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TMI Blog2009 (4) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... itional tax on the respondentassessee for the aforesaid period by the assessment order dated August 26, 2003 in view of the circular issued by the Commissioner of Commercial Taxes Department on April 16, 2001 which was issued by the Commissioner explaining the notification dated January 21, 2000. The first appellate authority-Deputy Commissioner (Appeals) however allowed the first appeal filed by the assessee on January 3, 2004 and held that the assessee would be entitled to avail of such partial exemption in respect of inter-State sales made on which concessional rate of six per cent was not availed of by him under the notification dated January 21, 2000. The Revenue took the matter further before the Tax Board and the appeal of the Revenue was allowed by the learned Tax Board on September 23, 2005 and aggrieved of the same, the assessee has come before this court in the present revision petition. I have heard learned counsels on both the sides at length and perused the relevant notifications, impugned orders and judgments cited at the Bar. The case in hand involves interpretation of the notifications dated May 6, 1986 and January 21, 2000 which are reproduced hereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (4) No claim for such reduction of tax shall be allowed in respect of levy-cement. S.O.-In exercise of the powers conferred by section 8(5), CST Act, 1956, the State Government hereby directs that the tax payable under sub-sections (1) and (2) of the said section, by any dealer having his place of business in the State, in respect of sale of cement made by him from any such place of business in the State, in the course of inter-State trade or commerce, shall be calculated at the rate of six per cent on the following conditions, namely:- 1.. That the dealer shall record the correct name with full and complete address of the purchaser in the bill or cash memorandum for such inter-State sale to be issued by him; 2.. That the burden of proof that the transaction was in the nature of inter-State sale shall be on the dealer; and 3.. That the dealer making inter-State sales under this notification shall not be eligible to claim benefits provided by Notification No. F.4(72)FD/Gr.IV/81-18 dated May 6, 1986 as amended from time to time (S. No. 625)." Mr. Dinesh Mehta and Mr. Ramit Mehta, learned counsels appearing for the petitioner-assessee, submitted that ak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption should be given accordingly. The learned counsel for the assessee further submitted that the assessee is claiming benefit of partial exemption only in respect of such inter-State sales made by it which are not covered by the notification dated January 21, 2000 and, therefore, the benefit of partial exemption cannot be hit or prohibited totally in view of condition No. 3 in the notification dated January 21, 2000. In other words, Mr. Mehta submitted that condition No. 3 of the notification dated January 21, 2000 operated only for inter-State sales made under the said notification availing the benefit of concessional rate of tax of six per cent and the said condition could not enlarge or expand the said notification dated January 21, 2000 and prohibit the assessee from availing of the partial exemption, under the notification dated May 6, 1986 altogether. In order to appreciate the controversy, it is also considered appropriate to reproduce the previous notification dated March 7, 1994 and ensuing circular issued by the Commissioner on April 15, 1994 also for ready reference: "Notification S. No. 928: F.4(8) FD Gr.IV/94-70 dated March 7, 1994 S. No. 200.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 6, 1986 for the financial year 2000-01, he would not be entitled to claim simultaneous benefit in the same year under the notification providing for reduced rate of tax on cement in course of inter-State trade or commerce without any supportive form C or D. Consequently, if the benefit of notification dated May 6, 1986 is being availed in any financial year, the dealer shall be debarred from claiming any benefit under notification dated May 6, 1986 for the same assessment year. Keeping in view the above status, the circular No. F.16 (Budget) Tax/CCT/94-95/108 dated April 15, 1994 is hereby withdrawn and the dealers will be entitled to claim benefit of either of the two notifications in any financial year. Action may be taken accordingly. Sd/(P.K. DEB) Commissioner Commercial Taxes, Rajasthan, Jaipur." The learned counsel for the petitioner-assessee also submitted that similar notification besides cement industry as quoted above were also issued on different occasions for other commodities also subject to the same condition No. 3 and few such Notifications are S.No. 1335 F.4(1)FD/ Tax Div/2000-303 dated March 30, 2000, as corrected on April 24, 2000, S. No. 1436 F.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said writ petition came to be finally disposed of with the additional order passed by the same learned single Judge on May 13, 2004 in the following terms: "May 13, 2004 Honourable B. Prasad, J. Mr. R. Mehta, for petitioner. Mr. B.S. Bhati, for respondent. Perused the explanation. Explanation is accepted. No further order is required to be passed. The matter is disposed of finally." The learned counsel for the assessee, therefore, submitted that the Tax Board has erred in holding that the petitioner-assessee was not entitled to avail of the benefit of partial exemption under the notification dated May 6, 1986 and, therefore, the revision petition deserves to be allowed for the assessment year 2001-02 also. Per contra, Mr. Rishabh Sancheti for Mr. Vinit Kumar Mathur for the Revenue vehemently submitted that on a plain construction of condition No. 3 of the notification dated January 21, 2000, quoted above, it was clear that the petitioner-assessee was not entitled to avail of any benefit under the notification dated May 6, 1986 in view of clear stipulation made in condition No. 3 of the notification dated January 21, 2000 and it not open to the assessee to segregate the inter-S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute has to be construed strictly and not liberally and the court cannot grant exemption under the Industrial Policy ignoring the eligibility condition prescribed therein in the exemption notification. Having heard the learned counsels and after giving my thoughtful consideration to the rival contentions raised at the Bar, this court is of the opinion that the present revision petition of the petitioner-assessee deserves to be dismissed and the assessee cannot be held entitled to the benefit of partial exemption under the notification dated May 6, 1986 for the assessment year 2001-02 in question. The reasons are as follows. It is well, nay, settled that the eligibility criteria for availing of exemption under the taxing statutes have to be strictly construed and the plain language of the notification has to be given its literal meaning as per the golden principle of interpretation that plain language should be construed literally without any intendment or interpretation. It is equally well-settled that there is no equity or intendment about tax. (1)Here italicised. It would be worthwhile to refer to a recent Supreme Court decision in the case of Tata Cummins Ltd. v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on November 15, 2000 in the State of Jharkhand, the appellant is not entitled to the benefit under clause 28.1. The learned counsel for the appellant contends that if we hold that units which were actually availing of the facility of tax deferment on November 15, 2000, will not be given the benefit under the clause 28.1, the consequence will be that hardly any unit will get the benefit of clause 28.1 because almost all the units of State of Jharkhand were enjoying the sales tax deferment on November 15, 2000. Hence he submitted that such an interpretation should be avoided. We are afraid we cannot accept this plea. It is well-settled that when the plain and grammatical meaning of the provisions in an Act or notification are clear then the literal rule of interpretation has to be applied. In the present case, in our opinion, clause 28.1 is clear. The words used there are 'not availing any facility of tax deferment'. Thus the present continuous tense has been used in clause 28.1. In our opinion, clause 28.1 means that the benefit therein will be available only if the facility of tax deferment is not actually being availed of on the date of the notification of the industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption given by the Government is a defeasible right of the industry and if by a later notification, the State reduced the exemption, the assessee had no right to claim that the State should not recover from the dealer the tax which the dealer has lost opportunity to recover from its customer. The court further held that what is granted can be withdrawn unless the Government is precluded from doing so on the ground of estoppel, which principle is itself subject to considerations of equity and public interest. Para Nos. 25 and 26 of the said judgment are opportune in this regard and, therefore, they are quoted below (at page 452 of STC): "25. An exemption is by definition a freedom from an obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an advantage not available to others. An exemption granted under a statutory provision in a fiscal statute has been held to be a concession granted by the State Government so that the beneficiaries of such concession are not required to pay the tax or duty they are otherwise liable to pay under such statute. The recipient of a concession has no legally enforceable right against the Government to grant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of exemption the State Government issued another notification excluding the formation of compound rubber from the definition of "manufacture" for the purpose of the original exemption notification. Such subsequent notification was challenged by the assessee on the ground that it was hit by the principle of promissory estoppel as well as by doctrine of legitimate expectation and the assessee could not be prematurely deprived of the exemption under the original notification. Upholding the contention of the assessee, the court held in para No. 43 as under: "Under section 10(1) of the Kerala General Sales Tax Act, 1963, the State Government has the power to make an exemption or reduction in rate either prospectively or retrospectively in respect of any tax payable under that Act. However, the power of the Government under section 10(3) by notification in the gazette to cancel or vary any notification issued under section 10(3) cannot be exercised retrospectively. That was the view taken by a single judge of the Kerala High Court, which was later approved by a Division Bench. The appeal preferred by the State of Kerala in Dy. Commr. (Law) case [2001] 121 STC 274 (SC); [2000] 9 SCC 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance of the same must result in cancelling the concession made in favour of the grantee-the respondent herein." In G.P. Ceramics Pvt. Ltd. v. Commissioner, Trade Tax, U.P. [2009] 19 VST 284; [2009] 2 SCC 90 the apex court has reiterated in para No. 29 of the judgment that it is now a well established principle of law that various eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. From the conspectus of the above legal authorities, it is clear that condition No. 3 of the notification dated January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be doing violence to the condition No. 3 which was never intended by the State Government. It is for the assessee to opt either for availing benefit of concessional rate of tax under the notification dated January 21, 2000 or not to do so altogether. Once, he does so and opts for the same, the applicability of the notification dated May 6, 1986 is excluded altogether and not in piecemeal. Therefore, it cannot be contended by the assessee that in respect of other inter-State sales, still partial exemption may be allowed in terms of notification dated May 6, 1986, applicability of which stands excluded. Doctrine of exclusion and eclipse would apply in such cases rather than doctrine of liberal construction. The contention of learned counsel for the assessee that since the Circular dated April 15, 1994 which was withdrawn later on April 16, 2001 clarified that such benefit of notification dated May 6, 1986 would be applicable in respect of inter-State sales, if such sales were made against declaration in form "C" or "D" but not when such inter-State sales are made without furnishing of declaration in form "C" or "D" as specified in notification dated March 7, 1994 and all assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein, direct,- (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification; (b) . . ." The principles of res judicata or estoppel do not apply in taxing statutes. There is hardly any need to re-emphasize these principles. There is no estoppel against statute. It is also well-settled that the circulars issued by the Commissioner do not have any statutory force and they can neither restrict nor expand the scope of statutory notification. The confusion on account of different interpretations given in the Circulars dated April 15, 1994 and April 16, 2001, cannot enure to the benefit of the assessee, in view of clear terms of condition No. 3 in the notification dated January 21, 2000 at least after April 16, 2001, when the previous Circular dated April 15, 1994 was withdrawn. As a matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, which unduly fetter with the quasi-judicial discretion of the assessing authorities, who are expected in law to give their findings of fact and interpret the statutory law in their own quasi-judicial discretion in accordance with the law as interpreted by the Supreme Court or jurisdictional High Court. The circulars issued by the Commissioner in the aforesaid manner like done vide circulars dated September 16, 1997 and April 15, 1998 are likely to hamper and throttle such quasi-judicial discretion which vests with the assessing authorities. Therefore, the aforesaid circulars issued by the Commissioner aforesaid on April 15, 1999 (S. No. 1132A) and September 16, 1997 (S. No. 1115B) are in conflict with the Division Bench decision of this court in Guljag Industries Ltd.'s case [2003] 129 STC 3 and even otherwise they are found to be without any authority of law. Consequently, both these circulars are found to be ultra vires and are hereby quashed. 13.. In view of the aforesaid, since there was no basis for the learned Commissioner to stipulate the time frame of 10 days or 30 days and, thereafter to require the assessing authority to invoke the concept of constructive delive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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