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2019 (10) TMI 1291 - HC - VAT and Sales TaxDate of exemption - amendment in the notification - exemption from tax under Notification G.O.Ms. No.146 Commercial Taxes and Registration (B2) Department on 08.08.2007 - manufacture and sale of beedi beedi tobacco tobacco leaves snuff and cheroot - According to the petitioners the exemption granted to chewing tobacco should be made available from the date of original Notification as the exclusion thereof had been an obvious omission that stood corrected from date of second Notification by substitution of the amended list of products in respect of which exemption was granted - HELD THAT - In addition to the other parameters in play such as the language employed and the date of amendment among others it is the intention behind the amendment that is perhaps the main determinant as to how the amendment is itself to be construed and applied whether prospectively or retrospectively. As far as the tobacco dealers are concerned a comparison of the first and second Notifications does not reveal anywhere the intention that the word chewing tobacco had been inadvertently omitted originally. The use of the word substituted only means that going forward the second Notification will take the place of the first Notification. By virtue of the second Notification having come to be the first stands effaced. This much is clear. However there is nothing else in the second Notification or any other explanatory instruction/circular/note that has been brought to my attention to lead me to a conclusion that the substitution was to take effect from the date of the first Notification itself. By virtue of the second Notification an entirely new commodity has been brought within the beneficial sweep of the exemption marking a departure in the original intention of the legislature as to the range of products that would be so entitled - if at all the intention that the second Notification were to act retrospectively were to be attributed to Legislature such intention should be manifest or at least discernible from the Notification itself from the objects thereof or at the least draw support from some tangible material. Retrospectivity of application of an Act/Notification/Provision cannot be an incident that is assumed in vaccum or a request that can be accepted for the mere asking. The petitioner makes much of the fact that chewing tobacco according to it is nothing but a product of tobacco and the original Notification intended according to it to cover tobacco and all its products. According to them the fact that tobacco and cheroot have been mentioned originally would itself be sufficient to bring all products of tobacco within the realm of the first exemption and the second then becomes just clarificatory and hence retrospective in operation. Thus where legislature intended that upon mere mention of a commodity all forms and descriptions of the commodity would stand encompassed it is seen to employ the phrase of all kinds or of all sorts . There is thus no force in the argument of the petitioner that mere mention of tobacco and cheroot should be taken as including chewing tobacco as well. If this had been the intention of the legislature it would have been so mentioned. Thus reading the phrase chewing tobacco in the first Notification would result in rewriting the Notification itself and in the light of the settled position that an exemption Notification has to be strictly construed rewriting of the same by insertion of new words is wholly impressible - writ petitions filed by the tobacco dealers are dismissed.
Issues Involved:
1. Retrospective application of tax exemption on chewing tobacco. 2. Retrospective application of amendments to Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006. Issue-wise Detailed Analysis: 1. Retrospective Application of Tax Exemption on Chewing Tobacco: The petitioners, manufacturers and sellers of chewing tobacco, challenged the assessments made under the Tamil Nadu Value Added Tax Act, 2006, arguing that the tax exemption granted to chewing tobacco through Notification G.O. Ms. No.149 dated 12.10.2009 should be applied retrospectively from the date of the original Notification G.O.Ms. No.146 dated 08.08.2007. The original notification exempted 'beedi, beedi tobacco, tobacco leaves, snuff, and cheroot' from tax, and the petitioners contended that the exclusion of chewing tobacco was an obvious omission corrected by the second notification. The court examined whether the second notification was intended to act retrospectively. It noted that the term 'substituted' used in the second notification only meant that the new notification would replace the old one going forward. There was no indication or explanatory note suggesting that the substitution was to take effect from the date of the first notification. The court emphasized that retrospectivity of an Act/Notification/Provision cannot be assumed without clear intention or tangible material supporting it. The court also highlighted that where the legislature intended to encompass all forms of a commodity, it explicitly used phrases like 'of all kinds' or 'of all sorts'. Therefore, the court concluded that the exemption for chewing tobacco could not be applied retrospectively, and the writ petitions filed by the tobacco dealers were dismissed. 2. Retrospective Application of Amendments to Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006: The petitioners, dealers in Iron, Steel, Cement, Electric, and Electronic goods, challenged the assessments for the period 2010-11, arguing that the amendment to Section 3(4) of the Act under Amendment Act 27 of 2011 should be applied retrospectively. The 2008 amendment stated that dealers with turnover up to Rs. 50 lakhs would be taxed at 0.5%, while those exceeding Rs. 50 lakhs would be taxed at regular rates. The 2011 amendment clarified that the liability to tax would be two-fold: presumptive for turnover up to Rs. 50 lakhs and regular for turnover above Rs. 50 lakhs. The petitioners contended that this amendment was clarificatory and should be applied retrospectively to correct the ambiguity from the 2008 amendment. The court analyzed the intention behind the 2011 amendment and found that it was indeed meant to rectify the ambiguity in the 2008 amendment. The Statement of Objects and Reasons for the 2011 amendment indicated that it was introduced to correct an unintended anomaly where dealers with turnover below Rs. 50 lakhs were required to pay tax even if they did not collect it. The court referred to various judgments to support the principle that amendments clarifying existing provisions or correcting anomalies are generally retrospective. The court also noted a similar decision by a Single Judge in the case of Tvl.Shanmugamari Timbers, which was not challenged by the revenue, thereby reinforcing the principle of consistency. Consequently, the court allowed the writ petitions filed by the dealers in Iron, Steel, Cement, Electric, and Electronic goods, and directed that the 2011 amendment be applied retrospectively for assessments from 2006 onwards. Conclusion: The court dismissed the writ petitions filed by the tobacco dealers, ruling that the tax exemption for chewing tobacco could not be applied retrospectively. However, it allowed the writ petitions filed by the dealers in Iron, Steel, Cement, Electric, and Electronic goods, ruling that the 2011 amendment to Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006, should be applied retrospectively to correct the ambiguity from the 2008 amendment.
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