TMI Blog2020 (6) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Marketing Corporation Limited (TASMAC) within the State of Tamil Nadu. There are no hesitation in concluding that the bottles in question have neither been consumed in manufacture of Beer/IMFL nor they could be said to have been used in such manufacture of Beer/IMFL. Hence, elements (i) and (iii) pertaining to clause (a) of sub-section (1) of Section 7-A of the Act do not exist in this case. The purchase tax under Section 7-A of the Act is leviable on the purchase turnover of empty bottles purchased by the assessee in the course of its business of manufacture and sale of Beer and IMFL - the purchase turnover of the empty bottles purchased by the assessee from the unregistered dealers under bought note is exigible to purchase tax under Section 7-A of the Tamil Nadu Act; and the assessee cannot escape such liability on the strength of the Clarifications/Circulars dated 09.11.1989 and 27.12.2000 which do not stand in conformity with the statutory provision as also declaration of law by the Courts. The appeal is partly allowed by holding that the purchase turnover of the empty bottles purchased by the assessee from the unregistered dealers under bought note is exigible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er certain circumstances, with root questions as to whether purchase tax is leviable on the purchase turnover of empty bottles purchased by the assessee in the course of its business of manufacture and sale of Beer and Indian Made Foreign Liquor2 and as to the operation and effect of the Clarifications dated 09.11.1989 issued by the Special Commissioner and Commissioner of Commercial Taxes, Chennai and dated 27.12.2000 issued by the Principal Commissioner and Commissioner of Commercial Taxes, Chennai . On the sideways, a separate question is as to whether cash discount on the price offered by the assessee to the Tamil Nadu State Marketing Corporation Limited is taxable in view of Explanation 2(iii) to Section 2(r) of the Act? 4. As noticed, the impugned order dated 05.12.2013 in Civil Appeal Nos. 4416-4419 of 2014 is essentially based on the previous order of the High Court dated 10.09.2004 which is in challenge by the revenue as also by the assessee in Civil Appeal Nos. 7164 of 2013 and 7165 of 2013. Hence, we propose to deal with the cross-appeals against the order dated 10.09.2004 in necessary details. Civil Appeal Nos. 7164 and 7165 of 2013: Relevant Background 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of 2.50%. 6.1. In his notice dated 30.04.1999, the AO, inter alia, observed that addition of sub-section (7) to Section 3 with effect from 22.05.1984 specifically treats the containers or packing materials as part of the goods sold or purchased; that there was no doubt that the bottles lost their identity as bottles, which were liable to tax at 10% before filling and they became integral part of the finished goods after filling and attracted liability under the charging Section 3(7) of the Act; and when the bottles became part of the goods, liability under Section 7-A of the Act was definite because, as a part of finished goods used in manufacture, it had not suffered the tax earlier. The AO also observed that in view of decision of this Court in Raj Sheel Ors. v. State of Andhra Pradesh Ors.: (1989) 74 STC 379, though the empty bottles were used as packing material and merged with the consideration of the main product, there was no separate sale of these empty bottles purchased from unregistered dealers and hence, such purchase of empty bottles was liable to tax under Section 7-A of the Act, as there was no subsequent taxable event on the sale of the packagi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd additional surcharge @ 15% and 5% respectively as also the additional sales tax. In response to this notice dated 05.02.2002, the assessee, by its letter dated 18.03.2002, submitted that any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers is not to be included in the turnover. In this regard, the assessee placed reliance on Explanation 2(iii) to Section 2(r) of the Act. 6.6. After examining the objections of the assessee, the AO, by his order dated 27.03.2002, confirmed the proposal of levying purchase tax @ 16% under Section 7-A of the Act on the bottles purchased from unregistered dealers with surcharge and additional surcharge @ 15% and 5% respectively as also additional sales tax @ 2.5% and penalty, essentially on the grounds that empty bottles were purchased from unregistered dealers; that they had been used as raw materials in manufacture of Beer and IMFL products; and that they had not been sold separately. The AO, in support of his conclusion, relied upon the decision of the Division Bench of Madras High Court in Appollo Saline Pharmaceuticals (P) Limited v. Deputy Commercial Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO to pass fresh orders giving effect to the Clarifications/Circulars dated 09.11.1989 and 27.12.2000. The writ petition so filed by the assessee has been considered and disposed of by the High Court by its impugned order dated 10.09.2004. 8.1. The following three questions were considered by the High Court in its impugned order dated 10.09.2004: - (i) Whether the purchase turnover of empty bottles purchased by the petitioner Company, who are engaged in the business of manufacturing Beer and IMFL products, from unregistered dealers for bottling Beer and IMFL manufactured by them, through the bought note to the extent of ₹ 24,78,20,465.00 is attracted for purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act (for brevity the Act )?; (ii) Whether purchase tax is leviable on the purchase turnover of the empty bottles purchased by the petitioner Company to the extent of ₹ 24,78,20,465.00, under Section 7-A of the Act, in spite of the clarifications dated 9.11.1989 and 27.12.2000 issued in favour of the petitioner Company by the Special Commissioner of Commercial Taxes, Chennai, in view of Section 28A of the Act?; and (iii) Whether cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature, the same was binding on the authorities till the concessions given to the assessee under the Clarification were withdrawn prospectively with effect from 28.01.2002; and the revenue could not refuse the benefit of the Clarifications dated 9.11.1989 and 27.12.2000 in respect of purchase tax under Section 7-A of the Act for the assessment year 1996-97. The High Court answered this question in favour of the assessee as follows:- 8.6.10. It is, therefore, clear that even though the clarification dated 9.11.1989 is executive in nature, the same is binding on the authorities till the concessions given to the petitioner under the clarification were withdrawn, which could be done only prospectively, viz., in the instance case, with effect from 28.1.2002, and the revenue could not refuse the benefit of the clarifications dated 9.11.1989 and 27.12.2000 in respect of levy of purchase tax under Section 7-A of the Act for the impugned assessment year 1996-97. 8.7. For all these reasons, we are convinced that even though the purchase turnover with respect to the purchase of empty bottles from the unregistered dealers under bought note can be charged for purchase tax under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax on this purchase turnover does not arise while making elaborate reference to the object and scheme of Section 7-A of the Tamil Nadu Act; to the process of bottling of Beer/IMLF after the same had been manufactured; and to the fact that the sale of liquor with bottles had only been to TASMAC within the State of Tamil Nadu with bottles being also taxed on such sales. 10.1 The learned senior counsel has referred to the history of insertion of Section 7-A to the Tamil Nadu Act w.e.f. 27.11.1969 and its various amendments from time to time with the submissions that the said provision was inserted with the main object to plug the leakage and to prevent evasion of tax. Further, with reference to the provisions contained in Section 7-A as applicable at the relevant time and sub-sections (1), (7) and (8) of Section 3 of the Act, the learned senior counsel has contended that the bottles were not disposed of in any manner other than by way of sale in the State but these were disposed of only by way of sale to TASMAC within the State of Tamil Nadu itself on payment of sales tax and hence, clause (b) of Section 7-A(1) does not apply. In support of these contentions, the learned senio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess of bottling commences only after completion of manufacturing of Beer when bulk Beer is transferred from the brewery for bottling; and manufacturing of liquor and putting manufactured commodity into bottles being two different processes, it cannot be said that the bottles have been consumed or used in manufacture of other goods. 10.2.1. The learned senior counsel has emphatically contended that in the process of manufacture, conversion of one commodity into a different commodity remains the essential element and if the identity of goods is not changed with irreversible process, manufacture would not be deemed to have taken place. In this regard, the learned counsel has referred to various decisions including those in Mafatlal Industries Ltd. v. Nadiad Nagar Palika and Anr.: (2000) 3 SCC 1, HMM Limited and Anr. v. Administrator, Bangalore City Corporation, Bangalore and Anr.: (1989) 4 SCC 640, Punjab Aromatics v. State of Kerala: (2008) 11 SCC 482, Collector of Central Excise, Bombay-II v. M/s. Kiran Spinning Mills: (1988) 2 SCC 348, Commissioner of Central Excise Customs, Gujarat v. Pan Pipes Resplendents Ltd. : (2006) 1 SCC 777, Union of India v. Alembic Glass Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contentions of the assessee. 10.3.1. The learned senior counsel would submit that in the case of M. K. Kandaswami (supra), this Court had only analysed the scheme of Section 7-A of the Act, as then existing, and had pointed out that the said provision was itself a charging provision. As regards the decision in the case of Nandanam Construction Co. (supra), the learned counsel would contend that therein, the respondent was purchasing goods such as sand and bricks which were consumed in the construction of flats and hence, this Court held that when the goods ceased to exist in the original form or ceased to be available in the State for sale or purchase, the purchasing dealer of such goods would be liable to tax, if the seller is not or cannot be taxed. The decision in Premium Breweries (supra), has been distinguished by the learned counsel with the submissions that therein, contention of the dealer was that the cardboard cartons, in which the liquor bottles were packed, may not be taxed at the higher rate applicable to the sale of liquor because cardboard cartons were sold separately but such a contention was not accepted by this Court. Thus, according to the learned counsel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to decision of this Court in the case of J.K. Cotton Spinning Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur and Ors.: (1965) 16 STC 563 though the issue involved in the said matter was completely different and related to categories of goods to be included in the registration certificate which has no co-relation with levy of purchase tax, particularly in view of the language used in Section 7-A(1) (a) of the Act. 11. As regards the Clarifications/Circulars, the learned senior counsel has referred to the contents of the Clarifications dated 09.11.1989 and 27.12.2000 and has made the submissions that in the assessee s own case, after examining the relevant facts and legal position, the revenue had specifically clarified that since the sale value of bottles is subject to tax at the time of sale of the contents, it had no liability to tax under Section 7-A of the Act; and such clarifications remain binding on the revenue, as rightly held by the High Court. 11.1 Further, with reference to the decisions of this Court in the cases of Commissioner of Income Tax, Kochi v. Trans Asian Shipping Services (P) Ltd.: (2016) 8 SCC 604, Signode India Ltd. v. Commissioner of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not amount to double taxation. 12.2 The learned AAG has referred to the decision in M.K. Kandaswami (supra) to submit that therein, this Court has made it clear that Section 7-A of the Act is a charging section and has explained that Section 7-A of the Act deals with taxable goods , that is, the kind of goods, the sale of which by a particular person or dealer may not be taxable in the hands of seller but purchase of the same by a dealer in the course of his business may subsequently become taxable. Thus, Section 7-A of the Act creates a liability against a dealer on his purchase turnover of goods, the sale or purchase of which though generally liable to tax under the Act, have not suffered tax and which, after the purchase, have been dealt by him in any of the modes indicated in Section 7-A(1). The learned AAG has further argued, with reference to the decision in Premier Breweries (supra), that the calculation of taxable turnover cannot be accomplished without taking into consideration the purchase tax on the goods purchased; and this Court has held that the packed goods have to be seen as one whole for the purpose of calculating the turnover of the goods. 12.3 Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision has been in pari materia with Section 7-A(1)(a) of the Tamil Nadu Act and this Court held that, when the goods cease to exist in the original form or cease to be available in the State for sale or purchase, the purchasing dealer of such goods is liable to tax if the seller is not or cannot be taxed. The learned AAG has further relied upon the interpretation and application of Section 7 of the Madhya Pradesh General Sales Tax Act, 1959 by this Court in the case of Ganesh Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh: (1969) 24 STC 343 with the submissions that the said provision has also been in pari materia with Section 7-A(1)(a) of the Tamil Nadu Act and this Court held that the assessees were registered as dealers and when they had purchased taxable building materials in the course of their business for manufacturing goods for sale, purchase tax was payable by them. 13. As regards the questions relating to the Clarifications/Circulars, the learned AAG has submitted that Section 28-A of the Act empowering the Commissioner of Commercial Taxes to issue clarifications came into effect from 06.11.1997 and hence, during the relevant assessment year i.e. 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and therefore, exemption is to be allowed thereupon. The Points for Determination 15. In comprehension of what has been noticed hereinabove, the principal point calling for determination in these appeals is as to whether purchase tax under Section 7-A of the Act is leviable on the purchase turnover of empty bottles purchased by the assessee in the course of its business of manufacture and sale of Beer and IMFL. The second point, co-related with the principal one, is on the operation and effect of the Clarifications/Circulars dated 09.11.1989, 27.12.2000 and 28.01.2002 as issued by the department. Another point arising out of the impugned order dated 10.09.2004 is as to whether cash discount on the price offered by the assessee to the TASMAC is taxable in view of Explanation 2(iii) to Section 2(r) of the Act? The Principal Point: Purchase Tax under S. 7-A of the Act over the Turnover in Question 16. Taking up the principal point for determination, we may usefully put in a nutshell the major aspects of the rival contentions. It is asserted on behalf of the assessee that purchase tax on the turnover in question is not leviable for two main reasons: O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or packing material and the charges for packing forming part of the turnover of the goods under sub-section (7) shall not be liable to tax. Explanation : For the purposes of sub-sections (7) and (8), containers includes gunny bags, tins, bottles or any other containers. 17.2. As noticed, Section 7-A was inserted in the Tamil Nadu Act with effect from 27.11.1969. This provision has undergone several amendments from time to time but, for the present purpose, its sub-section (1), as examined by this Court in the judgment dated 15.07.1975 in the case of M.K. Kandaswami (supra) and then, as applicable to the present case pertaining to the assessment year 1996-97, may be noticed. 17.2.1. The relevant part of the provision contained in Section 7-A (1) of the Act, as interpreted in the case of M.K. Kandaswami (supra), was as under (at p. 195 of STC):- Section 7-A. Levy of purchase tax: (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act) in circumstances in which no tax is payable under sections 3, 4 or 5, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merce, shall pay tax on the turnover relating to the purchase as aforesaid at the rate mentioned in sections 3 or 4, as the case may be. 17.2.3. Another aspect of amendment to the provision aforesaid by Tamil Nadu Act No. 60 of 1997 w.e.f. 06.11.1997 may also be taken note of with a caveat that this amendment is not directly applicable to the present case pertaining to the assessment year 1996-97 but has its relevance in relation to one limb of submissions made before us. By this amendment, in clause (a) of Section 7-A (1) of the Act, after the expression in , the words or for were inserted, resulting in further widening of the area of coverage of this provision. 17.3. For its relevance, we may extract in juxtaposition the progression of this clause (a) of Section 7-A (1) of the Act i.e., as originally enacted; as applicable to the present case after its amendment w.e.f. 01.01.1987; and as amended further w.e.f. 06.11.1997 as follows:- Clause (a) of Section 7-A (1) as originally Enacted Clause (a) of Section 7-A (1) as applicable to the present case after its amendment w.e.f. 01.01.1987 Clause (a) of Section 7-A (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in suitable containers and hence, it cannot be said that the bottles had been used up in the process of manufacture; and consequently, the purchase turnover of empty bottles could not be brought to charge under Section 7-A (1) (a) of the Act. 20. The other decision concerning the provision contained in Section 7-A (1) of the Act but after yet another amendment to clause (a) had been by the Madras High Court in the case of Appollo Saline Pharmaceuticals (supra). Therein, the assessee was engaged in manufacturing and marketing of I.V. fluid and the turnover of the bottles containing I.V. fluid was included in the turnover relating to the fluid by reason of Section 3 (7) of the Act. The assessee was confronted with a demand for payment of purchase tax for the reason that the bottles in which I.V. fluid was packed and sold were those bottles which the assessee had purchased from unregistered dealers and therefore, those bottles had not been subjected to tax at the time of purchase. It was essentially contended before the Madras High Court on behalf of the assessee that if the goods in respect of which purchase tax was sought to be levied continued to be available for sale or purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the value of the turnover relating to those goods is also subject to tax by deeming the same as forming part of the turnover of other taxable goods. 8. It is no doubt true that the turnover of the bottles is, byreason of section 3(7), deemed to be part of the turnover of the assessee relating to the I.V. fluids and by reason of the inclusion of such turnover of the bottles in that turnover, the turnover relating to these bottles is also subjected to tax. Such inclusion of the turnover relating to bottles, however, does not enable the assessee to get out of the net of section 7-A as the bottles were not sold as bottles but as part of a composite unit, viz., I.V. fluids packed in bottles. 9. Section 7-A(1)(a) refers to the consumption or use ofgoods in or for the manufacture of other goods. Having regard to the nature of the goods and the need for a container in order to make those goods marketable, it must necessarily be held that the bottles used here were bottles used in or for the manufacture of the I.V. fluids, having regard to the law laid down by the apex Court in the case of J.K. Cotton Spinning Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur [1965] 16 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients. 21.1. In the case of M. K. Kandaswami (supra), the respondent dealers had purchased a variety of goods, namely, arecanuts, gingelly seeds, turmeric, grams, castor seeds and butter in such circumstances where their sales were not liable to tax in the hands of the respective sellers although the goods were such, whose sale or purchase was generally liable to tax under the Act. Against the respondent dealers, either pre-assessment proceedings had been initiated or assessments had been made under Section 7-A of the Act on the purchase turnover of these goods on the assertions by revenue that the gingelly seeds and castor seeds were crushed into oil and the butter was converted into ghee by the respective dealers and by such action, the goods in question were consumed in the manufacture of other goods for sale; and hence, this action was covered under clause (a) of Section 7-A (1). It was also asserted that the other goods namely, arecanuts, turmeric and gram, were transported by the respective dealers outside the State for sale on consignment basis and thereby, those cases were covered by clause (b) or clause (c) of Section 7-A (1). In the backdrop of these facts, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dixit (supra) and observed that Section 7 of the Madhya Pradesh Act, as considered therein, though not carrying exact language as that of Section 7-A of the Tamil Nadu Act but their substance and object were the same. This Court also noticed that in Ganesh Prasad Dixit, it was held that the appellants (building contractors), who were purchasing building materials which were taxable under the Act and had been using them in the course of their business, had consumed the materials otherwise than in the manufacture of goods for sale and for a profit motive and hence, purchase price was taxable on the plain reading of words of Section 7 of the Madhya Pradesh Act. Taking note of such exposition, this Court observed in M. K. Kandaswami that the ratio decidendi of Ganesh Prasad Dixit was apposite guide for construing Section 7-A of the Tamil Nadu Act in the following (at p. 199 of STC) : The impugned section 7-A is based on section 7 of the Madhya Pradesh Act. Although the language of these two provisions is not completely identical, yet their substance and object are the same. Instead of the longish phrase, the goods, the sale or purchase of which is liable to tax under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction business. As regards the issue relating to the imposition of purchase tax under Section 7 of the Madhya Pradesh Act, a 3Judge Bench of this Court examined the relevant part of Section 7 of the Madhya Pradesh Act that read as under (at pp. 346-347 of STC):- Every dealer who in the course of his business purchases any taxable goods, in circumstances in which no tax under section 6 is payable on the sale price of such goods and either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 6 This Court observed that even though the phraseology used in Section 7 of the Act was a bit intricate, the meaning was fairly simple, giving out the eventualities where purchase tax would be payable i.e., when a dealer buys taxable goods in the course of his business and (1) either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (4) despatches them to a place outside the State except as a direct result of sale or purchase in the course of interState trade or commerce. The assessees are registered as dealers and they have purchased building materials in the course of their business; the building materials are taxable under the Act, and the appellants have consumed the materials otherwise than in the manufacture of goods for sale and for a profit-motive. On the plain words of section 7 the purchase price is taxable. Mr Chagla for the appellants urged that the expression or otherwise is intended to denote a conjunctive introducing specific alternative to the words for sale immediately preceding. The clause in which it occurs means, says Mr Chagla, that by section 7 the price paid for buying goods consumed in the manufacture of other goods, intended to be sold or otherwise disposed of, alone is taxable. We do not think that that is a reasonable interpretation of the expression either consumes such goods in the manufacture of other goods for sale or otherwise . It is intended by the Legislature that consumption of goods renders the price paid for their purchase taxable, if the goods are used in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e removal of inedible portions, the slicing and thereafter canning it on adding sugar to preserve it. It is contended for the revenue that pineapple slices have a higher price in the market than the original fruit and that implies that the slices constitute a different commercial commodity. The higher price, it seems to us, is occasioned only because of the labour put into making the fruit more readily consumable and because of the can employed to contain it. It is not as if the higher price is claimed because it is a different commercial commodity. It is said that pineapple slices appeal to a different sector of the trade and that when a customer asks for a can of pineapple slices he has in mind something very different from fresh pineapple fruit. Here again, the distinction in the mind of the consumer arises not from any difference in the essential identity of the two, but is derived from the mere form in which the fruit is desired. The learned counsel for the revenue contends that even if no manufacturing process is involved, the case still falls within section 5A(1)(a) of the Kerala General Sales Tax Act, because the statutory provision speaks not only of goods consumed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out payment of sales tax. The Assistant Commissioner of Commercial Taxes called upon the respondents to produce their books of accounts while proposing to hold them liable for purchase tax under Section 6-A of Andhra Pradesh Act. On the proposed action being challenged, the High Court held that in order to attract Section 6-A of the Andhra Pradesh Act, there ought to be consumption of the original goods for the purpose of manufacture of other goods for sale or for purposes other than sale; and in the absence of such consumption, the respondents were not liable to purchase tax. For this proposition, the High Court relied on the decision in Pio Food Packers (supra). In the appeal before this Court, the contention of revenue was that the said Section 6-A of the Andhra Pradesh Act was applicable to consumption of original goods in the manufacture of the other goods for sale or consumption of original goods otherwise . On the other hand, it was contended on behalf of the respondents that the view taken in Pio Food Packers, as followed in CST v. Thomas Stephen Co. Ltd.: (1988) 2 SCC 264 must be accepted and at any rate, if two views were possible, the assessee should be given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on purchase of goods from a person other than a registered dealer for consumption or disposal or despatch of goods outside the State. So the scheme of clause (ii) of section 6-A of the Act is that when the goods cease to exist in the original form or cease to be available in the State for sale or purchase, the purchasing dealer of such goods is liable to tax if the seller is not or cannot be taxed. To our mind, it appears that the object of section 6-A(ii)(a) of the Act is to levy purchase tax on goods consumed either for the purpose of manufacture of other goods for sale or consumed otherwise. If the view in Pio Food Packers [1980] 46 STC 63 (SC) ; [1980] 3 SCR 1271 , is accepted the result would be that the expression otherwise will qualify the expression sale and not the expression manufacture , which appears to us to be erroneous on a plain construction of the provision. The intention of the legislature, it appears to us, is to bring to purchase tax in either event of consumption of goods in the manufacture of goods for sale or consumption of goods in any other manner. Once the goods are utilised in the construction of buildings the goods cease to exist or cease to be av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h rate as may be notified under section 15. *** *** *** After it was amended by the aforesaid amendment Act, sub-sections (1) and (2) of section 9 read as follows: 9. Liability to pay purchase tax.- (1) Where a dealer liable to pay tax under this Act,- (a) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or (b) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the state in any manner otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export outside the territory of India within the meaning of sub-section (1) of section 5 of the Central Sales Tax Act, 1956; or (c) purchases goods, other than those specified in Schedule B, from any source in the State and exports them, in the circumstances in which no tax is payable under any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt commodities and (c) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter-State sale or export sale. It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State, no tax is payable on such disposition; similarly, where manufactured goods are despatched out of State as a result of an inter-State sale (sic) or export sale, no tax is payable on such sale. Similarly again where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents, no tax is payable on such removal. . *** *** *** To repeat, the scheme of section 9 of Haryana Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of nation and its economy, as explained hereinbefore. The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e use of an earlier statute to throw light on the meaning of a phrase used in a later statute in the same context; it permits the raising of a presumption, in the absence of any context indicating a contrary intention, that the same meaning attaches to the same words in a later statute as in an earlier statute if the words are used in similar connection in the two statutes; and it enables the use of a later statute as parliamentary exposition of the meaning of ambiguous expressions in an earlier statute. 26.1. We may, however, usefully add a caveat in regard to the application of the doctrine of pari materia, as entered in the same classic Principles of Statutory Interpretation by Justice G.P. Singh20 as follows: It is settled law that words used in a particular statute cannot be used to interpret the same word in a different statute especially when the two statutes are not pari materia .. 27. Keeping the aforementioned principles in view and having regard to the questions of construction involved in the present case, it appears appropriate to recapitulate the texts of the relevant provisions concerning purchase tax as occurring in different State enactments which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under section 5 or section 6 Madhya Pradesh Act Section 7 Every dealer who in the course of his business purchases any taxable goods, in circumstances in which no tax under section 6 is payable on the sale price of such goods and either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 6 Haryana Act 9. Liability to pay purchase tax.- (1) Where a dealer liable to pay tax under this Act,- (a) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assistance from the same for the purpose of deducing the basic ingredients of Section 7-A of the Tamil Nadu Act, as in force during the assessment year in question. Having said so, we may look at the principles available in the decisions of this Court dealing with either Section 7-A of the Tamil Nadu Act as earlier existing or the provisions in other enactments dealing with the same subject of the levy of purchase tax. 29. Now reverting to the cited decisions of this Court, we may at once observe that so far the decision in Hotel Balaji (supra) is concerned, reliance on the above extracted paragraphs on behalf of assessee has been entirely misplaced because the provision of purchase tax in the Haryana Act, as interpreted in Hotel Balaji, cannot be said to be in pari materia with Section 7A of the Tamil Nadu Act inasmuch as, in the phraseology of Section 9 of the Haryana Act, the expression or otherwise , qualifying the action of manufacture (as available in Tamil Nadu Act) had not been there. To be more specific, the referred observations in Hotel Balaji cannot apply to the Tamil Nadu Act for the simple reason that in Section 9 of the Haryana Act, levy of purchase tax was env ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression or uses after the expression consumes and thereby, not only consumption but even use in the manner envisaged by the provision would provide coverage thereunder. Therefore, when the later amendment has not altered the basics of Section 7-A of the Act and had only enlarged its scope, the principles applicable to the present case could be culled out from the enunciation in M. K. Kandaswami, with necessary variation, rather enlargement. 31. As held in M. K. Kandaswami (supra), Section 7-A of the Act is a charging as well as a remedial provision, its main object being to plug leakage and prevent evasion of tax; and in interpreting such a provision, a construction which would defeat its purpose or render it otiose should be eschewed. As regards workability of Section 7-A of the Act, this Court catalogued its ingredients in a point-wise break up and pointed out that it would apply only if all such ingredients are cumulatively satisfied. We have extracted the analysis so made by this Court hereinbefore . The same analysis shall apply to the provision of Section 7-A with which we are concerned in the present case with necessary variation and with major difference that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution Bench in Nandanam Construction Co. was akin to that of Section 7-A of the Tamil Nadu Act as existing earlier and as examined in M.K. Kandaswami. Further, noticeably, in M.K. Kandaswami, the 3-Judge Bench held that the decision in Ganesh Prasad Dixit, wherein the provision contained in Section 7 of the Madhya Pradesh Act had been interpreted by this Court, was apposite guide for construing Section 7-A of the Tamil Nadu Act; and then, in Nandanam Construction Co., the Constitution Bench approved the enunciation in Ganesh Prasad Dixit as regards the interpretation of the expression or otherwise while making it absolutely clear that this expression or otherwise provided alternative to the expression manufacture and not to the expression sale ; and the converse interpretation as regards this expression or otherwise in Pio Food Packers was overruled. The provision in Section 7 of the Madhya Pradesh Act had also been similar to the original Section 7-A of the Tamil Nadu Act. 33.1. As noticed, by the amendment with effect from 01.01.1987, the scope of Section 7-A (1) has only been enlarged with addition of the expression or uses . Looking to the expressions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether purchase tax under Section 7-A of the Act is leviable over the turnover in question. 36. As noticed, for the purpose of its business of manufacture and sale of Beer and IMFL, the assessee had purchased empty bottles from unregistered dealers situated outside the State as well as from non-dealers for the bottling of Beer and IMFL. The assessee would assert that purchase tax on the turnover in question is not leviable for the reason the said empty bottles were recycled after use by the consumers and were re-filled with Beer/IMFL; and that the said bottles had not been consumed or used in the manufacture of liquor and they were only used as containers in which already manufactured liquor was bottled for carrying and sale. The counter stand of revenue is that use of the said bottles is imperative in the manufacture of Beer/IMFL and packaging of Beer/IMFL in glass bottles has to be seen as an inseparable composite unit; and therefore, purchase tax on the turnover of purchase of such empty bottles is leviable, for being covered by Section 7-A (1) (a) of the Act. 36.1. The assessee has urged another contention that the sale value of bottles has been subjected to tax at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the ambit of clause (a) of Section 7-A (1) of the Act? As already noticed, as per the language used, this provision comes in operation when the dealer consumes or uses such goods in the manufacture of other goods for sale or otherwise . Hence, the activity in question would be so covered if any one of the four elements of clause (a) exists, i.e., (i) if the goods in question are consumed in manufacture of other goods for sale; or (ii) if they are consumed otherwise; or (iii) if they are used in manufacture of other goods for sale; or (iv) if they are used otherwise. 39. In view of their intrinsic connectivity, we may first examine the elements (i) and (iii) and shall examine the other elements a little later. Now, in order to examine as to whether any of these elements (i) or (iii) exists or not, we may look at the meaning and connotation of the expressions consume , use and manufacture employed in clause (a) of sub-section (1) of Section 7-A of the Act with a little reference to the etymology related with these expressions as also to the semantics related with the preposition in . 39.1. As per Concise Oxford English Dictionary , one of the meaning assigned to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- MANUFACTURE implies a change, but every change is not manufacture and yet every change of an article is the result of treatment labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use . Conversion of raw materials into a finished product, e.g. converting iron ore into steel plate. Manufacture is : (1) The application, to material, of labour or skill, whereby the original article is changed to a new, different, and useful article, provided the process is of a kind popularly regarded as manufacture, or (2) the product of such process. Whatever is made by human labour, either directly or through the instrumentality of machinery. (Abott L. Dict.) *** *** *** Every alteration in an article does not confer on it a new character as a manufacture. To constitute a new and different article and a manufactured article , it must be so changed as to have a positive and specific use in its new state. *** *** *** 39.4. As noticed, the co-relation of verbs consumes and uses with manufacture is framed in clause (a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption denote using up a particular thing in a way that results in complete exhaustion of that thing. On the other hand, the expression use denotes the application or deployment of a particular thing as a means of achieving something or for accomplishment of a purpose. Undoubtedly, the word use is of wider import than consumption . 40.1. In regard to the expressions in question, we may usefully recount that the earlier existing Entry 52 of List II of the Seventh Schedule to the Constitution of India provided for Taxes on the entry of goods into a local area for consumption, use or sale therein . While taking up interpretation of the State enactment made under the said Entry 52, this Court dealt with the matter in the case of Mafatlal Industries Ltd. (supra), where cloth pieces of particular length were brought within the octroi limits of the Municipality concerned and were cut into smaller pieces of different sizes. This action was held by this Court not amounting to use or consumption of the cloth within the octroi limits. In that context, this Court took note of the relevant entry as also the relevant provision of the State enactment and said,- 14 ..we hold that me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it may not be used up as such. To put it in different words, in use , a thing shall be employed for the accomplishment of a purpose but in consume , the thing shall not only be employed but shall also get absorbed or devoured in accomplishment of the purpose. 41. As noticed, clause (a) of sub-section (1) of Section 7-A of the Act covers both the eventualities i.e., of consumption and of use but when they take place in the manufacture of other goods for sale . Therefore, now it is necessary to delve into the salient features related with the expression manufacture . 41.1. As noticed, the relevant dictionary meanings fairly give out that by manufacture what is basically meant is the process by which a thing is made or built by human or by machine in contradistinction to what is produced by nature. Ordinarily, it denotes the application of labour or skill to material so as to bring out a new, different and useful article in place of the original one. In regard to this expression manufacture , it shall also be profitable to make a brief reference to the relevant decisions. 41.2. In the case of Kiran Spinning Mills (supra), this Court dealt with the issue in relation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion was as to whether printing/decorating of duty-paid plain glazed ceramic tiles amounted to manufacture in terms of Section 2(f) of Central Excise Act, 1944. In that context, the Court said that manufacture implies a change but, every change is not a manufacture; and, for manufacture , there must be transformation and a new article, having distinct name, character or use, ought to come into existence. Such requirements of manufacture were held not satisfied in the given case. This Court said : 5. The point which falls for consideration in this case is whether printing/decorating of duty-paid plain glazed ceramic tiles amounts to manufacture or not in terms of Section 2(f) of the Central Excise Act, 1944. The process for amounting to manufacture must be one which brings into being a new substance known to the market. Manufacture implies a change but every change is not a manufacture and yet every change in an article is the result of some treatment, labour and manipulation. For manufacture, something more is necessary. There must be transformation and a new article must result, having a distinct name, character or use. These conditions are not satisfied in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard wherein it was clearly held that bottling takes place after brewing of Beer is complete. This Court said as under :- 62. It is not in dispute that the process of brewing beer and the process of bottling beer are considered to be distinct and separate processes governed respectively by the Brewery Rules and the Bottling Rules. The operations connected with bottling are required to be conducted in a separate premises under a different licence. The process of bottling begins with the transfer of bulk beer from the brewery for bottling. Subsection (2) of Section 28-A refers to an allowance to an extent of 10% not only in regard to losses within the brewery but also to cover losses in bottling and storage. As noticed above, Rule 53 of the Brewery Rules and Rule 7(11) of the Bottling Rules when read conjointly show that the said Rules are supplementary to each other and together implement Section 28-A of the Act. At all events, the validity of neither Rule 53 of the Brewery Rules nor Rule 7(11) of the Bottling Rules is under challenge. Be that as it may. 43.1. What has been observed in relation to brewing and bottling of Beer would equally apply to distillation and bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1) of Section 7-A of the Act. In this regard, we need again to look at etymology related with the expression in question. 46.1. The expression otherwise is essentially used in the texts as an adverb or as an adjective. Out of the numerous meanings assigned to this expression in the Concise Oxford English Dictionary, some of the relevant meanings are: in other respects; in a different way, alternatively. 46.2. Similarly, in Black s Law Dictionary, the expression otherwise is assigned several meanings including in a different way; in another manner; except for what has just been mentioned; to the contrary; differently . 47. The variety of meanings assigned to the expression otherwise makes one aspect absolutely clear that this expression is intended to denote something different than the thing/s to which it is employed; and that this expression is essentially general in nature. In the phraseology of clause (a) of sub-section (1) of Section 7-A of the Act, the words or otherwise have been placed after the particular words consumes , uses and manufacture . Obviously, these words or otherwise are intended to convey that not only the activities envisaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that far from using these words ejusdem generis with the preceding clauses, the Legislature had used them in an all-inclusive sense; and, in the given context and looking to the object and the mischief sought to be dealt with by the enactment, there was no room for application of the rule of ejusdem generis. The Court, inter alia, said as under : 11 .The legislature has been cautious and thorough-going enough to bar all avenues of escape by using the words or otherwise . Those words are not words of limitation but of extension so as to cover all possible ways in which a vacancy may occur. Generally speaking, a tenant s occupation of his premises ceases when his tenancy is terminated by acts of parties or by operation of law or by eviction by the landlord or by assignment or transfer of the tenant s interest. But the legislature, when it used the words or otherwise , apparently intended to cover other cases which may not come within the meaning of the preceding clauses, for example, a case where the tenant s occupation has ceased as a result of trespass by a third party. The Legislature, in our opinion, intended to cover all possible cases of vacancy occurring due to any rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form so as to be sold in that original form. 49. Keeping the principle aforesaid in view, we may now take up elements (ii) and (iv) of clause (a) of sub-section (1) of Section 7-A of the Act. Thus, the question is as to whether the bottles in question have been consumed otherwise or used otherwise . 49.1. As already noticed, consumption requires the thing in question being exhausted or ceasing to exist for being used up. The bottles in question, even when used as containers of the liquor manufactured by the assessee, had neither been exhausted nor had ceased to exist; they have rather continued to exist while retaining their basic identity and character as bottles. Of course, they (empty bottles) had been filled up with liquor but such filling up has not resulted in the bottles themselves being used up. Hence, the activity in question does not fall within the ambit of element (ii). However, the very same logic does not apply to element (iv) because it cannot be said that the bottles in question have not been used otherwise . 49.2. As noticed, the expression use is of wide amplitude and it refers to the usage or engagement of an article for the accomplishment of a pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion within the fourth element i.e., used otherwise . 49.4. Hence, though the bottles in question have not been consumed otherwise , they have indeed been used otherwise ; and therefore, the activity of assessee in relation to the bottles in question is clearly covered by element (iv) of clause (a) of sub-section (1) of Section 7-A of the Act. 50. To summarise the discussion aforesaid and to put our views in a nutshell, the goods in question (empty bottles) have not been consumed in the manufacture of other goods for sale nor they have been consumed otherwise because of having retained their identity. They have also not been used in the manufacture of other goods for sale because manufacture of Beer/IMFL was complete without their use. However, they have been used for bottling and when bottling remains an integral part of the business activity of the assessee, i.e., of manufacturing the liquor by the process of brewing/distillation and then, selling the manufactured liquor by putting the same in bottles, they have been used otherwise . That being the position, use of the goods in question for bottling takes the turnover of their purchase within the net of Section 7-A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the goods contained, i.e., Beer/IMFL. The Explanation to Section 3 of the Act puts it beyond doubt that the expression containers includes bottles. 52.1 Another relevant feature of the provisions in question is that applicability of Section 7-A of the Act has not been made dependent on the event of levy of sales tax on the goods for which purchase tax is to be levied. As noticed, levy of purchase tax is dependent on cumulative existence of the necessary ingredients of Section 7-A of the Act; and no exception or exclusion is provided with reference to the factum of levy of sales tax on the goods in question at the time of their sale. In fact, not much of elaborate discussion in this regard appears requisite, for a direct answer being available in a 3-Judge Bench decision of this Court in the case of Premier Breweries (supra) wherein, pari materia provisions of the Kerala Act as regards levy of sales tax were considered. In the said case of Premier Breweries, the appellant had sold liquor packed in cardboard cartons. It was contended that such cardboard cartons had already borne tax under the entry paper other than the newsprint cardboard and their products and hence, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the same rate as the goods contained therein. 24. Moreover, the packing materials as such are not being taxed under sub-section (5) of section 5 of the Act. The subject-matter of tax are the goods packed in the containers. In calculating the turnover of the goods, packing materials will have to be taken into account. The packing materials will be taxed at the same rate and at the same point as the goods contained in the packing material. This is because the goods are sold packed in containers and are charged accordingly. This is a rule of computation of the turnover of the goods. If no tax is ultimately found leviable on the goods then no tax can be levied on the containers in which the goods are contained. 52.2 As already noticed, this question was also examined by the High Court in the case of Appollo Saline Pharmaceuticals (supra) although the said decision was rendered in relation to the bottles used for packing of I.V. fluid and the provision examined therein was that as existing after amendment of clause (a) of sub-section (1) of Section 7-A with insertion of the words or for but, such amendment is of no effect so far as this limb of contentions is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t levy of sales tax at the time of sale of the goods in question would exclude them from the net of purchase tax. That being the position, the second limb of submissions on the part of assessee turns out to be hollow and baseless, and cannot be accepted. 53. Therefore, the final result of the discussion aforesaid is that purchase tax under Section 7-A of the Act is leviable on the purchase turnover of empty bottles purchased by the assessee in the course of its business of manufacture and sale of Beer and IMFL. OPERATION AND EFFECT OF DEPARTMENT S CLARIFICATIONS/CIRCULARS 54. As noticed, the High Court in its impugned order dated 10.09.2004 did reach to the conclusion that purchase tax was leviable on the purchase turnover of the empty bottles but found the assessee entitled to the benefit of Clarifications/Circulars issued by the revenue on 09.11.1989 and 27.12.2000. The revenue has questioned this part of the order of the High Court on the grounds and contentions as noticed hereinabove. In order to examine the rival contentions in this regard and the correctness of proposition adopted by the High Court, we may take note of the statutory provision in the Tamil Nadu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier opinion in the following terms:- COMMERCIAL TAXES DEPARTMENT FROM TO THIRU P.C. CYRIAC, I.A.S., Principle Commissioner and Commissioner of Commercial Taxes Chepauk, Chennai 600 005 Tvl. Mohan Breweries and Distilleries Ltd., Rayala Towers, II Floor, 781-85 Anna Salai, Chennai 600 002. -------------------------------------------------------------------------------- D. DIS. ACTS CELL II/52900/2000 DATED : 27.12.2000 CLARIFICATION NO.192/2000 Sir, Sub : TNGST Act 1959 Clarification on rate of tax for purchase of old/used bottles for filling beer/IMFL products requested reg. Ref : From Tvl. Mohan Breweries and Distilleries Ltd., Chennai-2. Lr. Dt. 13.7.2000. Tvl. Mohan Breweries and Distilleries Ltd., Chennai-2, in their letter cited have requested clarification for the years 1991-92, 93-94, 94-95 and 95-96 in respect of purchase of old bottles assessed to tax under section 7-A of the TNGST Act, 1959. The details furnished by the petitioners have been perused and the following clarification on rate of tax is issued : In this office reference D.Dis.Acts Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .89 will apply to IMFL/Beer. The issue has been re-examined in the light of the decision of the Tamil Nadu Taxation Special Tribunal in the case of Appollo Saline Pharmaceuticals Private Limited reported in 120 STC. P.493, and the clarification issued in the reference cited is modified as below : It is hereby clarified that purchase of empty bottles from un-registered dealers used for the packing of Beer/IMFL manufactured by Tvl. Mohan Breweries and Distilleries Limited, Chennai is liable to tax under section 7-A as per decision reported in 120 STC Page 493. (Sd.) Arun Ramanathan, Special Commissioner and Commissioner of Commercial Taxes. (underlining in original) 56. As noticed, in support of its conclusion that the revenue cannot refusethe benefit of Clarifications dated 09.11.1989 and 27.12.2000 to the assessee, the High Court has relied upon various decisions including that of the Constitution Bench of this Court in the case of Dhiren Chemical Industries (supra). The learned counsel for the assessee has additionally relied upon several other decisions as mentioned hereinbefore. On the other hand, it is contended on behalf of the revenue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the case of Kalyani Packaging Industries v. Union of India: (2004) 6 SCC 719. The Constitution Bench observed and noted as follows:- 3. In Kalyani Packaging Industry v. Union of India it was noted as follows: (SCC p. 721, para 6) 6. We have noticed that para 11 of Dhiren Chemical case is being misunderstood. It, therefore, becomes necessary to clarify para 11 of Dhiren Chemical case. One of us (Variava, J.) was a party to the judgment of Dhiren Chemical case and knows what was the intention in incorporating para 11. It must be remembered that law laid down by this Court is law of the land. The law so laid down is binding on all courts/tribunals and bodies. It is clear that circulars of the Board cannot prevail over the law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemical case because of the circulars of the Board in many cases the Department had granted benefits of exemption notifications. It was submitted that on the interpretation now given by this Court in Dhiren Chemical case the Revenue was likely to reopen cases. Thus para 11 was incorporated to ensure that in cases where benefits of exemption notification ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed in the binding decision of this Court or the High Court is to be given effect to; and no direction can be issued to enforce a clarification or circular contrary to the declaration of law by the Courts. 59. In view of the above, the decisions relied upon by the learned senior counsel for the assessee do not require much dilation. However, we may refer to a few representative decisions as infra. 59.1. In the case of Trans Asian Shipping (supra), reference to the circular was made by this Court only after declaration of law while indicating that the circular clarified the need and essence of the provisions when such circular was issued contemporaneously by the Central Board of Direct Taxes with introduction of the provisions of Section 115-VF and 115-VG in the Income Tax Act, 1961. As regards the circular, this Court observed as under :- 30. We would also like to refer to Circular No.05/2005 dated 15-7-2005 explaining the need and essence of the introduction of these provisions which was issued contemporaneously by the Central Board of Direct Taxes (CBDT). The Circular clarifies that the Scheme is a preferential regime of taxation . It also clarifies that charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to be those authorised by Section 28-A, they cannot have any effect over and above the interpretation of Section 7-A of the Act by the Courts. In other words, applicability of Section 7-A to the turnover in question could only be decided on the interpretation of the provision and its application to the given fact situation and not on the basis of Clarifications/Circulars in question. Put differently, the so-called Clarifications dated 09.11.1989 and 27.12.2000 had not been of explaining the meaning of any doubtful term or expression in the statutory provision nor they were explaining the object and purport of the provision concerned. The said Clarifications/Circulars had merely been the expression of the understanding of the concerned officer, be it SCCT or PCCT, about operation of Section 7-A of the Act vis- -vis the purchase turnover of the empty bottles purchased by the assessee. However, such understanding of the officer concerned turns out to be a pure misunderstanding, when it stands at contradiction or incongruous to the declaration of law by the Courts; and could only be ignored. The latest Circular of the year 2002, issued after decision of the jurisdictional Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supplied or otherwise disposed of in any of the ways referred to in clause (n), by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea, and rubber (natural rubber, latex and all varieties and grades of raw rubber) grown within the State by himself or on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. *** *** *** Explanation (2) Subject to such conditions and restrictions, if any, as may be prescribed in this behalf- *** *** *** (iii) any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover; *** *** *** 65.2. In view of the clear phraseology of the above extracted Explanation, not much of discussion appears requisite as regards this issue that has rightly been decided by the High Court in favour of the assessee and not much of seri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions) Nos. 1667,1669, 1857 of 2008 and 13 of 2009 before the High Court. The High Court, by its impugned common order dated 05.12.2013, has partly allowed the said petitions while deciding the issues pertaining to penalty in favour of the assessee but, has dismissed the same in relation to the levy of purchase tax under Section 7-A of the Act. In regard to the issue of purchase tax, the High Court relied on the reasoning given in its earlier order dated 10.09.2004 for assessment year 1996-97, which we have taken note of hereinbefore. The assessee has, therefore, assailed the said common order dated 05.12.2013 insofar as the High Court has confirmed its liability towards purchase tax under Section 7-A of the Act for the aforesaid assessment years 1986-87, 1987-88, 1988-89 and 1989-90 in Civil Appeal Nos. 4416-4419 of 2014. 70. What has been discussed and held hereinbefore in relation to order dated 10.09.2004, equally applies to this set of appeals too. Therefore, the High Court has rightly decided the issue of levy of purchase tax against the assessee in its order dated 05.12.2013 and no case for interference at the instance of the assessee is made out. 71. Accordingly, Civi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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