1954 (3) TMI 52 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction and validity of orders under the Assam Sales Tax Act, 1947.
2. Exemption of chira and muri from sales tax under Schedule 3 of the Assam Sales Tax Act.
3. Interpretation of the term "cereals" and "forms of rice" in the context of the Assam Sales Tax Act.
4. Availability and adequacy of remedies under Article 226 of the Constitution.

Detailed Analysis:

1. Jurisdiction and Validity of Orders:
The petitioner, a registered dealer, challenged the orders dated 29th March 1952 and 20th August 1952, which imposed sales tax on chira and muri. The petitioner argued that these orders were without jurisdiction as chira and muri should be exempt from taxation under Schedule 3 of the Assam Sales Tax Act, 1947. The Superintendent of Taxes and the Assistant Commissioner of Taxes held that chira and muri were "products of rice" and not "forms of rice," thus not exempt from taxation.

2. Exemption of Chira and Muri from Sales Tax:
The primary legal question was whether chira and muri fell under the exemption provided for "all cereals and pulses including all forms of rice" in Schedule 3 of the Assam Sales Tax Act. The Commissioner of Taxes opined that chira and muri should be considered "forms of rice" and thus exempt. However, the Assistant Commissioner and the Superintendent of Taxes disagreed, classifying them as "products of rice." The Court had to determine if these items retained their character as cereals despite undergoing processes like boiling and frying.

3. Interpretation of "Cereals" and "Forms of Rice":
The Court emphasized that taxation exemptions must be strictly construed. It noted that the term "cereal" broadly includes "grain used as food," and chira and muri, despite undergoing simple processes, still retained their character as cereals. The Court found the argument that these items were merely different forms of rice compelling, concluding that "forms of rice" in Schedule 3 should include these items. The Court rejected the narrower interpretation that "forms" referred only to varieties of rice, such as broken rice or rice flour, as it would unduly limit the exemption's scope.

4. Availability and Adequacy of Remedies under Article 226:
The petitioner argued that the Commissioner erroneously referred the matter to the High Court instead of exercising his revisionary powers under Section 31 of the Assam Sales Tax Act. The Court acknowledged that the petitioner had no other remedy left as the application for revision had become time-barred. The Court held that the failure to specifically move under Section 31 should not deprive the petitioner of relief, especially since the Commissioner had already examined the records and formed an opinion favoring the petitioner. The Court found that the petitioner's conduct was diligent and bona fide, justifying the issuance of a writ under Article 226 of the Constitution.

Conclusion:
The Court concluded that chira and muri should be considered "forms of rice" and thus exempt from sales tax under Schedule 3 of the Assam Sales Tax Act. The orders imposing tax were quashed as illegal and void. The Court emphasized that the language of the statute should be construed broadly to fulfill its remedial purpose, and any ambiguity should benefit the taxpayer. The petitioner's application under Article 226 was allowed, but no costs were awarded due to the petitioner's initial failure to move under the correct section.