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2016 (9) TMI 721 - SUPREME COURT

2016 (9) TMI 721 - SUPREME COURT - TMI - Interestate sale of cement - benefit of partial exemption - whether the appellant is entitled to dual benefit of partial exemption under the notification dated 06.05.1986 and also the lower rate of tax @ 6% under notification dated 21.01.2000. - while calculating the benefits under notification dated 06.05.1986 the appellant had not included the figure of sale of levy cement made in the base year, that is, 1984-85. - Held that: - A dealer making inte .....

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be entitled to partial exemption under the notification dated 06.05.1986, when accompanied with Form C and D and for inter-State sale transactions without Form C and D, benefit of notification dated 07.03.1994 would apply. - The principle of res judicata would have no application in spite of the understanding by the assessee and the Revenue, for the circular dated 15.04.1994, is not to the specific effect as suggested and, further notification dated 07.03.1994 was valid between 1st April, 19 .....

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s [2008 (10) TMI 5 - SUPREME COURT OF INDIA] relied upon where it was held that circulars and instructions issued by the Board are binding on the authorities under respective statute, but when this Court or High Court lays down a principle, it would be appropriate for the Court to direct that the circular should not be given effect to, for the circulars are not binding on the Court. - Once circular dated 15.04.1994 stands withdrawn vide circular dated 16.04.2001, the appellant-assessee canno .....

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position does not commend acceptation and has to be repelled. It would certainly not apply to the notification dated 21.01.2000. - Appeal dismissed - decided against appellant. - Civil Appeal No. 102 of 2010, Civil Appeal No. 6136 of 2013 - Dated:- 16-9-2016 - Dipak Misra And C. Nagappan, JJ. JUDGMENT Dipak Misra, J. Civil Appeal No. 102 of 2010 The appellant is a Public Limited Company incorporated under the Companies Act, 1956 and engaged in the business of manufacturing and selling Grey .....

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entire inter-State sales and decrease in percentage of stock transfers but the benefit under the said notification was not available on levy cement. From the assessment year 1989-90 to 1997-98 the appellant had been granted benefit of partial exemption under the notification dated 06.05.1986 except for the assessment year 1995-96 and 1996-97 as no claims were made by the appellants being not eligible. 2. It is necessary to state here that the State, in exercise of powers conferred by Section 8( .....

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on notification dated 06.05.1986. This notification remained in force from 01.04.1994 to 31.03.1997. 3. The CCT vide Circular No. 2/94-95 dated 15.04.1994 clarified that inter-State sales of cement duly supported by C and D forms shall be eligible for benefit of partial exemption notification dated 06.05.1986 and that such benefit would not apply to inter-State sales which are not supported by declarations in declarations in Forms C / D . 4. By Notification No. 97-122 dated 12.03.1997 issued und .....

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epicted, for the assessment year 1997-98, dispute arose whether the sale of levy cement in the base year, i.e., 1984-85, can be included and taken into consideration for calculating the base year s figure for the purpose of calculating the benefits under the notification dated 06.05.1986. A re-assessment notice was issued to the appellant for disallowing the said partial exemption on the ground that while calculating the benefits under notification dated 06.05.1986 the appellant-company had not .....

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the same is pending consideration. A similar dispute about inclusion of levy cement had also arisen for the assessment year 1991-92 which had been decided by the Tax Board, Rajasthan vide order dated 16.01.2003 in favour of the appellant which attained finality since no revision petition was filed by the State against the said decision. For the assessment year 1999-2000, the appellant was asked vide show cause notice dated 16.10.2001 to explain why the benefit of partial exemption under notifica .....

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d by the said order, the appellant had filed a DB Special Appeal No. 539 of 2002 which is pending consideration. We may immediately clarify that we are not concerned with the said assessment years. 6. For the assessment year 2000-2001, a Show Cause Notice dated 11.01.2001 was issued to the appellant seeking to disallow the benefit under notification dated 06.05.1986 on the ground that the appellant had not calculated the benefits under notification dated 06.05.1986 after including the figure of .....

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aler making inter-State sales under this notification shall not be eligible to claim benefit provided under partial exemption notification dated 06.05.1986. 8. After a lapse of seven years from the previous circular dated 15.04.1994, the CCT issued another Circular No. 94-95/119 dated 16.04.2001 purporting to clarify the applicability of partial exemption notification dated 06.05.1986 vis-a-vis notification dated 07.03.1994 and subsequent notifications dated 12.03.1997 and 21.01.2000. By the sai .....

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cer to the appellant seeking to disallow the benefits under notification dated 06.05.1986 on a purported retrospective application of the Circular dated 16.04.2001. Appellant challenged the said show cause notice before the High Court by way of a Writ Petition bearing No. 6192 of 2003. The High Court vide order dated 18.11.2003 held that the said show cause notice dated 19.08.2003 was not justified as Circular dated 16.04.2001 could apply only prospectively and not retrospectively. 10. While fin .....

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04.2001 and imposed additional tax on the assessee for the assessment year 2001-2002. 11. The appellant filed an appeal before the Deputy Commissioner (Appeals), who allowed the appeal on 03.01.2004 holding that the appellant would be entitled to avail such partial exemption in respect of inter-State sales made on which concessional rate of 6% was not availed of by it under notification dated 21.01.2000. 12. Being aggrieved by the order of the appellate authority, the revenue approached the Raja .....

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ned Single Judge vide order dated 17.04.2009 considering the submissions put forth by the parties and upon analysing the principle stated in Tata Cummins Ltd. v. State of Jharkhand 2006 (16) Tax update 199, M/s Vividh Marbles Pvt. Ltd. v. Commercial Tax Officer 2007 (17) Tax update 307, State of Rajasthan v. J.K. Udaipur Udyog Ltd. and another(2004) 137 STC 438, MRF Ltd. Kottayam v. Asstt. Commissioner (Assessment) Sales Tax and ors. (2006) 8 SCC 702 and other authorities came to hold that condi .....

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We have heard Mr. S. Ganesh, learned senior counsel for the appellant and Mr. Jatinder Kumar Bhatia, learned counsel for the respondent. 14. The seminal issue that arises for consideration, succinctly put, is whether the appellant is entitled to dual benefit of partial exemption under the notification dated 06.05.1986 and also the lower rate of tax @ 6% under notification dated 21.01.2000. To answer the issue raised, it is necessary to refer to the notifications and the language employed therein .....

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erest, in supersession of the Finance Department Notification No. F.4 (72) FD/Gr. IV/81-36, dated December 3, 1985, hereby directs that, with immediate effect, any dealer, having his place of business and manufacturing goods in the State of Rajasthan, may claim partial exemption from the tax payable in respect of the sales by him of such goods in the course of inter-State trade or commerce by way of reduction at the rate of 50% of the tax so payable on increased sales upto 50% and at the rate of .....

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ce, Depot or agent outside the State for sale outside the State, during any accounting year as against such percentage during the accounting year 1984-85. (2) In the case of a dealer who commenced the manufacture of goods in the State of Rajasthan on or after 1.1.1985 , the average of the aforesaid percentages in respect of the other manufacturers in the State in the relevant industry during the accounting year 1984-85, calculated and determined by the assessing authority with the approval of th .....

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nting year as against such percentage during the accounting year 1984-85; and (4) No claim for such reduction of tax shall be allowed in respect of levy-cement. 15. The notification dated 21.01.2000 is as under:- [No.F.4(1) FD/Tax Div. 97-266] Jaipur, 21 s t January, 2000 In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 the State Government being satisfied that it is necessary in the public interest so to do, hereby directs that the tax payab .....

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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 6.5.1986 as amended from time to time. 16. On a careful scanning of the notification dated 06.05.1986, it is evident that it allows partial exemption from sales-tax on inter-State sales, subject to and in the manner stipul .....

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tured and sold by a dealer in the State of Rajasthan. It has a purpose. The increase in quantum of goods sold in inter-State trade or commerce with reduction in quantum of stock transfers by way of branch or depot transfers on which NIL or no Central Sales tax is applicable would increase the revenue of the State. Clause 4 of the notification envisages that no reduction of tax is to be allowed in respect of levy cement. Computation of the total quantum of goods with reference to the exclusion of .....

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critical and significant. 17. The 21.01.2000 notification applies to a dealer having a place of business in the State and is in respect of sale of cement made by him from any place of business within the State in the course of inter-State trade or commerce. Apart from the above, certain other conditions are to be satisfied. They are (a) sales-tax in respect of inter-State sales as per the notification would be calculated at the rate of 6% and (b) the dealer making inter-State sales under notific .....

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to claim benefit under the notification dated 06.05.1986. The reason is to deny dual benefit and also the notification dated 06.05.1986 computes the benefit on the basis of turnover. Bifurcation and division of turnover would lead to distortion and cause anomalies. 19. To get over the aforesaid impasse, the learned counsel for the appellant has raised three contentions. The two notifications being beneficial should be liberally construed, for it cannot be assumed that the intendment was that if .....

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fication dated 06.05.1986. Quite apart from the aforesaid argument, it is urged that partial exemption could be granted under the notification dated 06.05.1986 in respect of such intra- State sales not covered by the notification dated 21.01.2000; and benefit of partial exemption under notification dated 06.05.1986 would co-exist with the notification dated 21.01.2000, though in respect of different and distinct transactions. The second limb of argument is that this interpretation was the unders .....

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cular dated 15.04.1994 was clarificatory and had rightly interpreted and expounded the interplay between the two notifications. Therefore, the circular dated 15.04.1994 under the notification dated 07.03.1994 would equally apply and would guide the interpretation of the notification dated 21.01.2000. 20. In order to appreciate the contentions raised, it is imperative to reproduce notification dated 07.03.1994 and the circular dated 15.04.1994, and the circular dated 16.04.2001 by which circular .....

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at 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 the sales of cement made by him from any such place of business in the course of inter-State trade or commerce shall be calculated at the rate of 4 percent without furnishing of declaration in form C or certification in form D on the following conditions, namely:- (i) that the dealer shall record the name and full and complete address of the purchaser in t .....

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o 31st March, 1997. 21. The circular dated 15.4.1994 is reproduced below:- Tax Policy circular No.2/94-95 STATE OF RAJASTHAN COMMERCIAL TAX DEPARTMENT No. Pa. 16/Budget/Tax/Commissioner/94-95/108 Dated 15/4/1994 To, All Deputy Commissioners, Commercial Tax All Assistant Commissioners, Commercial Tax All Commercial/Assistant Commercial Tax Officers Circular The notification No. Pa. 4 (8) FD/Group-4/94-70 dated 7/3/1994 was issued by the State Government and the rate of central tax on the inter-St .....

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6/5/1986 as amended from time to time with respect to the inter-State sale of the cement done with the form- C or form- D , but aforesaid benefit shall not be available in case the inter-State sale is done without the form- C or form- D . 22. The circular dated 16.04.2001 withdrawing the circular dated 15.04.1994 is as follows:- GOVERNMENT OF RAJASTHAN COMMERCIAL TAXES DEPARTMENT No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001 All Dy. Commissioners All Assistant Commissioners All Comme .....

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ial year. For instance, if he opts for benefit under notification dated 06.05.1986 for the financial year 2000-2001, he would not be entitled to claim simultaneous benefit in the same year under the notification providing for reduce rate of tax on cement in course of interstate trade or commerce without any supportive Form C or D. Consequently, if the benefit of notification dated 21.01.2000 is being availed in any financial year, the dealer shall be debarred from claiming any benefit under noti .....

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from 1st April, 1997. In such a situation, the plea of the appellant that dual benefits were availed of under notification dated 07.03.1994 post 1st April, 1997 is unacceptable and has to be rejected. Be it noted, by another notification No. 97-122 dated 12.03.1997, the State Government had rescinded notification dated 07.03.1994 and directed that the Central Sales Tax shall be calculated @ 4%, subject to the condition that the dealer making inter State sales in this notification would not be e .....

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cement was unconditionally fixed at 4%, even when there was no declaration in Form C and Form D. The notification dated 06.05.1986 relating to inter-State sale required Form C and Form D, for availing the benefit. The circular did not in clear and categorical terms lay down that dual or multiple benefits under the two notifications could be availed of by the same dealer. It, however, appears that both the assessee and the Revenue had understood the circular dated 15.04.1994 to mean that inter-St .....

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Revenue, for the circular dated 15.04.1994, is not to the specific effect as suggested and, further notification dated 07.03.1994 was valid between 1st April, 1994 up to 31st March, 1997 (upto 31st March, 1997 vide notification dated 12.03.1997) and not thereafter. The Commercial Tax Department, by a circular, could have extended the benefit under a notification and, therefore, principle of estoppel would apply, though there are authorities which opine that a circular could not have altered and .....

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inding on the authorities administering the enactment but cannot alter the provision of the enactment, etc. to the detriment of the assessee. Needless to emphasise that a circular should not be adverse and cause prejudice to the assessee. (See : UCO Bank, Calcutta v. Commissioner of Income Tax, West Bengal (1999) 4 SCC 599). 26. In Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries (2008) 13 SCC 1, it has been held that circulars and instructions issued by the Board are .....

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001 to 31st March, 2002. The period in question is mostly post the circular dated 16.04.2001. As we find, the appellant-assessee has pleaded to take benefit of the circular dated 15.04.1994, which stands withdrawn and was only applicable to the notification dated 07.03.1994. It was not specifically applicable to the notification dated 21.01.2000. The fact that the third paragraph of the notification dated 21.01.2000 is identically worded to the third paragraph of the notification dated 07.03.199 .....

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