TMI Blog2007 (9) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... ment cannot take place on mere change of opinion and in such circumstances the reassessment is impermissible. The upshot of the above discussion is that the circular dated 25th of January, 2003 is legal and valid but on the basis of the said circular, the reassessment proceeding cannot be initiated provided the assessment was completed on the basis of the earlier circular dated 15th of September, 1998. In the result, the Writ Petition succeed and are allowed. The reassessment notices issued for the relevant assessment years are hereby quashed. - Civil Misc. Writ Petition No. 278 of 2004, Civil Misc. Writ Petition No. 1217 of 2007, Civil Misc. Writ Petition No. 622 of 2004, Civil Misc. Writ Petition No. 838 of 2005, Civil Misc. Writ Petition No. 1334 of 2006, Civil Misc. Writ Petition No. 12 - - - Dated:- 28-9-2007 - Hon'ble Prakash Krishna And Hon'ble Bharati Sapru,JJ. ORDER All the aforesaid writ petitions were heard together and are being disposed off by a common judgement as jointly agreed by the learned counsel for the parties. A common question of law is involved in all these petitions with regard to the interpretation of words 'turnover of sales&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 1996-97 under the U.P. and Central Sales Tax was completed on 22nd of December, 1998. In the said assessment the Assessing Officer granted exemption on the consignment sale amounting to Rs.27,22,730/- and on stock transfer amounting to Rs.17,00,38,442/-. Subsequent thereto, the Deputy Commissioner (Assessment) - I, Trade Tax, issued the impugned notice under section 21(2) of the Act to reopen the assessment on the ground that the turnover of Rs.22,47,08,545/- representing the stock transfer and consignment sale, have escaped assessment as these transfers prior to achievement of base production are not permissible. He opined that exemption on stock transfer or consignment sale before the base production is achieved, is not legally permissible. Impugning the said notice the present writ petition has been filed challenging the circular dated 25th of January, 2003 Annexure -5 to the writ petition also being contrary to the notifications dated 31st of March, 1995 and 21st of January, 1997, both issued under section 4-A of the Act. Heard Shri Bharat Ji Agrawal, learned senior counsel along with Sri Rakesh Ranjan Agrawal, Shri Piyush Agrawal, Shri Nikhil Agrawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding counsel for the department submits that the notifications should be read as a whole without making any additions or alterations. On a plain reading of these notifications, he submits the stock transfer and consignment sale are liable to be excluded from the 'base production'. The intention of the legislature is crystal clear. In these notifications the phrase 'on the turnover of sales' have been used consciously. The word turnover on sales have fix and definite connotation under the sales tax statute. Turnover and sale have been defined under section 2(i) and 2 (h) under the Act. These words used in notifications should be understood as defined in the Act. Since these words are free from any ambiguity, no external aid of interpretation or any theory relating to the supposed intention of legislature can be imported into. Considered the respective submissions of the counsel for the parties. To begin with, it may be noted that since April, 1990 for the first time the State Government by amending section 4-A provided exemption from or reduction in the rate of tax which can also be availed by such units which have undertaken expansion, diversification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of tax relief by such exemption from or reduction in rate of tax as specified in Column 5 of Annexure I is achieved, whichever is earlier, on the turnover or of sales. (a) of the quantity of goods manufactured in excess of the base production in the case of units undertaking expansion or modernization; and (b) of goods manufactured by the unit which are of a nature different from those manufactured earlier by such unit in the case of units undertaking diversification. 2. ............................................................................................3. ............................................................................................4. ............................................................................................ 5. Base production of unit undertaking expansion or modernization shall be deemed to be - (a) maximum production achieved during any one of the preceding five consecutive assessment years, or (b) 80 per cent of the installed annual production capacity, whichever is higher. 6. (a) Turnover of sale of goods in any assessment year to the extent of the quantity covered by production of that year and the stock of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch have undertaken expansion, diversification or modernization or backward integration, the investment in only such land, building, plant, machinery, equipment, apparatus, components, moulds, dyes, jigs and fixtures shall be taken into account as were acquired on or before the relevant date of commencement of the period of facility notified under sub-section (1) of Section 4-A of the Act. 7. (a) turnover of sale of goods in any assessment year to the extent of the quantity covered by base production of that year and the stock of base production of previous years shall be deemed to be the turnover of base production; (b) only the turnover of goods in any assessment year in excess of the quantity referred to in clause (a) shall be entitled to the facility of exemption from or reduction i the rate of tax. The same language has been used in clause 7 of the subsequent notification dated 21st of February, 1997 except that in place of 7 (a) and 7 (b) it has been numbered as 7(1) and 7(2) in the subsequent notification. The learned senior counsel for the petitioner has laid emphasis on the words 'quantity of goods, goods manufactured in excess of 'base production' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent should be construed liberally. A provision intending for promoting economic growth has to be interpreted liberally. CST Vs. Industrial Coal Enterprises 1999 UPTC 250 is a case under section 4-A of the Act. In this case the Apex Court has held that the provision granting exemption from tax for the purposes of encouraging production of goods and promoting development of industry should be liberally construed. Construction should be reasonable and purposive. It has followed its earlier decision of Bajaja Tempo Ltd. (supra). It has also noted that if the construction sought to be placed by the department therein is accepted, the very purpose and object of the grant of exemption will be defeated. This appears to be the vital factor which weighed heavily. The other factor that the dealer of that case had only shifted the unit to its own premises being more convenient and easier to carry on the production of the goods undisturbed by the baggeries of the lessor and to save the liability of payment of rent, was also taken into consideration by the court. The learned standing counsel, on the other hand, submits that where language of a provision is clear, the provision should be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solve the ambiguity. But if the statutory language is unambiguous then that must be given effect to. The legislature is deemed to intend and mean what it says. The need for interpretation arises only when the words used in the statutes are, on their own terms ambivalent and do not manifest the intention of the legislature. Keshavji Ravji and Co. and Others v. Commissioner of Income Tax : JT 1990 (1) S.C. 253. Exceptions to the above rule of strict interpretation have also been noted therein. They are - (1) the rule of strict construction does not apply to a provision which merely lays down the machinery for the calculation or procedure for the collection of tax. (2) if two constructions are possible and a strict construction would lead to an absurd result then the construction which is in keeping with the object of the statutory provision or in keeping with equity could be accepted. The Apex Court in M/s. Binani Industries Limited Vs. Assistant Commissioner of Commercial Taxes JT. 2007 (5) S.C. 311 following its earlier decision in Ahmedabad Manufacturing Calico Printing Co. Ltd. Vs. S.G. Mehta ITO AIR 1963 S.C. 1436 and Biswamath Jhunjhunwalla has held that, ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the very object of the notification as well as of section 4-A of the Act is to increase production of goods in the State. Elaborating the argument, he submits that the words of the quantity of goods manufactured in excess of 'base production' in clause (a) of (1) (b) of the notification dated 31st of March, 1995 should also be taken into consideration while assigning the meaning to the words on the turnover of sales . 'Base Production' has been defined in clause - 7 of the said notification of the year 1995 which has been reiterated in the subsequent notification dated 21st of February, 1997. 'Base production' is also defined in almost the same language in section 4-A (6) Explanation (6), which reads as follows:- (6) For the purposes of this section the expression 'base production' means - (a) maximum production achieved during any one of the preceding five consecutive assessment years; or (b) 80% of the installed annual production capacity; whichever is higher. The 'base production' has been defined as a measure to the point with reference to production of unit beyond which the unit would be entitled for exemption from, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing exemptions to new industry and projects as incentive. And secondly to ensure to the State a bare minimum, that is tax on 'base production', which was fixed by way of the eligibility certificates. To our mind, the purpose was double fold and of mutual benefit. It was certainly not to give an opportunity to the tax payee to circumvent the payment of tax on base production by effecting with ingenuity stock transfers and the like. It also was intended that the tax payer would fulfil the payment of tax on the achievement of base production first and thereafter, enjoy the exemption on excess production in the State of U.P. The concessions/exceptions generated by the State of U.P. were given in order to benefit the State of U.P. also. Help was also sought to be taken from the form (iv) prescribed under Rule 41 to support the argument that the total turnover includes not only the taxable turnover but also the exempted turnover whether such exemption is permissible under any provisions of the Act or Central Sales Tax Act. Form (iv) is a prescribed form for filing return of turnover. On a perusal of the said form it is clear that column - 7 of it requires disclosure of ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder are valid and legal. It can be said with reasonable certainty that stock transfer and branch transfer is not included in on turnover of sale in the notifications under consideration. No other point was pressed. There is no merit in the writ petition No.288 of 2003 M/s. Kajaria Ceramics Limited Vs. State of U.P. and others seeking quashing of the circular dated 25th of January, 2003 or challenging the notice dated 4th of February, 2003. The writ petition is dismissed. But no order as to costs. Then the question arises whether on the basis of the aforestated circular dated 25.1.2003 reassessment proceeding under section 21 (2) of the Act could or could not be initiated. In all these writ petitions the challenge is to the reassessment proceedings also, on the ground of change of opinion. The reassessment proceeding relates to the assessment Year 1996-97 (Central) in writ petition No.278 of 2004 the, assessment Year 1997-98 (Central) in writ petition No.622 of 2004, assessment Year 1998-99 (U.P. and Central) in writ petition No. 838 of 2005, assessment Year 1999-2000 (U.P. and Central) in writ petition No.1334 of 2006, assessment Year 2000-01 (U.P. and Central) in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference:- 24. The issues can be looked at from a different angle. Undisputedly, the 1996 Circular was binding on the revenue authorities as is spelt out in the case of 12.4.1996 and 23.10.1999 Circulars. The assessments were completed on the basis of 12th April, 1996 Circular. Merely because the commissioner changes his view/opinion and according to him it was review of the earlier decision that cannot have any effect on any assessment which has been completed on the basis of the 1996 Circular. 25. That being so, the question of re-opening the assessment by mere change of opinion is entirely impermissible. 26. Though these aspects need not be taken not of in view of the conclusion that the proviso was clarificatory in nature and operated with effect from the date Section 5C was amended i.e.1.4.1986 yet this is an additional factor to set aside the High Court's judgement. It is stated by a long line of decisions that reopening of assessment is not permissible by mere change of the opinion in the assessing officer. Here it has not been disputed that the Circular dated 23.10.1999 was on account of change of opinion of the Commissioner that too while reviewing the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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