TMI Blog1995 (2) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Sales Tax Act so as to make the sales effected by the petitioner free from any tax liability. 3.. On behalf of the respondents it was argued that the term "exempt from tax generally" appearing in section 8(2-A) of the Central Sales Tax Act does not include goods which are exempt only on specified conditions or in specified circumstances. Reliance was placed in this connection upon the Explanation to section 8(2-A) (supra). It was urged that exemption of footwear in terms of entry 46 of the Fifth Schedule as the same stood during the relevant period was an exemption which was subject to the condition that the cost of the footwear was less than Rs. 30 and therefore any such exemption could not be deemed to be an unconditional or general exemption as would entitle the petitioners to the benefit flowing from section 8(2-A) of the Central Sales Tax Act, 1956. 4.. Section 8 of the Central Sales Tax Act, 1956, governs the rates of tax on sales in the course of inter-State trade or commerce. Sub-section (2-A) of section 8 with which we are concerned in these petitions starts with a non obstante clause and, inter alia, provides that no tax shall be payable under the Central Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the appellant was also exempt from the payment of tax under the Central Sales Tax Act. The claim made by the company was negatived by the court holding that the exemption granted under section 5(2)(a)(iv) of the State Act, was not a general but an exemption available only in specified circumstances and under specified conditions. The court pointed out that the specified circumstances in that case were that the sale must be to an undertaking engaged in supplying electrical energy to the public under a licence and the specified condition was that the items of goods purchased by the undertaking must be used for generation or distribution of electrical energy. The fulfilment of these conditions and circumstances stipulated by section 5(2)(a)(iv) of the Punjab Act was essential for claiming exemption from the State tax. It was in these circumstances held that if any one of the conditions specified by the said provision was not satisfied no exemption would be available to the sales made by the company. The court emphasised that "general exemption" means that the goods should be totally exempt from tax before a similar exemption from levy of Central sales tax can become available, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed the conditions relating to identity of the goods and the dealer are always there in every exemption and the same did not amount to a condition of sale. Following the judgment in Pine Chemicals case [1992] 85 STC 432 (SC) the appeals filed by the assessee/corporation were allowed and the claim for exemption upheld. 7.. Review petitions thereafter appear to have been filed against both the judgments aforesaid. These petitions were heard by a Bench of three Judges and were allowed reversing the view taken in both these cases. Relying upon a judgment in Indian Aluminium Cables' case [1976] 38 STC 108 (SC) and International Cotton Corporation case [1975] 35 STC 1 (SC), the Supreme Court held that the terms "specified circumstances and specified conditions" referred to in the Explanation had reference to the goods in respect of which the exemption was sought, and that a general exemption means that the goods should be totally exempt from tax under the State Act before a similar exemption from the levy under the Central Act can become available. The conditions stipulated by the notifications granting exemption, namely, that the goods should be manufactured by a new industria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of which is under sales tax law of the appropriate State, exempt from tax generally? Certainly not. Exemption provided by Government Order No. 159, to repeat, is not with reference to goods but with reference to the industrial unit. So long as it is (i) a large or medium scale industry and (ii) it manufactures and sells goods within the five years of its going into production, the sale of such goods is exempt irrespective of the nature or classification of goods. Similar goods may be manufactured by another unit but if it does not satisfy the above two requirements, the goods manufactured and sold by it would not be entitled to exemption from tax. Indeed, the goods manufactured by that very unit would not be eligible for exemption if they are manufactured after the expiry of five years from the date it goes into production and/or sells them beyond the said period. The period of exemption may also vary from unit to unit depending on the date of commencement of production in each unit. For the above reasons, we are of the opinion that the exemption granted under the aforesaid Government order does not satisfy the requirements of section 8(2-A)." 8.. The question therefore is whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the goods rather than the condition subject to which the exemption is granted. It therefore follows that if the goods described in the Schedule are granted exemption not unconditionally but upon certain terms which go beyond the description thereof, then what is in excess of the description is either a condition or a circumstance. Take for instance mangal sutra and footwear which answer the same description irrespective of whether the value of a pair of footwear is Rs. 30 or Rs. 3,000 or the price of a mangal sutra is Rs. 500 or Rs. 2,500. Footwear does not cease to be footwear nor does it become a footwear of a different specie or commercially different commodity merely because its price, goes beyond a particular amount. So also is the case with mangal sutra and carpets woven on handlooms which continue to remain the goods of the particular description regardless of what their price is. In case therefore such goods are granted exemption subject to their price being less than the amount mentioned in the Schedule the condition regarding the price is obviously a condition within the meaning of section 8 of the Central Sales Tax Act, thereby making the exemption a conditional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 8(2-A) of the Act, has not been defined nor has the term "specified circumstances" been so defined. The term condition has been given the following meaning in Black's Law Dictionary, 6th Edition: "A future and uncertain event upon the happening of which is made to depend the existence of an obligation; or that which subordinates the existence of the liability under a contract to a certain future event................ A qualification, restriction; or limitation modifying or destroying the original act with which it is connected." 12.. When seen in the light of the above meaning, it is manifest that the grant of exemption to footwear is conditional, for the exemption is subject to the qualification or the restriction that the same would be available not to footwear generally but only to such footwear as fulfils the prescribed condition of the price thereof being less than Rs. 30 per pair. The sale of footwear for a price less than Rs. 30 per pair may even be a specified circumstance the existence whereof may entitle the goods sold to the grant of exemption from payment of sales tax. 13.. It was next argued that the underlying object behind the provisions of section 8(2-A) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 per pair. This Court observed thus: "If the said test is applied it would be seen that the chappals or footwear costing not more than Rs. 30 per pair will not be entitled for exemption under the CST Act. If the exemption under the KST Act was in regard to the footwear in general, then such exemption would have extended in regard to tax under the CST Act also. But, the exemption notification under section 8-A of the KST Act does not give exemption to footwear in general but gives exemption only under a specified condition or circumstance, that is the cost of the footwear being not more than Rs. 30 per pair. Thus the exemption is dependent on the act of the dealer in selling the footwear at a price of not more than Rs. 30 per pair. In other words, the exemption under the State Act is conditional and is available only in a special circumstances, when the sale price is less than Rs. 30 per pair. As the exemption is not general but subject to a specified condition, the benefit of the exemption cannot be extended to the turnover relating to such footwear under the CST Act having regard to the explanation of section 8(2-A)." Learned counsel appearing for the petitioners however t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the learned counsel, bring to tax footwear costing less than Rs. 30 for the period prior to the date of issue of the impugned clarification. In support of his submission he placed reliance upon section 3-A(2) of the Karnataka Sales Tax Act and the judgment of this Court in T.M. Mohan v. Additional Agricultural Income-tax Officer [1990] 184 ITR 190. He also placed reliance upon a Full Bench judgment of the High Court of Kerala in Commissioner of Income-tax v. B.M. Edward [1979] 119 ITR 334 and argued that clarification issued by the Commissioner in exercise of his statutory powers would be binding even if such clarifications were contrary to the provisions of the Act, under which the same were issued. 17.. Smt. Vidya, learned Government Advocate, on the other hand placed reliance upon the judgment of the Supreme Court in Bengal Iron Corporation v. Commercial Tax Officer [1993] 90 STC 47 and urged that the clarifications issued by the Commissioner could never supersede or defy the statutory provisions of the Act let alone bind the courts. Reliance was placed by her upon a Division Bench judgment of this Court in Lipton India Limited v. State of Karnataka [1994] 95 STC 225; ILR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral 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. Of course, the Parliament/Legislature never speaks or explains what does a provision enacted by it mean. (See Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. AIR 1983 SC 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of the Commissioner dated April 2, 1992, to the appellant can ever be construed as suo motu clarification by the Commissioner about the rate of tax payable and that the said clarification can be said to have been made to officers and persons employed in the execution of the Act, who have to follow such clarification. The said reply given by the Commissioner was not in exercise of any suo motu power. Secondly, it was not a clarification issued in connection with any rate of tax. Thirdly, it was not addressed to any of the subordinate officers............... It is also now well-settled by a catena of decisions of the Supreme Court that general executive instructions cannot bind the assessing authorities discharging quasi-judicial functions under the Act. In the case of Bengal Iron Corporation [1993] 90 STC 47; AIR 1993 SC 2414, it has been in terms laid down by the Supreme Court that such clarifications and circulars issued by the Central Government or State Government regarding taxability of certain items represent merely their understanding of the statutory provisions. It is doubtful whether such clarifications and circulars bind the quasi-judicial functioning of the authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al foundation for any such claim. It was imperative for the petitioners to have stated that they had acted upon the clarifications in question and changed their position to their detriment. It was only if the petitioner had clearly asserted and convincingly demonstrated the above by reference to some acceptable evidence or material that they could possibly rely upon the principles of promissory estoppel. No such case has however been made out by the petitioners or any one of them. The clarification relied upon by the petitioners was never addressed to them nor is it otherwise shown to have been circulated for the information of the industry. Even assuming that the clarification had been sent to the subordinate officers of the department, as was urged by Mr. Prasad, which fact is not borne out by record of this Court, yet unless the petitioners showed further that they had acted upon the representation contained in the clarification, they can neither claim prejudice nor call in aid any equitable considerations in their favour. Reliance upon the judgment of the Kerala High Court in Commissioner of Income-tax v. B.M. Edward [1979] 119 ITR 334 [FB] and that of the Supreme Court in St ..... X X X X Extracts X X X X X X X X Extracts X X X X
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