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TMI Blog2009 (3) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... the field, on the premise that the assessing authorities are not complying with the statutory position in letter and spirit and that the provision is being misinterpreted though the tax formulation in relation to the primary crushers was clarified on April 2, 2005 as aforesaid, the Commissioner issued Circular No. 11/2007 hereinafter, for short, "the Circular", on February 28, 2007 stating that the statutory provision is that the compounded tax in respect of the primary crushers would be 50 per cent of the total compounded tax arrived for the secondary crushers in a crushing unit. These writ petitions are filed by the dealers seeking to quash the circular and for incidental and consequential relief in the wake of different proceedings on the basis of the circular. The petitioners contend that the impugned circular is issued contrary to the statutory provisions and is in excess of the authority conferred as per section 59A of the KGST Act and section 94 of the KVAT Act and is, hence, without jurisdiction. It is argued that the impugned action amounts to prescribing a rate of tax contrary to the statutory prescriptions, to do which, the power is just not available. It is pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount only to the statutory recognition of the authority, to clarify, meaning thereby, to make clear; to elucidate; to explain; its antonym being, "to confuse". The scope of any exercise with reference to those provisions is only to remove the confusion, if any. Such a provision is intended only to provide a statutory declaration as to the identity of the executive statutory functionary who would be the repository of the authority to clarify, in case of any confusion. In the executive realm, this is necessary. The word "power" does not appear to be the proper word to describe that authority, having regard to the different shades of what is called "authority" that go into the legal sense of the term "power". In the situation in hand, the "power" to issue clarification does not include the authority to issue any clarification or circular contradicting the provisions of the Acts and Rules framed thereunder. The KGST Act and the KVAT Act are primary legislations. They contain the will of the sovereign, namely, We, The people; expressed through the authorized legislative limb; which is not to be watered down by the executive. That is why no subordinate legislation is to contradict it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit would depend upon the question whether that is in accordance with, or, is contrary to the relevant provisions of the KGST Act and KVAT Act. Section 7(1)(b) of the KGST Act provided as follows: "7. Payment of tax at compounded rates.-(1) Notwithstanding anything contained in sub-section (1) of section 5- (a) . . . (b) any mechanical crushing unit producing granite metals may, at its option, instead of paying tax in accordance with the provisions of that sub-section, pay tax at the following rates, namely:- By the Kerala Finance Act, 2001, the following Explanation was added with effect from July 23, 2001. "Explanation.-Primary crusher shall also be reckoned for the purpose of computation of the quantum of compounded tax." Later, that Explanation was substituted with effect from April 1, 2004 as per the Kerala Finance Act, 2004 as follows: "Explanation.-For the purpose of this clause primary crusher shall also be reckoned for computation of the quantum of compounded tax and the rate of compounded tax applicable to primary crusher shall be 50 per cent of the rates mentioned in items (i), (ii) and (iii) above." On the introduction of the KVAT Act from April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crushing machines into three types depending upon their size and thereby prescribe the respective compounded rate at which tax payable for each crushing machine. Any doubt as to whether a primary crusher is also to be reckoned for the purpose of computation of the quantum of compounded tax stood concluded by the provisions in the Explanation introduced in the KGST Act from July 23, 2001 and by the availability of the Explanation that stood in the KVAT Act from April 1, 2005 to the effect that primary crushers shall also be reckoned for the purpose of computation of quantum of compounded tax. While those Explanations governed the field, the indisputable position was that all crushing machines employed in the process of producing granite metals with the aid of mechanized crushing machines were to be reckoned on the basis of the size of each one of them. The Explanations which fall for consideration, which hold the field from April 1, 2004, retain the provision that stood earlier, viz., that the primary crusher shall also be reckoned for computation of the quantum of compounded tax. They further state that the rate of compounded tax applicable to primary crusher shall be 50 per cent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as above is that which emanates on a plain reading of the relevant provisions. This is not a case where two plausible views are possible and hence, there is no question of making any choice, either in favour of the Revenue or in favour of the assessees. Hence, the question whether a provision for payment of tax at compounded rates is, in its essence, a provision by way of exemption, calling for strict construction, or otherwise, does not arise for decision. The ratio of TATA Iron & Steel Co. Ltd. v. State of Jharkhand [2005] 140 STC 284 (SC) does not, therefore, require to be applied. That argument of the Department is left open. In the result, these writ petitions are allowed, quashing Circular No. 11/ 07 dated February 28, 2007 issued by the Commissioner of Commercial Taxes and it is declared that the compounded rate of tax on primary crusher is 50 per cent of the respective rates mentioned in clauses (i), (ii) and (iii), respectively of section 7(1)(b) of the KGST Act and section 8(b) of the KVAT Act, depending upon the size of the primary crusher in each case. It is also declared that the clarification issued by the Commissioner of Commercial Taxes as per order No. C3.44514 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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