TMI Blog2009 (7) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that while two interpretations are possible, the Court would ordinarily interpret the provisions in favour of the tax-payers and against the revenue - In the cases on hand, admittedly there was ambiguity with regard to the rate of tax payable by the assessees for the paper based decorative laminated sheets and the benefit of the said ambiguity should be extended to the petitioner-assessees and not to the department/revenue. The impugned clarification issued by the first respondent and the consequential show cause notices/orders passed in reassessment, issued by the second respondent are unsustainable - petition allowed. - W.P.Nos.19331, 19843-44, 20154-58, 20314-17, 20325-29, 20334-35, 20347-49, 20406-07, 20421-22, 20474-76, 20521, 20759-63, 20848-51, 20998-00, 21010-12, 21022-24, 21174-79, 21463, 21464-69, 21803-05 and 25229 of 2008 - - - Dated:- 17-7-2009 - N. PAUL VASANTHAKUMAR J. N. Murali, K. Soundara Rajan, R. Hemalatha, S. Ravi Kumar, Haja Naziruddin, Advocates. JUDGEMENT (1.) IN W.P. Nos.20474 to 20476 of 2008, the petitioners have prayed to quash the clarification issued by the Commissioner of Commercial Taxes dated 30.5.2008, enhancing the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted assessments and proposed to re-assess the Sales turnover of paper based decorative laminated sheets at 16%. In some cases, revised orders were passed. The said show cause notices/revised orders were issued on the basis of the clarification issued by the first respondent dated 30.5.2008. The said clarification is challenged in W.P. No.20474 to 20476 of 2008.(e) In all other Writ Petitions, the petitioners have challenged the show cause notices/revised orders on the ground that there is no purpose in giving reply to the show cause notices on re-opening the assessment or filing Appeal, since the Assessing Officers relied upon the clarification issued by the first respondent, which is binding on the Assessing Officers. The jurisdiction of the first respondent in issuing the clarification is also challenged on the ground that the Special Tribunal has given an order as early as on 12.4.1996 and the said order was accepted without challenging the same by the department. The relevant entry in the TNGST Act, 1959, also has not been amended or modified, based on which the Commissioner issued clarification on 23.3.2006 and the petitioners have also paid 10% of the tax on the sale of pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarification dated 17.8.2005 and subsequently reviewed based on the order passed in O.P. No.120 of 1996 dated 12.4.1996 by the Tamil Nadu Taxation Special Tribunal and the impugned clarification is issued based on the judgments of the Supreme Court above referred and in some cases the already concluded assessments were re-opened and show cause notices were issued and in some cases revised assessment orders were passed. (3.) IT is further stated in the counter affidavit that while manufacturing paper based decorative laminated sheets, the paper used in the manufacturing process as raw material completely disappears on the creation of altogether new products and therefore there is no nexes or relation with either paper or board. The law having been declared by the Supreme Court, though under the Central Excise Taxation Tariff Act, 1985, the interpretation given by the Supreme Court equally applies to the paper based laminated sheets, which is being sold by the petitioners and therefore the clarification issued by the first respondent is valid and the second respondent is entitled to reassess the assessments already completed and entitled to demand the difference in tax i.e., fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side. The learned counsels cited the judgment of the Supreme Court reported in Binani Industries Limited v. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore and Others, 2007 (6) VST 783 (SC) Mauri Yeast India Pvt. Ltd. v. State of UP. and Another, 2008 (10) RC 607 (SC) M/s. MSCO Pvt. Ltd. v. Union of India and Others, AIR 1985 SC 76 and Union of India and Others v. R.C. Jain and Others, AIR 1981 SC 951, in support of their above said contentions. The learned Special Government Pleader, appearing for the respondents submitted that the Supreme Court having declared the law on the subject giving interpretation with regard to the paper based laminated sheets, though under the entries contained in Central Excise and Tariff Act, 1985, the product being the same, the clarification issued by the first respondent stating that the paper based laminated sheets on sale is liable to be levied 16% tax instead of 10% tax, is valid. The learned Special Government Pleader further submitted that the earlier clarifications issued to collect 10% of tax was based on the order passed by the Tamil Nadu Taxation Special Tribunal and now the Supreme Court having declared the law, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration before the Tamil Nadu Taxation Special Tribunal in O.P.No.120 of 1996 and the Tribunal after obtaining the opinion of the Joint Director of Industries and Commerce (Chemical), Chennai-32, (namely expert opinion) held that the paper based resin reinforced decorative sheets (laminated paper as described by the Joint Director of Industries and Commerce) fell under Entry 44(v) of Part -C- assessment year 1994-95 and paper based decorative laminated sheets are taxable at 8%. The respondents accepted the said findings and issued clarification on 12.11.1998 by cancelling the earlier clarification issued on 22.4.1998 and allowed 8% of tax. The said 8% tax was raised to 10% subsequently. (7.) AGAIN the first respondent issued another clarification on 17.8.2005 stating that paper based decorative laminated sheets is taxable at 16% under Entry 8(ii) of Part -C- of the First Schedule. When objections were filed and prayed for reconsideration of the said clarification, the first respondent accepted the same and cancelled the said clarification dated 17.8.2005 by another clarification dated 23.3.2006 and stated that paper based decorative laminated sheets is taxable at 10% und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r based decorative laminated sheet) one, produced by the assessee and the other purchased by the Revenue were sent to the Joint Director of Industries and Commerce (Chemical), Chennai-32, to submit a report as to whether the said samples would fall under which of the two entries extracted above, i.e. Entry 13(i), Part-E, First Schedule (at 16%) and entry 44(v), Part C, First Schedule (at 8% - old entry). In his report in Rc.3097/CW.4/96, dated 29.3.06, the Joint Director, reported as follows: With reference to the above, I am to state that the exhibits two numbers marked by A and B received along with the letter cited are laminated paper and fall in the category mentioned in the extract given as Sl.No.44(v), Part-C, First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The particulars furnished by them have been examined. In view of the fresh facts put forth by the petitioners and relying on the above decision of the Tamil Nadu Taxation Special Tribunal, it is clarified that -Paper based decorative laminated sheet- is taxable at 10% under entry No.22(iv), Part-C, First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The clarification already issued in the reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in commodities in the First Schedule, its intention is obvious that it did not wish to extend the benefit of single point taxation in respect of those commodities. Since fungicides was not included in Entry 66, as it existed at the relevant time, and it was specifically added in the original entry by the Amending Act, it is obvious that the intention of the Legislature was to extend the benefit of single point taxation to fungicides only from the date of the addition, viz., September 13, 1977. The commodities covered by the amended entry are wider than those in the original entry and since the effect of the amended entry was not made retrospective, it would be reasonable to hold that it was not the intention of the Legislature to employ the expanded entry for considering the original entry. The expressions used in the entry, both as it originally existed and after its amendment, are commercially and popularly understood and it is fairly well-settled that the words or expressions must be construed in the manner in which they are understood in the trade. No aid can, therefore, be available from the publications of the Indian Standards Institute as to what pesticides are. Even t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule to the TNGST Act, 1959, is not only all comprehensive, but includes paper of all sorts and all kinds of paper even other than those illustrated or enumerated in the entry. If reference is made to specific inclusion within the meaning of the entry of categories of goods such as paste-board, mill board, straw board, card board, pulp board including grey board, corrugated hoard, duplex and triplex boards and board for playing cards it would only go to show that each and every kind of product connected with or having paper as one of its constituents, is made to encompass under the said entry. As rightly contended by the learned counsel for the petitioners, the Tamil Nadu Taxation Special Tribunal, in O.P. No.120 of 1996, by order dated 12.4.1996, considered the issue with regard to the taxability of paper based laminated sheets. In fact, the Taxation Special Tribunal directed to produce the sample of the product by directing the revenue to inspect the place of business and make a sample purchase of the product and the said sample was sent to the Joint Director of Industries and Commerce, Chennai-32, and a report was directed to be filed as to whether the samples would fall un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication should receive the beneficent construction. (b) In Commissioner of Central Excise, Arne v. Pudumjee Pulp Paper Mills Ltd., 2006 (198) ELT 330 (SC) also the Honourable Supreme Court took the same view.(c) In Commissioner of Customs v. Spice Telecom, 2006 (10) SCC 704, the retrospective effect of the notification was considered and in paragraph 16 it is held as follows: . 16. Revenue has relied upon the subsequent Notification No. 21/2002 dated 10.3.2002. THE subsequent notification defines the scope of ancillary equipment for BTS by restricting the entry to only three equipments, namely, (i) cellular repeaters, (ii) amplifiers, and (iii) wave guides (List 22, Sl. No. 239 of the Table). Radio terminals in this notification have not been considered as ancillary equipment of BTS. Revenue contends that Notification No. 21/2002 is clarificatory in nature and would be applicable to the radio terminals imported by the respondent in the year 1998 as well. We do not find any substance in this submission. THE subsequent notification which defines the scope of ancillary equipment is effective only from 1.3.2002 and does not have retrospective effect. THE respondent's clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore this Court that they have not collected more than 10% of tax while selling the paper based laminated sheets. It is also well settled that if there is ambiguity with regard to the rate of tax to be collected, the benefit should go to the assessee.(a) In Mathurmn Agrawal v. State of Madhya Pradesh, 1999 (8) SCC 667, in paragraph 12 it is held as follows: 12. Another question that arises for consideration in this connection is whether sub-section (1) of Section 127-A and the proviso to sub-section (2)(b) should be construed together and the annual letting values of all the buildings owned by a person to be taken together for determining the amount to be paid as tax in respect of each building. In our considered view this position cannot be accepted. The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11.) THE contention of the learned counsel for the respondents that the Writ Petitions filed challenging the re-assessment notice to re-open the assessment is not maintainable as the Writ Petitions are premature in nature, cannot be sustained. Similarly, the revised orders passed are also bad in law. Admittedly, the second respondent issued the notice to re-open the assessments already finalised based on the clarification of the first respondent dated 30.5.2008. Once the clarification itself is found untenable and also found not having any retrospective effect, the second respondent is not justified in issuing the impugned notices to the petitioner for re-opening the already finalised assessments as well as to pass reassessment orders. In view of the said findings the objections raised by the respondents to maintain the Writ Petition challenging the notices are also untenable. For all the reasons stated above, I hold that the impugned clarification issued by the first respondent and the consequential show cause notices/orders passed in reassessment, issued by the second respondent are unsustainable. The Writ Petitions are allowed. No costs. Connected Miscellaneous Petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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