TMI Blog2010 (12) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... rained not to follow the later decision of the Supreme Court in Sait Rikhaji's case [1990 (8) TMI 344 - SUPREME COURT OF INDIA] and are inclined to follow the earlier decisions in The Indian Express (P.) Ltd. case [1986 (4) TMI 321 - SUPREME COURT OF INDIA], and in the case of The Hindu [1987 (11) TMI 334 - SUPREME COURT OF INDIA]. Hence, the questions raised in these cases are answered against the assessee and in favour of the Revenue. - STA No. 3 of 2009, STRP Nos. 36 of 2007 & STRP Nos. 39 of 2008 - - - Dated:- 24-12-2010 - MANJULA CHELLUR (MRS) AND NAGARATHNA B.V. (MRS), JJ. For the Appellants : P. Usman for Hedge Assts., G. Rabinathan and M. Thirumalesh For the Respondent : Smt. Geetha Menon, AGA, The judgment of the court was delivered by Mrs. MANJULA CHELLUR J.- So far as STA No. 3 of 2009 is concerned, the appellant is a registered dealer of old newspaper and waste paper. The appellant claimed exemption from tax liability on the sale of above items as exempted under the Karnataka Sales Tax Act, 1957 ( the Act , for short). But the assessing authority did not grant exemption and assessed tax on the ground that the appellant is liable to pay tax treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Whether the impugned order passed by the third respondent is violative of article 141 of the Constitution of India inasmuch as in the impugned order the third respondent discarded the latest ruling of the Supreme Court in Sait Rikhaji Furtarnal v. State of Andhra Pradesh reported in [1992] 85 STC 1 (SC)? 4. Whether the third respondent was justified in holding that the exemption of tax liability for the sale of newspaper as envisaged in entry 54 of List II of the Seventh Schedule to the Constitution is not available to the sale of old newspapers terming it as waste paper? In STRP No. 39 of 2008: 1. Whether the Tribunal is justified in concluding on the facts and circumstances of the case by interpreting the decision of the Full Bench of the Andhra Pradesh High Court, wherein the Full Bench which has rightly distinguished the point involved in this petition of the two Division Bench judgments of the apex court in respect of the similarly situated situations that arose before the Full Bench of the Andhra Pradesh High Court? 2. Whether the Tribunal has applied its mind before concluding on the ground of the later judgment of the apex court is applicable even if it is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77 (SC). The Hindu had procured glazed newsprint for use in the publication of a magazine. The magazine was discontinued subsequently. Subsequently the unused stock of the glazed newsprint as well as old newspaper, print waste and cut waste were sold. The Madras High Court held that the turnover of the appellant relating to sale of the above items liable to tax under the Tamil Nadu General Sales Tax Act, 1959. Then the matter was taken up before the Supreme Court and the Supreme Court by referring to its earlier decision in the case of The Indian Express (P.) Ltd. referred to [1987] 67 STC 474 (SC), disposed of the matter holding that if unused glazed newsprint as well as old newspaper, print waste and cut waste are sold, they are liable for tax. The learned counsel for the Revenue also relied upon the decision in the case of State of Karnataka v. Kasturi Sons Ltd. [2000] 120 STC 564 (Karn). In this case, their Lordships held that if a commodity falls under any of the entries in the Second Schedule, it cannot be subjected to duty under section 5(1) of the Act. The description of paper in entry 3 of Part P of the Second Schedule includes paper of all kinds including carbon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd direct that old newspapers when sold as such would be covered by the exemption provided in the Constitution and sale thereof would not be liable to sales tax. . . They also placed reliance on the decision in the case of All India Reporter Karamchari Sangh v. All India Reporter Limited [1988] 70 STC 349 (SC); [1988] Supp SCC 472 (pages 355, 356, 357 and 359 in 70 STC): The expression 'news' is not defined in the Act. Several definitions of the expression 'news' collected from the different dictionaries and digests have been cited before us. It is enough if we refer to the meaning of the word 'news' given in the Shorter Oxford English Dictionary for purposes of this case. It says that 'news' means tidings, new information of recent events; new occurrences as a subject of report or talk. The law reports which are being published by the first respondent are reports of recent decisions of the Supreme Court of India and of the High Courts in India which are supplied to it by its agents appointed at New Delhi and other places where High Courts are situated. It cannot be disputed that these decisions are of public importance. Article 141 of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny news and that the public is not interested in them. We are of the view that any decision published in the law reports of the first respondent contains information about the recent events which have taken place in the Supreme Court or in the High Courts which are public bodies and these are matters in which the public is interested. We find it also difficult to agree with the submission made on behalf of the first respondent that since the law reports are going to be preserved by the lawyers as reference books after getting them rebound subsequently they should be treated as books. It may be that the decisions contained in these law reports may cease to be items of news after sometime but when they are received by the subscribers they do possess the character of works containing news. It is significant that the expression 'newspaper' as defined in the Act includes not merely 'public news' but also 'comments on public news'. Every law report contains the editorial note at the commencement of the decisions printed therein and also comments on some of the recent decisions. Law reports also contain, newly enacted Acts, Rules and Regulations, book reviews an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not say so. Therefore, the law declared in the case of The Indian Express case [1987] 67 STC 474 (SC) has to be preferred to the conclusion reached in Sait Rikhaji Furtarnal's case [1992] 85 STC 1 (SC). To substantiate this contention, the Revenue places reliance on the decision in the case of Babu Parasu Kaikadi v. Babu [2004] 1 SCC 681, to contend that when the conflicting decisions are given by the co-ordinate Benches of the apex court, the later decision having not noticed earlier binding precedent of a co-ordinate Bench it would become per incuriam. A court is bound to follow the earlier judgment which is precisely on the point in preference to the later judgment which was rendered without adequate argument at the Bar and also without reference to the mandatory provisions of the Act. In the very same judgment, they refer to several cases of the apex court on these issues, which are referred to at paras 14, 15, 16, 17 and 18 which read as under: 14. Having given our anxious thought, we are of the opinion that for the reasons stated; hereinbefore, the decision of this court in Dhondiram Tatoba Kadam [1994] 3 SCC 366, having not noticed the earlier binding precede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions rendered in Govindanaik G. Kalaghatigi v. West Patent Press Co. Ltd. AIR 1980 Kar 92 [FB] and C.N. Rudramurthy v. K. Barkathulla Khan [1998] ILR Kar 3371. In the case of Govindanaik AIR 1980 Kar 92 [FB], the relevant paragraphs are paras 5 and 12 which read as under: 5. In the light of the pronouncements of the Supreme Court in Mattulal v. Radhe Lal AIR 1974 SC 1596 and Union of India v. K.S. Subramanian AIR 1976 SC 2433 we hold that the Full Bench of three Judges in J. Aramha v. Mysore Road Transport Corporation [1974] 1 Kar. L.J. 344 [FB], did not lay down the law correctly and we overrule that decision. The answer to the question referred to this Bench, should in our opinion, be as follows: 'If two decisions of the Supreme Court on a question of law cannot be reconciled and one of them is by a Larger Bench while the other is by a Smaller Bench, the decision of the Larger Bench, whether it is earlier or later in point of time, should be followed by High Courts and other courts. However, if both such Benches of the Supreme Court consist of equal number of Judges, the later of the two decisions should be followed by High Courts and other courts.' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to. As the Act in question was a beneficial legislation enacted for the purpose of improving the conditions of service of the employees of the newspaper establishments, even if it is possible to have two opinions on the construction of the provisions of the Act, the one which advances the object of the Act and is in favour of the employees for whose benefit the Act is passed has to be accepted, was the opinion of their Lordships. In that context, their Lordships were persuaded to place wide and liberal construction on the word newspaper so as to cover journalist. It was certainly not with reference to old newspapers and waste newspapers. They also said that the law journals lose their characteristic as newspapers in course of time and further held that though the publication of newly enacted Act, Rules, Regulations. Book reviews and advertisements relating to law books, etc., may not occupy a substantial part of law report to make it a newspaper, the publication of the recent judgments itself is sufficient to make a law report a newspaper which may after sometime cease to be a newspaper and become a book of reference. In view of the above discussion, we can place relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Government cannot impose sales tax on the sale of such newspaper. In support of their contention they have relied upon certain decisions. According to the assessee, in the case of Sait Rikhaji Furtarnal v. State of Andhra Pradesh [1992] 85 STC 1 (SC), the Supreme Court by placing reliance on another decision in All India Reporter Karamchari Sangh v. All India Reporter Limited [1988] 70 STC 349 (SC); [1988] Supp SCC 472, held that old newspapers are also newspaper within the meaning of the aforementioned legislative entries and would be entitled to the exemption provided under the Constitution and therefore, the sale thereof would not be liable to sales tax. They have also placed reliance on another decision of this court in the case of Reliable Rocks Builders and Suppliers v. State of Karnataka [1982] 49 STC 110 (Karn), wherein it has been held that an assessee who purchases boulders under circumstances in which no tax is leviable at the purchase point and who converts them into jelly in a process which is not a manufacturing process is not liable to tax under section 6 of the Karnataka Sales Tax Act, 1957. It is therefore, submitted that the later decision of the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 1 (SC). In support of this submission, she has relied upon a Full Bench opinion of the Andhra Pradesh High Court in the case of Ushodaya Enterprises Limited v. Commissioner of Commercial Taxes, A.P., Hyderabad [1998] 111 STC 711 (AP) [FB], to contend that a later decision of the Supreme Court need not be automatically followed, when the same was found on a mistaken impression of another decision of the Supreme Court and which is contrary to an earlier decision on the very same point. It is on the basis of these rival contentions that the aforesaid questions of law would have to be answered. While answering question No. 1, it is necessary to answer question No. 2 and therefore, the same are taken up together. At the outset, it is necessary to extract entry 92A, List I and entry 54 of List II of the Seventh Schedule to the Constitution: 92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of interState trade or commerce. 54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. Entry 54 which is in the State List empowers the State Government t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax. Contrary to the view taken in the aforementioned decisions in the case of Sait Rikhaji [1992] 85 STC 1 (SC), reliance was placed on another decision of the Supreme Court in the case of All India Reporter Karamchari Sangh [1988] 70 STC 349 (SC); [1988] Supp SCC 472, wherein, it was held that old newspaper is also newspaper which would be entitled to exemption provided under the Constitution and the sale thereof would not be liable to sales tax. In the said case, there is no reference made to the earlier decision of the Supreme Court in The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC), and the case of The Hindu [1987] 67 STC 477 (SC) though there is also no direct reference to the case of All India Reporter Karamchari Sangh [1988] 70 STC 349 (SC); [1988] Supp SCC 472. Since the judgment refers to law journals to come within the meaning of a newspaper though not carrying news of contemporary period, the reference in all likelihood is to the case of All India Reporter Karamchari Sangh [1988] 70 STC 349 (SC); [1988] Supp SCC 472. Therefore, it would be appropriate to refer to the said decision. In the case of All India Reporter Karamchari Sangh [1988] 70 STC 349 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Full Bench decision of the High Court of Andhra Pradesh in the case of Ushodaya Enterprises [1998] 111 STC 711 (AP). On a question identical to the cases under consideration. P. Venkatarama Reddy, J., writing the opinion that the Full Bench states as follows (pages 721 and 722 in 111 STC): . . . While we have no second thoughts on the principle that the High Court should abide by the decision of the apex court in a spirit of loyalty, we are unable to follow Sait Rikhaji case [1992] 85 STC 1 (SC) (though a later decision it is), which did not notice the decision of a co-ordinate Bench of the Supreme Court in The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC). For the time being, we shall leave apart from consideration the question whether later decision is bound to be followed and whether it is open to the High Court to disregard the decision of the Supreme Court on the ground of the said decision being 'per incuriam'. He further opined as follows: Without making inroads into the settled principles governing the binding force of a decision of the Supreme Court either by virtue of its precedential value or the mandate of article 141, we can safely evolve the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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