TMI Blog2001 (8) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial Taxes vide circular in Acts Cell-I/D. Dis/65969/99 dated September 28, 1999 has to be applied and according to this formula, taxable turnover under section 3(4) of the Act has to be fixed as indicated below: Total purchase value by Sale value of final product issue of form XVII for the exported to other country or manufacture of the X despatched to other State as products stock transfer However, in the circular dated September 12, 2000, the formula has been changed as indicated below: Total purchase value by Sale value of final product issue of form XVII for the exported to other country or manufacture of the X despatched to other State as products stock transfer 6.. Paper Products Ltd. v. Commissioner of Central Excise (1999) 112 ELT 765 (SC); (1999) 6 JT 185 (SC). 6.. Similarly a Constitution Bench of the Supreme Court in Navnit Lal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Income-tax Bombay reported in [1965] 56 ITR 198 (SC); AIR 1965 SC 1375 has held that a circular issued by the Central Board of Direct Taxes under section 5(8) of the Income-tax Act, 1922 would be binding on all the officers and persons who were employed in execution of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raj Wadhwani reported in AIR 1961 SC 1506 support this proposition. Therefore, the proceedings in TNGST 1880011/9899 dated June 20, 2001 may be quashed as prayed for. 7.. On perusing the records, it is seen that the petitioner effected raw material purchases at concessional rate of tax by furnishing declaration forms and on manufacture of end-products, sold the same not only locally and on inter-State but also on export and as branch transfers outside the State. Section 3(4) of the Act contemplates levy of purchase tax if the manufactured goods by availing concessional rate of tax under section 3(3) of the Act are not sold but despatched to a place outside the State either by branch transfer or by transfer to an agent for sale, or any other manner, except as a direct result of sale or purchase in the course of inter-State trade or commerce. The relevant section as it stood for the assessment year 1998-99 reads as follows: "(4) Where any dealer, after availing the concessional rate of tax under sub-section (3), does not sell the finished goods but despatches them to a place outside the State either by branch transfer or by transfer to an agent, by whatever name called, for sale, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase or procure raw materials from different sources as detailed below: (i) By local purchases against form XVII. (ii) Inter-State purchases against "C" declaration forms. (iii) Receipts from head office or branches outside the State. It will therefore be practically difficult to tax the purchase of a particular raw material with the end-product in particular. It is considered that it will not be proper to impose the additional levy of 2 per on the entire value of goods purchased against form XVII. The turnover liable to tax at 2 per cent can be determined on proportionate basis with reference to purchases and sales as below: Formula I.(Straight cases where all purchases are used in manufacture and all goods manufactured are disposed) Form XVII purchase Form XVII purchase Formula II.-(Goods purchased availing concessional rate of tax are partly used in manufacture of goods; and such manufactured goods are disposed in part and the rest held in stock.) Step I: To arrive at the value of the form XVII purchase: Opening stock of form XVII purchases from 12-3-1993 for 1993-94. Add: Purchases availing concessional rate: Deduct: Closing stock of purchases ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board: Provided that no such orders, instructions or directions shall be issued (a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the [Commissioner of Central Excise (Appeals)] in the exercise of his appellate functions." 15.. In this connection, it is also relevant to refer to section 28-A of the Act which was introduced by Act 60 of 1997 with effect from November 6, 1997. This section reads as follows: "Section 28-A. Power to issue clarification by Commissioner of Commercial Taxes.-(1) The Commissioner of Commercial Taxes on an application by a registered dealer, may clarify any point conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culty in holding that statutory clarification given are binding on the department. Similarly, the decisions relied on pertaining to Central Board of Direct Taxes have arisen under peculiar circumstances. The case considered in Navnit Lal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Income-tax, Bombay reported in [1965] 56 ITR 198 (SC); AIR 1965 SC 1375 arose in the context of section 12(1B) of the Income-tax Act, 1922. According to this newly introduced provision, if a controlled company adopts the device of making a loan or advance to one of its shareholders, such shareholder will be deemed to have received the said amount out of the accumulated profits and would be liable to pay tax on the basis that he has received the said loan by way of dividend. It appears that before this provision was introduced, the Honourable Minister for Revenue and Civil Expenditure gave an assurance that outstanding loans and advances which are otherwise liable to be taxed as dividends in the assessment year 1955-56 in pursuance of the amendment, namely, section 12(1B) of the Act, will not be subjected to tax if it is shown that they had genuinely refunded to the respective companies before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 17 of the Act. Only in that context, it was held that there was violation of article 14 of the Constitution of India. In the case of Commissioner, Sales Tax v. Narayan Automobiles reported in [1994] 92 STC 555 (All.), the High Court in revision declined to interfere with the order of the lower appellate authorities who relied on the circular instructions to classify an item for levy of tax. However, in the present case, no circular instruction of the Commissioner of Commercial Taxes would be binding on the persons working under the control of the Commissioner of Commercial Taxes prior to the introduction of section 28-A of the Act with effect from November 6, 1997. Even from November 6, 1997, only if circular instructions are issued in terms of section 28-A of the Act, then such instructions are binding on the persons working under the control of the Commissioner of Commercial Taxes. In the present case, the circulars dated August 20, 1999, September 28, 1999 and September 12, 2000 have been issued only on the formula to be adopted to arrive at the turnover under section 3(4) of the Act on the basis of request from certain dealers and these circulars have not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 3(4) of the Act clearly says that except in respect of inter-State sale or purchase, if the goods are despatched to a place outside the State either by branch transfer or by transfer to an agent by whatever name called for sale or in any other manner, then purchase tax at 2 per cent has to be paid in addition to the concessional rate of tax paid already under section 3(3) of the Act. Therefore, when export sale has not been specifically excluded as in the case of inter-State sale while imposing purchase tax, there is absolutely no case to add words to the provisions of the Act. In this connection, it is relevant to quote the classic observations of Rowlatt, J. in Cape Brandy Syndicate v. Commissioners of Inland Revenue (1921) 1 KB 64 at page 71: "In a taxing statutes one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 19.. The above observation has been quoted with approval by a Bench of three Judges of the Supreme Court in Commissioner of Income-tax v. Ajax Products Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 quasijudicial 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." 22.. In the above circumstances, I find that there is absolutely no case to declare that the circular of the Commissioner of Commercial Taxes dated September 28, 1999 prescribing a formula to work out the taxable turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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