TMI Blog1990 (8) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts in T.C. No. 1099 of 1980 may now be noted. This case relates to the assessment year 1977-78. The assessees are flour mills. They reported a total and taxable turnover of Rs. 49,75,580.90 and Rs. 25,48,529.2 1, respectively. The Joint Commercial Tax Officer, Mannadi (West) determined the total turnover under the Tamil Nadu General Sales Tax Act after excluding the turnover under "inter-State sales" at Rs. 30,58,838 and the taxable turnover at Rs. 26,04,716. In arriving at the above figures, the Joint Commercial Tax Officer, Mannadi (West), excluded a turnover of Rs. 5,09,990 representing sales of wheat bran and bran flakes, on the strength of exemption notification dated March 4, 1974, as amended during the relevant assessment year. However, rejecting the claim of the assessees, that a sum of Rs. 30,379.92 represented "administrative charges" and that will not form part of the taxable turnover, the assessing authority included the same in the taxable turnover. Aggrieved by the inclusion of the "administrative charges" in the taxable turnover, the assessees preferred an appeal to the Appellate Assistant Commissioner. The appellate authority accepted the claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to sale of cattle feed, was wrong. They also contended that if the above view taken by the Board of Revenue is taken as correct, the exemption granted would be meaningless having regard to the facts that wheat products including wheat bran are subject to tax at the point of first sale as per entry 75 of the First Schedule to the Act and wheat bran is always sold by the flour mills as a by-product. In other words, if wheat bran is to be subjected to tax at the hands of the flour mills, as per entry 75 of the First Schedule, on account of the fact that the sale of wheat bran by flour mills was not as "cattle feed", the subsequent sale or sales will automatically get excluded from the taxable turnover. In that case, there will be no need for granting exemption under that notification for the sale of wheat bran. In the light of the above, the learned counsel submitted that that could not be the true intendment of the exemption notification. In support of their contention that wheat bran is cattle feed and the sale of the same by flour mills is exempt from tax, they relied on the following decisions: Mahabir Flour Mills v. Commissioner of Commercial Taxes reported in [1987] 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Kerala reported in [1988] 68 STC I (SC). 9.. The learned counsel for the appellants also brought to the notice of the court that the Sales Tax Appellate Tribunal (Additional Bench), Madurai, in MTA Nos. 252 and 253 of 1979 dated July 17, 1980, has taken the view that "administrative charges", having regard to the circumstances under which the same was collected by the flour mills, will not form part of the taxable turnover, and this decision has been accepted by the Revenue. 10.. Contending contra, the learned Additional Government Pleader (Taxes) submitted that exemption notifications should be strictly construed and the view taken by the Board of Revenue, placing reliance on a judgment of the Supreme Court in State of U.P. v. Indian Hume Pipe Co. Ltd. reported in [1977] 39 STC 355 (SC) is quite in order, and does not call for any interference. He also submitted that in any event, bran flakes cannot at all be brought under the exemption notification. He also submitted that "administrative charges" are pre-sale charges, and as such, are rightly included in the taxable turnover. 11.. Let us now consider the rival submissions. To appreciate the contentions of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ader, unless the flour mills clearly establish that wheat bran sold by them was only as cattle feed, they cannot claim exemption. We do not think, on the facts of this case, such a contention can be advanced, for, accepting the case of the flour mills in these cases, the assessing officer granted exemption, and it is only the Board of Revenue which, on an assumption that wheat bran can be used for extracting oil or can be used in poultry farms as chicken-feed, revoked the exemption. First of all, the exemption notification does not prescribe any condition and in the context of wheat bran is a cattle feed having not been disputed, the view taken by the Board of Revenue on the assumption, cannot be supported. The learned Additional Government Pleader, however, pointed out that if the exemption entry simply enumerates the items of cattle feed, as has been done by the amendment dated April 12, 1979 (referred to above in para II), then it can be contended that wheat bran sold for any purpose will come under exemption and not otherwise. In this connection only, the learned counsel for the appellants placed reliance on a judgment of Nainar Sundaram, J. in Sree Ramakrishna Cattle-feed Manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... class of goods, if the conditions or restrictions placed in the matter of exemption, militate against the purpose for which exemption has been granted and have the effect of defeating that purpose to a large extent, they cannot be upheld if there is no reasonable justification for introducing them. Such restrictions are open to challenge on the ground either that they discriminate between dealers of the same class, or that they are arbitrary. Notification F. No. A-3-15-81(12)ST-V dated April 7, 1981, issued by the Madhya Pradesh State Government under section 12(1)(i) of the Madhya Pradesh General Sales Tax Act, 1958, exempted from payment of sales tax all sales of footwear made of rubber or plastic for a prescribed period, but the exemption was restricted to sales by a dealer registered under the Act, 'who deals exclusively in footwear made of rubber and/or plastic and the sale price of such footwear does not exceed rupees ten per pair'. The petitioner contended in the writ petition filed by him that the word 'exclusively' rendered the restriction arbitrary, and ought to be quashed: Held, allowing the petition, that even in big cities dealers exclusively dealing in rubber or pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officers continued to levy tax on wheat bran and, therefore, again, the association, by letter dated March 12, 1978, requested the Board of Revenue to give necessary instructions to the Deputy Commercial Tax Officer, Salem Rural, in the matter of levy of tax on wheat bran. In response to that, the association was informed that though the Board of Revenue was of the view that wheat bran was exempt from tax, the Sales Tax Appellate Tribunal (Additional Bench), Madurai, has taken the view that sale of wheat bran is exempt only if it is sold as a cattle feed by a dealer in cattle feed. Therefore, the wheat bran sold otherwise will be liable to tax. In view of the subsequent stand taken by the department, the association wrote to the Board of Revenue on April 3, 1979, in detail making out a case for exemption on sales of wheat bran. In reply to that, the Board of Revenue issued B.P. Rt. No. 2156/79 dated June 30, 1979, directing the assessing officers not to proceed with the assessment of dealers in wheat bran, pending further orders. After getting clarification from the Government, the Board of Revenue clarified the position by proceedings dated August 5, 1980, which reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price at the flour mills, the price to dealers and bulk consumers are as shown below: (Price per quintal) Maida Sooji Atta Bran Rs. P. Rs. P. Rs. P. Rs. P. Ex-mill price 168.78 166.48 80.12 61.81 Sales tax 3.32 3.33 1.60 .. Surcharge on ST 0.17 0.17 0.08 .. Millers incidentals 2.00 2.00 .. .. Administrative surcharge 1.73 1.02 1.20 1.19 ------------------------------------------ Issue price by mills 176.00 173.00 83.00 63.00 ------------------------------------------ Sd. K. Ponnusamy for COMMISSIONER (C.S.)." 18.. It is not in dispute that the prices for wheat products are fixed by the Government by exercising the powers under the provisions of Essential Commodities Act, 1955. It is also again not in dispute that any flour mill, which charges prices exceeding the price fixed, is liable for proper penal action under the Control Orders. The net result is that the flour mills have to sell the wheat products only for the price fixed by the Government. It is only in that circumstances, the Commissioner of Civil Supplies issued proceedings enabling the flour mills to collect "administrative charges" with specific direction to show it separately. The circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges. (5) The Civil Supplies Corporation will pay sales tax only with reference to the ex-mill rates in respect of the stock lifted by them for public distribution. (6) Payment of surcharge on sales tax is not applicable in the case of the following roller flour mills which are situated outside the municipal limits. ............" In these circumstances, we have no hesitation to hold that "administrative charges" collected by the appellants and passed on to the Civil Supplies Department will not form part of the taxable turnover. This view of ours is amply supported by the various decisions cited by the learned counsel for the appellants. 19.. In [1988] 68 STC 1 (Food Corporation of India v. State of Kerala), the Supreme Court, while considering a similar issue, held as follows: "Held, that under the agreement the administrative surcharge and the price equalisation charge were the liabilities of the retailers to the Government and the appellant functioned merely as a collecting agent or a conduit pipe through which collections of administrative surcharge and price equalisation charge passed from the retailers to the Government: the two items were never part of the price o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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