TMI Blog2013 (6) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... arly holds that substitution has the effect of replacing the old Serial No.18 of Part B of Fourth Schedule of Act 32/2006 and the substitution will therefore entail goods described in Serial No.18 of Part-B of Fourth Schedule of Amending Act 32/2008 the benefit of exemption as is applicable from the inception of Act 32/2006. The new replaces the old and that is substitution and as a consequence, exemption becomes inevitable. The department's plea that the exemption will not apply to the period from 1.1.2007 to 31.3.2008 cannot be accepted, as substitution in this case will have to relate back to 1.1.2007 itself, when Act 32/2006 came into force. It needs no further clarification to state that even in terms of the decision Namputhiris Pickle Industries v. State of Kerala and another [1998 (3) TMI 594 - SUPREME COURT OF INDIA] the powder form of chilly continues to be one and the same item. This statement is made only to amplify that despite substitution by way of Act 32/2008, the petitioners are entitled to exemption in respect of the powder form of chilly, turmeric and coriander on the mere entry in Serial No.18 of Part-B of Fourth Schedule to Act 32/2006. When there is no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is Fourth Schedule and it has been wrongly stated as Fifth Schedule. The learned counsel for the petitioners sought for oral permission to amend the mistake and the same is granted. 2. The petitioners were registered dealers under the Tamil Nadu General Sales Tax Act, 1959 (for brevity, the TNGST Act ) and are now registered dealers under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (for brevity, Act 32/2006 ) and under the Central Sales Tax Act, 1956. The petitioners are carrying on business in food and condiments. 3. Under the provisions of the TNGST Act, chilly, coriander and turmeric were exempted goods falling under Serial No.16 of Part B of the Third Schedule to the TNGST Act with effect from 17.7.1996. However, chilly power, coriander powder and turmeric powder did not fall within the purview of the Third Schedule to the TNGST Act. 4. The Madras Chillies Merchants Association requested the Government of Tamil Nadu to clarify whether chilly powder, pepper powder and coriander powder are taxable or not consequent to withdrawal of levy of tax on the sale of chilly, turmeric and coriander. This was considered by the Government of Tamil Nadu and on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Part B of the Third Schedule to the TNGST Act, 1959 reads as follows: 'Chillies, Tamarind, Coriander, Turmeric and Shikkai sold by any dealer whose total turnover in respect of these items does not exceed ₹ 300 crores in a year' Serial No.18 of Part B of the Fourth Schedule to the TNVAT Act, 2006 reads as follows: 'Chillies, Tamarind, Coriander, Turmeric, Asafoetida (HING), Shikakai and Shikakai Powder, Jaggery and Gur including Jagerry powder and Nattusakkarai sold by any dealer whose total turnover in respect of those items does not exceed ₹ 300 Crores in a year.' 7. In the year 2008, by the Tamil Nadu Value Added Tax (Amendment) Act, 2009 (for brevity, Act 32/2008 ), certain provisions of Act 32/2006 came to be amended. Section 3 of Act 32/2008 is an amendment to Fourth Schedule to Act 32/2006 and the relevant portions necessary for the present adjudication are as follows: Section 3. Amendment of Fourth Schedule. - In the Fourth Schedule to the principal Act, in Part-B,- (1) for item 12 and the entries relating thereto, the following item and entries shall be substituted, namely:- 12. Bread, bun and rusk (branded or otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (January, 2007 to March, 2007) and the assessment year 2007-2008. It is stated that by virtue of Section 22 of Act 32/2006, the returns should be accepted subject to passing of the assessment order, but no original order of assessment was passed by the respondents. 11. Thereafter, the competent authority, issued a notice on 31.8.2010 proposing to invoke Section 27 of Act 32/2006, which relates to assessment of escaped turnover. The petitioners submitted their detailed objections on 9.9.2010, inter alia, stating that the exercise of power under Section 27 of Act 32/2006 is unwarranted and uncalled for. However, by the impugned orders dated 14.3.2011, the respondents rejected the objections raised by the petitioners and disallowed the exemption on the sales of coriander powder and turmeric powder. Hence, these writ petitions. 12. The learned counsel for the petitioners submitted as follows: i. The goods in question, namely turmeric powder and coriander powder, by virtue of G.O.(D) No.383, Commercial Taxes Department, dated 22.10.1998 and the clarification dated 9.12.2002 are clearly the same goods as turmeric and coriander and that is how the department treated it for a lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother; or to replace. In Black's Law Dictionary, 5th Edn., at p. 1281, the word substitute has been defined to mean to put in the place of another person or thing, or to exchange. In Collins English Dictionary, the word substitute has been defined to mean to serve or cause to serve in place of another person or thing; to replace (an atom or group in a molecule) with (another atom or group); or a person or thing that serves in place of another, such as a player in a game who takes the place of an injured colleague. 16. By reason of the aforementioned amendment no substantive right has been taken away nor any penal consequence has been imposed. Only an obvious mistake was sought to be removed thereby. .... 25. In Zile Singh v. State of Haryana, (2004) 8 SCC 1, wherein the effect of an amendment in the Haryana Municipal Act, 1973 by Act 15 of 1994 whereby the word after was substituted by the word upto fell for consideration, wherein Lahoti, C.J. speaking for a three-Judge Bench held the said amendment to have a retrospective effect being declaratory in nature as thereby obvious absurdity occurring in the first amendment and bring the same in conformity with what the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lost sight of. Where a statute is passed for the purpose of supplying an obvious omission in a former statute, the subsequent statute relates back to the time when the prior Act was passed. (See Attorney General v. Pougett, 146 ER 130.) 28. The doctrine of fairness also is now considered to be a relevant factor for construing a statute. In a case of this nature where the effect of a beneficent statute was sought to be extended keeping in view the fact that the benefit was already availed of by the agriculturalists of tobacco in Guntur, it would be highly unfair if the benefit granted to them is taken away, although the same was meant to be extended to them also. For such purposes the statute need not be given retrospective effect by express words but the intent and object of the legislature in relation thereto can be culled out from the background facts. (emphasis supplied) He stated that by dint of Act 32/2008 the substitution made to Entry 18 would mean that turmeric and turmeric powder, and coriander and coriander powder existed in the Fourth Schedule on and from 1.1.2007 and that is the way in which it should be interpreted. The intention of the legislature is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescience and perfect clarity. In the absence of it, when a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which give rise to it, and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give force and life to the intention of the legislature. That was clearly laid down by the resolution of the Judges in Heydon case, and it is the safest guide today. Good practical advice on the subject was given about the same time by Plowden.... Put into homely metaphor it is this: A Judge should ask himself the question: If the makers of the Act had themselves come across this ruck in the texture of it, how would they have straightened it out? He must then do as they would have done. A Judge must not alter the material of which it is woven, but he can and should iron out the creases. On this point, he also placed reliance on a decision of the Supreme Court in State of Tamil Nadu v. Kodaikanal Motor Union (P) Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and of Ministers and carry it out, and we do this better by filling in the gaps and making sense of the enactment than by opening it up to destructive analysis.' 11. Although the said views of Lord Denning have not been approved by the House of Lords in Magor St. Mellons Rural Distt. Council v. Newport Corpn., (1951) 2 All ER 839, they have been referred to with approval by this Court. [See: State of Bihar v. Dr Asis Kumar Mukherjee, (1975) 3 SCC 602; State of Karnataka v. Hansa Corpn., (1980) 4 SCC 697]. The observations of Viscount Simonds in the House of Lords disapproving the observations of Denning, L.J. referred to above, have also been referred to with approval in Punjab Land Development and Reclamation Corpn. Ltd.. v. Presiding Officer, Labour Court, (1990) 3 SCC 682. v. On the legal plea, it is further pointed out by the learned counsel for the petitioners that since the petitioners have already submitted returns and no original order of assessment has been passed, the jurisdiction of making revision of assessment or escapement of assessment does not arise at all and it will not come within the purview of escaped assessment for invoking the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form. In Rasoi Products v. Commercial Tax Officer (1982) 51 STC 248 (Cal), the Calcutta High Court held that when pepper, black pepper, white pepper and turmeric are powdered, there is no substantial change in the commodities and that the powders are not again liable to sales tax. In Ram Bhadur Takkur Takkur (P) Ltd. v. Coffee Board [1991] 80 STC 199 it was held by the Madras High Court that when coffee seeds are powdered and coffee powder results, there is no substantial change in the identity of the two goods for purposes of sales tax. In New Swastik Flour Mill v. State of Karnataka [1992] 84 STC 49, the Karnataka High Court held that atta, maida and soji which are produced out of wheat, though different in form from the parent substance, they are nothing but wheat in substance for purposes of the sales tax law. They followed the decision in Dhanbad Flour Mills v. State of Bihar [1989] 75 STC 47 of the Patna High Court, where a similar view was taken. 16. Following the decisions of the Supreme Court referred to above, which now have emphasised the essential nature of the substantial identity tests, and the decisions of the High Courts above referred to, we hold that when chill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following view expressed by the Bombay High Court: It was submitted by the respondents that the subsequent amendment expressly refers to animal feed supplements. This suggests that animal feed supplements were not previously included in the exemption notification. This reasoning must be rejected. The amendment appears to be clarificatory in nature. For example, the amendment now expressly refers also to animal feed concentrates which were not expressly referred to earlier. It cannot be said that animal feed concentrates are not animal feed. In the same manner products which supplement animal feed and are generally added to animal feed are also covered by the generic term animal feed. and confirmed the decision of the Bombay High Court. This decision is relied upon by the learned counsel for the petitioners to contend that chilly and chilly powder continue to be the same product and, therefore, if exemption is granted to coriander and turmeric under Serial No.18 of Part B of Fourth Schedule to Act 32/2006, it will also include coriander powder and turmeric powder. The substitution by Act 32/2008 in Serial No.18 is merely to substitute the old entry in Act 32/2006 with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that clauses (c) and (d) providing for denial of a duty drawback claim and in the nature of an embargo, should be understood in the context of import-export policy of the government in force and when the policy of the government was to promote exports, providing incentives to exporters by way of benefit in the form of duty drawback and providing for such benefits being with the main purpose of augmenting the foreign exchange reserve etc., the significance of the 100% EOU undertaking in terms of the relevant provisions of export-import policy is only to the establishment of a 100% EOU in terms of the policy and nothing more and at any rate the export-import policy cannot regulate or override the provisions of the Act, Rules and the notifications issued under these statutory provisions. In fact, there is no conflict or scope for understanding in the manner as is sought to be submitted by the learned counsel for the respondent-assessee. To this effect is the view taken by the courts including the Supreme Court and the interpretation to be placed in respect of an exemption provision is well settled in law, for us to either to get confused or to take a contrary view and to put the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any person or authority to whom such powers have been delegated by the Legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the courts that the persons or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect; (see Subha Rao, J., in Dr Indramani Pyarelal Gupta v. W.R. Nathu Others, (1963) 1 SCR 721, the majority not having expressed any different opinion on the point; Modi Food Products Ltd. v. Commissioner of Sales Tax U.P., AIR 1956 All 35; India Sugar Refineries Ltd. v. State of Mysore, AIR 1960 Mysore 326 and General S. Shivdev Singh v. State of Punjab, 1959 PLR 514.) (iii) A decision of the Supreme Court in Bombay Oil Industries Private Limited v. Union of India and others, 1995 Supp (1) SCC 295, wherein it has been held as under: 10. Before parting we may note one sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behind them. (See Lenigh Valley Coal Co. v. Yensavage, 218 FR 547.) The view was reiterated in Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama, (1990) 1 SCC 277. 13. In D.R. Venkatchalam v. Dy. Transport Commr., (1977) 2 SCC 273 it was observed that courts must avoid the danger of a priori determination of the meaning of a provision based on their own preconceived notions of ideological structure or scheme into which the provision to be interpreted is somewhat fitted. They are not entitled to usurp legislative function under the disguise of interpretation. 14. While interpreting a provision the court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. (See Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd., (2000) 5 SCC 515). The legislative casus omissus cannot be supplied by judicial interpretative process. Language of Section 6(1) is plain and unambiguous. There is no scope for reading something into it, as was done in N.Narasimhaiah v. State of Karnataka, (1996) 3 SCC 88. In State of Karnataka v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 to 31.3.2008. Paragraph (7) of the said judgment is as under: 7. The appellants have approached this Court challenging the show cause notice issued by the respondent to re-open the assessment orders on the ground that the appellants are not entitled for exemption before 1.4.2008 in view of G.O.Ms.No.36, dated 1.4.2008. Without submitting any explanation to the aforesaid show cause notice, the appellants have chosen to file the writ petition. The only grievance of the appellant is that even before issuance of G.O.Ms.No.36, dated 1.4.2008, they were enjoying the exemption granted under the TNVAT Act and this exemption has not been taken away by the issuance of the subsequent G.O.Ms.No.36, dated 1.4.2008. This contention of the learned Senior Counsel was already met by the learned single Judge by drawing the various provisions of the Act and the clauses found in the G.O.Ms.No.36, dated 1.4.2008. From a reading of the impugned order in the light of the provisions of the Act and the G.O.Ms.No.36, dated 1.4.2008, we are convinced that the decision of the learned single Judge does not call for any interference. The learned single Judge has rightly come to a conclusion that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the decision of the Full Bench of the Kerala High Court in Namputhiris Pickle Industries v. State of Kerala, supra, wherein they have extensively dealt with the commodity, namely Chilly, and what is the effect of the powder form of the said goods. The Kerala High Court has categorically held that the mere change in the powder form does not change the essential nature of the commodity relying upon Tungabhadra Industries' case, [1960] 11 STC 827 or the substantial identity test as stated in Pio Foods' case [1980] 46 STC 63. They have given a clear finding that there is only a change in the form and there is no change in the substantial identity. This decision was upheld by the Supreme Court on the said finding as well in State of Kerala and another v. Namputhiris Pickle Industries, (2000) 117 STC 312. 17.2. This decision of the Full Bench of the Kerala High Court and the Supreme Court comes in aid of the petitioners' plea that turmeric and turmeric powder, and coriander and coriander powder are one and the same goods not only to the understanding of the petitioners, but also that of the State. This fact stands amplified by the government order in G.O.(D) No.38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.18 of Part B of the Fourth Schedule to Act 32/2008, it is evident that the substitution made is only to state the obvious, namely to fill up the lacunae for the period from 1.1.2007 to 31.3.2008. The old entry has been substituted by the new entry into Act 32/2006. It is not a case of insertion or addition of a new entry. What is substituted would stand substituted from inception (i.e) with effect from 1.1.2007. Whereas insertion or addition will be relevant to the date of amendment (i.e.) 1.4.2008. By substitution, the amended Serial No.18 of Part B of the Fourth Schedule replaces old Serial No.18 of Part-B of Fourth Schedule of Act 32/2006. The old Serial No.18 of Part-B of Fourth Schedule becomes dead letter for all purposes. The implication of the word substituted is defined by the Supreme Court at paragraph (15) of Indian Tobacco Association case, extracted in paragraph 15(ii) of this order. Substitutionmeans put one in the place of another. This is exactly what has been done in the present case. The amendment serves the cause of exemption granted under Act 32/2006. 18.4. The contention of the learned Additional Advocate General that substitution effected will be operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the decision of the Full Bench of the Kerala High Court in Namputhiris Pickle Industries v. State of Kerala and another, supra, which has been upheld by the Supreme Court in State of Kerala and another v. Namputhiris Pickle Industries, supra, the powder form of chilly continues to be one and the same item. This statement is made only to amplify that despite substitution by way of Act 32/2008, the petitioners are entitled to exemption in respect of the powder form of chilly, turmeric and coriander on the mere entry in Serial No.18 of Part-B of Fourth Schedule to Act 32/2006. 18.7. When there is no differentiation between the two forms of the goods, the substitution is more in the nature of clarification of a pre-existing right which has accrued to the petitioners, that is to say that the powder form of turmeric and coriander are no different from turmeric and coriander. The decision of the Supreme Court in State of Kerala and another v. Namputhiris Pickle Industries, supra, makes it clear that there is no differentiation between chilly and its powder form. If both are one and the same goods. The mere entry in Serial No.18 of Part B of the Fourth Schedule to Act 32/2006 it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of 75 of the Act. In the light of this provision, the Division Bench came to hold that the notification read with Rules expressly deny the benefit of drawback in certain situations and in respect of certain goods and, therefore, if there is a contravention of the same, the benefit cannot be extended. There is no quarrel to the proposition that the language of the notification, Rules and Sections has to be strictly construed. There is also no doubt that in interpreting taxing provisions, the exemption provision found in taxing statutes has to be express and there is no exemption by implication or logical deduction. In other words, strict interpretation should be resorted to. 18.8.2. In the present case, we are concerned not with a case of exemption notification. The statute has already provided for exemption under Fourth Schedule to Act 32/2006. The exemption was available under the TNGST Act as well. The exemption came to be substituted with effect from 1.4.2008 into the Fourth Schedule and I have already held that substitution would mean that it is given effect from 1.1.2007 in view of the various decisions of the Supreme Court, referred to above. 18.8.3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der powder, and turmeric and turmeric powder under the TNGST Act and also under Act 32/2008 were considered as one and the same goods and not different goods and that has been affirmed by the Full Bench of the Kerala High Court and the Supreme Court and the Government has accepted it to be same goods. If that be the case, there is no change even during the period between 1.1.2007 and 31.3.2008 insofar as the said goods are concerned. It does not change the character of the goods merely because by substitution the word powder has been added. This position is accepted by the Government in the Government Order in G.O.(D) No.383, Commercial Taxes Department, dated 22.10.1998, which has been referred to supra. Therefore, the plea that the amendment will not have retrospective effect will not be a tenable plea insofar as the present case is concerned. It has no relevance and is factually distinguishable. 18.10.2. In the Bombay Oil Industries Pvt. Ltd., case there are two notifications, one distinct from the other. Whereas in the present case, as per the TNGST Act the goods were one and the same and in the Act 32/2008 also the goods are one and the same. Therefore, there is no ambigu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent construction by the Court does not arise. Therefore, the decision in Padma Sundara Rao (Dead) and others case, supra, does not apply to the facts of the present case. 18.12. The Division Bench decision of this Court dated 19.9.2011 made in W.A.Nos.1705 to 1708 of 2011 (Sakthi Masala (P) Limited v. Assistant Commissioner (Commercial Taxes), Perundurai), and the reasoning contained therein that the petitioners therein will be entitled to exemption only after the issuance of the government order and not before that is based on interpretation of G.O.Ms.No.36, Commercial Taxes and Registration (B2) Department, dated 1.4.2008. However, the plea of the petitioners in that case was that both the goods are one and same and the decisions of the Full Bench of the Kerala High Court and the Supreme Court were never raised nor considered by the Division Bench of this Court. In the case on hand, the petitioners have made out a case for interference by this Court as the proceedings initiated are without jurisdiction and contrary to law laid down by the Apex Court on identity of goods. 18.13. In view of the above, the Court has no hesitation to hold that the goods, namely powder form of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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