under Section 37-B of the said Act are binding on the department and the department cannot be permitted to take a stand contrary to the instructions issued by the Board. These judgments have also held that the position may be different with regard to an assessee who can contest the validity or legality of such instructions but so far as the department is concerned, such right is not available......
It is clear from the abovesaid pronouncements of this Court, that, apart from the fact that the circulars issued by the Board are binding on the department, the department is precluded from challenging the correctness of the said circulars even on the ground of the same being inconsistent with the statutory provision. The ratio of judgment of this Court further precludes the right of the department to file an appeal against the correctness of the binding nature of the circulars. Therefore, it is clear that so far as the department is concerned, whatever action it has to take, the same will have to be consistent with the circular which is in force at the relevant point of time."
14. The relevant circular, 37-B of the Central Excise Act reads as follows :
"37B. Instructions to Central Excise Officers.--The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board :
Provided that no such orders, instructions or directions shall be issued--
(a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner ; or
(b) so as to interfere with the discretion of the [Commissioner of Central Excise (Appeals)] in the exercise of his appellate functions."
15. In this connection, it is also relevant to refer to Section 28-A of the Act which was introduced by Act 60 of 1997 with effect from November 6, 1997. This section reads as follows :
"Section 28-A. Power to issue clarification by Commissioner of Commercial Taxes.--(1) The Commissioner of Commercial Taxes on an application by a registered dealer, may clarify any point concerning the rate of tax under the Act. Such clarification shall be applicable to the goods specified in the application :
Provided that no such application shall be entertained unless it is accompanied by proof of payment of such fee, paid in such manner, as may be prescribed.
(2) The Commissioner of Commercial Taxes may, if he considers it necessary or expedient so to do, for the purpose of uniformity in the work of assessment and collection of tax, clarify any point concerning the rate of tax under this Act or the procedure relating to assessment and collection of tax as provided for under this Act.
(3) All persons working under the control of Commissioner of Commercial Taxes shall observe and follow the clarification issued under Sub-section (1) and Sub-section (2)."
16. While interpreting the import of this Section 28-A of the Act, this Special Tribunal in O.P. Nos. 1334 to 1336 of 2000, etc., cases dated January 25, 2001 in the case of Salt Sales Corporation v. Deputy Commercial Tax Officer (Additional) [2004] 134 STC 529 has given the following findings and directions :
"1. Section 28-A of the TNGST Act is perfectly valid and intra vires the Constitution of India.
2. Any clarification given by the Commissioner under subsection (1) of Section 28-A will bind the parties who sought for clarification. If it is a society or association it will bind all its members. However, it will be open to them to canvass such a clarification in assessment proceedings before the assessing officer and appellate proceedings before the Appellate Assistant Commissioner on materials and precedence binding on the assessing officer and Appellate Assistant Commissioner. The ultimate independent decision should be that of the assessing officer or Appellate Assistant Commissioner.
3. Any clarification given under Sub-section (2) of Section 28-A of the TNGST Act can be canvassed before the assessing officer and Appellate Assistant Commissioner in assessment proceedings and appellate proceedings respectively on all aspects of the case, and the assessing officer and Appellate Assistant Commissioner have to give independent decision on the arguments before him.
4. For all other administrative purposes the clarification given under Sub-section (1) or (2) shall be binding on the officers subordinate to him by virtue of Sub-section (3)."
17. Thus, there is no difficulty in holding that statutory clarification given are binding on the department. Similarly, the decisions relied on pertaining to Central Board of Direct Taxes have arisen under peculiar circumstances. The case considered in Navnit Lal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Income-tax, Bombay reported in [1965] 56 ITR 198 (SO ; AIR 1965 SC 1375 arose in the context of Section 12(1B) of the Income-tax Act, 1922. According to this newly introduced provision, if a controlled company adopts the device of making a loan or advance to one of its shareholders, such shareholder will be deemed to have received the said amount out of the accumulated profits and would be liable to pay tax on the basis that he has received the said loan by way of dividend. It appears that before this provision was introduced, the Honourable Minister for Revenue and Civil Expenditure gave an assurance that outstanding loans and advances which are otherwise liable to be taxed as dividends in the assessment year 1955-56 in pursuance of the amendment, namely, Section 12(1B) of the Act, will not be subjected to tax if it is shown that they had genuinely refunded to the respective companies before June 30, 1955. This assurance was given so as to avoid extreme hardship resulting from Section 12(1B) of the Income-tax Act. With a view to carry out the assurance given by the Minister in Parliament, a circular [No. 20 (XXI-6)/55] was issued by the Central Board of Revenue on May 10, 1955. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision. The officers were, therefore, asked to intimate to all the companies that if the loans were repaid before the June 30, 1955 in a genuine manner, they would not be taken into account in determining the tax liability of the shareholders to whom they may have been advanced. This circular issued by the Board under Section 5(8) of the Act was held to be binding on all the officers and persons employed in the execution of the Act. This view was reiterated again in the case of Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal reported in [1971] 82 ITR 913 (SC); AIR 1972 SC 524. It was further observed in the above judgment that the circular issued under Section 5(8) of the income-tax Act was in consonance with Rule 33 and the circular merely laid down certain just and fair methods of approach to a difficult problem. Thus, in the peculiar circumstances as narrated above, the statutory circular was held to be binding on the authorities. In the case of S.K. Natesam Pillai v. Deputy Commercial Tax Officer reported in [1971] 28 STC 517 (Mad.), this issue considered was in the context of G.O. Ms. No. 1285, Revenue, dated April 27, 1999 whereby plantain dealers who were not income-tax assessees or who have not submitted or called upon to submit returns under the Indian Income-tax Act, were held to be not liable to pay sales tax. Though many dealers were exempted from sales tax on the basis of the G.O., the petitioner was assessed to tax. When the petitioner was denied exemption from the sales tax on the ground that on the basis of the executive instructions, no benefit could be conferred on the dealer, it was held that the advantage extended to other dealers cannot be denied to the petitioner merely on the ground that it was an executive instruction and not a specific notification under Section 17 of the Act. Only in that context, it was held that there was violation of Article 14 of the Constitution of India. In the case of Commissioner, Sales Tax v. Narayan Automobiles reported in [1994] 92 STC 555 (All.), the High Court in revision declined to interfere with the order of the lower appellate authorities who relied on the circular instructions to classify an item for levy of tax. However, in the present case, no circular instruction of the Commissioner of Commercial Taxes would be binding on the persons working under the control of the Commissioner of Commercial Taxes prior to the introduction of Section 28-A of the Act with effect from November 6, 1997. Even from November 6, 1997, only if circular instructions are issued in terms of Section 28-A of the Act, then such instructions are binding on the persons working under the control of the Commissioner of Commercial Taxes. In the present case, the circulars dated August 20, 1999, September 28, 1999 and September 12, 2000 have been issued only on the formula to be adopted to arrive at the turnover under Section 3(4) of the Act on the basis of request from certain dealers and these circulars have not been issued under Section 28-A of the Act. Further, as already indicated, no circular has been issued by cancelling the earlier circulars. The circulars issued prior to August 20, 1999, during 1996 and 1994 were with reference to the consignment or branch transfers made with reference to manufactured goods by utilising raw materials purchased at concessional rate. During 1999, the same formula was adopted in respect of export sales also when certain dealers sought clarification as to the manner in which export sales have to be treated in the context of goods manufactured by utilising raw materials purchased at concessional rate of tax. In such circumstances, absolutely there is no basis to hold that the formula suggested to work out the turnover under Section 3(4) of the Act as indicated on August 20, 1999 or September 12, 2000 has to be applied only prospectively for the assessment year 1999-2000. Even in the circular dated September 12, 2000, it has been clearly indicated that the assessing officers have to apply their mind while adopting the formula suggested so as to work out the taxable turnover under Section 3(4) of the Act without causing any hardship to the dealers. Thus, the officers were told to exercise their independent decision while exercising quasi-judicial function in making assessment. Thus on the whole, I find no merit in the contention that the formula suggested during 1999 has to be adopted prospectively for the assessment year 1999-2000. In this case, the assessing authority initially issued the pre-assessment notice by adopting the formula pertaining to branch transfer or consignment sales and later realised that the manufactured goods out of raw materials obtained at concessional rate of tax have also been sold on export sales and therefore the formula adopted earlier was incorrect and that the new formula suggested during 1999 is the appropriate one in the circumstances of the case. Only in such circumstances, a revised notice has been given. There is no irregularity in the revised notice given and the orders passed after duly considering the objections filed by the dealer.
18. As regards the contention that Section 3(4) of the Act does not contemplate levying purchase tax on export sales made out of goods manufactured by utilising raw materials purchased at concessional rate of tax against declarations, I find no merit at all. Section 3(4) of the Act clearly says that except in respect of inter-State sale or purchase, if the goods are despatched to a place outside the State either by branch transfer or by transfer to an agent by whatever name called for sale or in any other manner, then purchase tax at 2 per cent has to be paid in addition to the concessional rate of tax paid already under Section 3(3) of the Act. Therefore, when export sale has not been specifically excluded as in the case of inter-State sale while imposing purchase tax, there is absolutely no case to add words to the provisions of the Act. In this connection, it is relevant to quote the classic observations of Rowlatt, J. in Cape Brandy Syndicate v. Commissioners of Inland Revenue (1921) 1 KB 64 at page 71:
"In a taxing statutes one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
19. The above observation has been quoted with approval by a Bench of three Judges of the Supreme Court in Commissioner of Income-tax v. Ajax Products Ltd. [1965] 55 ITR 741 (SC). Obviously, the reason to levy purchase tax under Section 3(4) of the Act is simple, namely, that, if the manufactured goods out of raw materials obtained against concessional rate are disposed of outside the State otherwise than by way of inter-State sale either in the form of branch transfer or consignment sale or export sale, the State does not get any revenue and only to augment the revenue, the State has imposed the purchase tax. In Section 3(4} of the Act, the expression "in any of the manner" would include sale by export also.
20. As regards alternative remedy, as categorically held by us in O.P. Nos. 1334 to 1336 of 2000, etc. dated January 25, 2001, in the case of Salt Sales Corporation [2004] 134 STC 529 (TNTST) it is open to an assessee to canvass a clarification in assessment proceedings before the assessing officer and in appeal proceedings before the Appellate Assistant Commissioner on materials and precedence binding on the assessing officer and Appellate Assistant Commissioner. Further, the appellate authorities are not subordinates working under the control of the Commissioner of Commercial Taxes and therefore even the clarification issued under Section 28-A of the Act is not binding on the appellate authority. While working out the taxable turnover under Section 3(4) of the Act, the assessing authority has taken into account the total sales including export sales and the total outside the State sales other than inter-State sales but including export sales. Therefore without investigating into the facts, the sales turnover cannot be segregated. In such circumstances, the proper course is to approach the statutory authority only for any relief. The decisions relied on are not relevant in such circumstances when the alternative remedy provided under the statute is an efficacious one and it is not a mere futility as contended. There is absolutely no case to ignore the alternative statutory remedy in this case.
21. The following observations of the Supreme Court in Bengal Iron Corporation v. Commercial Tax Officer reported in [1993] 90 STC 47 would apply aptly to the various circulars issued by the Commissioner of Commercial Taxes in regard to the formulae to arrive at the taxable turnover under Section 3(4) of the Act :
"So far as clarifications/circulars issued by the Central Government and/or State Government are concerned, they represent merely their understanding of the statutory provisions. They are not binding upon the courts. It is true that those clarifications and circulars were communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion. It is doubtful whether such clarifications and circulars bind the quasi-judicial functioning of the authorities under the Act. While acting in quasi-judicial capacity, they are bound by law and not by any administrative instructions, opinions, clarifications or circulars. Law is what is declared by this Court and the High Court--to wit, it is for this Court and the High Court to declare what does a particular provision of statute say, and not for the executive."
22. In the above circumstances, I find that there is absolutely no case to declare that the circular of the Commissioner of Commercial Taxes dated September 28, 1999 prescribing a formula to work out the taxable turnover under Section 3(4) of the Act is prospective in nature, as prayed for. Nothing was shown that there was any violation of Articles 14 or 141 of the Constitution of India in passing the impugned order of assessment dated June 20, 2001. There is absolutely no case to quash the order in TNGST 1880011/98-99 dated June 20, 2001 on any of the grounds urged by the petitioner. In the above circumstances, the original petition is dismissed giving liberty to the petitioner to file statutory appeal against the order of assessment. The time spent in pursuing the matter before this Special Tribunal shall be excluded for the purpose of calculation of limitation to file the statutory appeal. The original petition is disposed of in the above terms.
23. And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
24. Issued under my hand and the seal of this Tribunal on 20th day of August, 2001.