TMI Blog2005 (9) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... s at 10 per cent of the purchase turnover. The petitioner wanted to make benefits as was available to such of those manufacturers who have the units in the State and who produce finished products from out of raw materials which are subjected to tax in terms of the provisions of section 5A of the Act. It is the claim of the petitioner that the petitioner has been availing of such concessions under section 5A of the Act for several years and that the provisions of section 5A had also undergone many legislative corrections; that while all along, concession had been claimed by the petitioner which it appears had been denied to it for the reason that the petitioner had not been able to secure certain compliance in accordance with the procedure prescribed for availing such concessions, etc. However, insofar as the provisions of section 5A as were amended by Act 5 of 2001 and applicable for the period April 1, 2001 to March 31, 2002 are concerned, the petitioner felt that though the main part of section 5A of the Act extended certain concessions even to a dealer like the petitioner, the proviso to sub-section (2) of section 5A of the Act sought to disentitle the benefit or depriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner either to interpret the provisions of section 5A in such a manner that the proviso does not operate or to understand the section excluding the proviso. I have heard Sri Sarangan, learned Senior Counsel appearing for the petitioner and Sri Vedamurthy, learned Government Pleader appearing for the respondent. Learned Senior Counsel for the petitioner has drawn my attention to the provisions of section 5A as it stood at the relevant point of time which read as under: 5-A. Taxation of industrial inputs. (1) Notwithstanding anything contained in section 5, the tax payable by a registered dealer, in respect of the sale of any industrial input liable to tax under the Act to another registered dealer for use by the latter as a component part or raw material or packing material of any other goods which he intends to manufacture inside the State for sale or in respect of sale of consumables liable to tax under the Act to another registered dealer for use in such manufacture, shall be at the rate of four per cent or the rate specified in section 5, whichever is lower, on the taxable turnover relating to such sale: Provided that where the rate of tax in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2), sells away such inputs contrary to such declaration or condition, the assessing authority, after giving such person a reasonable opportunity of being heard, shall, by order in writing, impose upon him by way of penalty a sum, which shall not be less than the amount of tax leviable under section 5 on the sale of the inputs so purchased or tax leviable under clause (b) of sub-section (3) of section 5 or section 6 on the inputs so purchased, but which shall not exceed one and half times the amount of such tax; (iii) having his manufacturing unit inside the State and having purchased any inputs by furnishing a declaration under first proviso to sub-section (1) or having paid tax on any inputs under subsection (2), uses such inputs contrary to such declaration or, the assessing authority, after giving such person a reasonable opportunity of being heard, shall, by order in writing, impose upon him by way of penalty a sum which shall not be less than twice the amount of tax leviable under section 5 or 6 but not exceeding two and half times the amount of such tax on the inputs so purchased: [Provided that no penalty shall be levied under this sub-section after a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (2) on purchase of inputs: [Provided that no penalty shall be levied under this sub-section after a period of eight years from the close of the year to which the purchase relates.] Explanation. (1) For the purpose of this section, the expressions 'industrial inputs' or inputs, mean either a 'component part' or 'raw material' or packing material, but do not include cement, and inputs falling under Serial Number 12 of Part 'S' and Serial Number 10 of Part 'M' of the Second Schedule. (2) The expression 'component part' means an article which forms an identifiable constituent of the finished product and which along with others, goes to make up the finished product. (3) The expression 'raw material' means any material,- (a) from which another product can be made, through the process of manufacture, either by itself or in combination with other raw materials; or (b) a processing or any other chemical solvent (including chemicals used for testing, analysis or research) used in the solvent extraction process or a catalyst required in the manufacturing process, but it does not include fuels, and consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be inconsistent with the main provision, totally denying the benefit and accordingly interpretation of section 5A of the Act should be such that as to extend the benefit to a person who otherwise qualifies under the main provision so that the object of the very section is achieved and is not totally defeated. Further order dictated on September 9, 2005. What is principally contended by Sri G. Sarangan, learned Senior Counsel appearing for the petitioner, is that while the provisions of section 5A of the Act as it stood for the period April 1, 2001 to March 31, 2002 did extend a benefit to persons like the petitioners in terms of sub-section (1) of section 5A and even when the petitioner has fully complied with the requirement under this sub-section, the petitioner is stumped and denied the benefit only by the inarticulate provision, namely, the first proviso to this section, wherein due to sheer impossibility of compliance with a condition imposed therein, the petitioner is sought to be deprived of the concession or what is known as the reimbursement of tax to which he had become eligible under sub-section (1) of section 5A of the Act. What is pointed out is that the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as remits the tax at the sale point and therefore remitting the tax by itself on both occasions. Learned Senior Counsel points out that while the proviso does not seek to play or run counter to the main provision of subsection (1) of section 5A, in a situation where the levy is at the sale point and therefore the compliance with the proviso is undoubtedly a reality, in a situation where the levy is at the purchase point, and tax is levied under section 5(3)(b). While the purchase tax is paid by the purchasing dealer, which is attracted under section 5 of the Act at that point, it is remitted by the purchaser himself and not through the seller. It is in such circumstance, the petitioner is before this court seeking a declaration to hold that the proviso is running contrary to the main section; should be held to be not operative, particularly in a situation where the levy under section 5(3)(b) of the Act when the manufacturer purchases at the purchase point. Sri T.K. Vedamurthy, learned Government Pleader appearing for the respondent, has very strongly defended the correctness of the levy, the correctness of the provision and the condition as imposed under the proviso. Subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial input liable to tax under the Act to another registered dealer for use by the latter as a component part or raw material or packing material of any other goods, which he intends to manufacture inside the State for sale, shall be at the rate of four per cent or the rate specified in section 5, whichever is lower, on the taxable turnover relating to such sale: 5A.-Taxation of industrial inputs. (1) Notwithstanding anything contained in section 5, the tax payable by a registered dealer, in respect of the sale of any industrial input liable to tax under the Act to another registered dealer for use by the latter as a component part or raw material or packing material of any other goods which he intends to manufacture inside the State for sale or in respect of sale of consumables liable to tax under the Act to another registered dealer or use in such manufacture, shall be at the rate of four per cent or the rate specified in section 5, whichever is lower, on the taxable turnover relating to such sale: Therefore, the reliance placed by the learned Government Pleader on the decision of this court in Vasavadatta Cements [2004] 138 STC 276; [2003] ILR Kar. 3091, does not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see any intelligible differentia being made in making a distinction as between a manufacturer who pays the tax while purchasing the raw material whether at the sale point or purchase point. If the proviso is one which on a plain reading can restrict the benefit only to a situation where the manufacturer pays it through the selling dealer and not by paying it himself, then, there is something radically wrong with the proviso, which, to that extent, runs counter to the main provision. In understanding and interpreting a proviso, it should be one for giving effect to the main provisions and to avoid an interpretation which render it unconstitutional or unintelligible. In the present case, if the provision is read as one which is operative only in a situation where, in reality, the compliance is possible that will avoid any inconsistency or an illegality or unconstitutionality being attributed to the proviso, inasmuch as on a plain reading or a strict construction of the proviso, the proviso would disentitle a person like the petitioner from the benefit or concession extended under section 5A of the Act in the present situation, which is without any rationale or intelligible differenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment on an understanding as had been submitted by the learned Government Pleader and as indicated in the assessment order. The assessment order though may not be part of this writ proceeding, having been passed by denying the benefit, unless necessary directions are issued in this regard, the petitioner may not reap the benefit of the interpretation of the provisos as in this order and the entire exercise in such an event will be reduced to an exercise in futility. Learned Senior Counsel has also placed on record a copy of the assessment order and submits that as this was the only disputed aspect, the matter had not been carried in appeal but instead, as the matter involved interpretation of the very proviso and the validity thereof, the petitioner had chosen to file the present petition and to the extent, the petitioner has succeeded in the present writ petition and the interpretation of section 5A being one as urged by the petitioner and as held now by this court, the petitioner should be definitely given the benefit of the same by according appropriate relief. Submission of Sri Vedamurthy, learned Government Pleader, is that while the period for filing the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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