2016 (9) TMI 721 - SC - VAT and Sales Tax

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 inter-State sales under the notification dated 21.01.2000 is disqualified and not eligible 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. Both the assessee and the Revenue had understood the circular dated 15.04.1994 to mean that inter-State transactions would qualify and would 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, 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 restricted the notification to the determent of the assessee. The decision in the case Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries 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 Once circular dated 15.04.1994 stands withdrawn vide circular dated 16.04.2001, the appellant-assessee cannot claim the benefit of the withdrawn circular. The circular dated 15.04.1994 was ambiguous and, therefore, as long as it was in operation and applicable possibly doctrine of contemporanea exposition could be taken aid of for its applicability. It is absolutely clear that the benefit and advantage was given under the circular and not under the notification dated 07.03.1994, which was lucid and couched in different terms. The circular having been withdrawn, the contention of contemporanea exposition 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.

Summary

Issues Involved:
1. Eligibility for partial exemption under the notification dated 06.05.1986.
2. Validity of reassessment notices for excluding levy cement sales.
3. Applicability of the circulars dated 15.04.1994 and 16.04.2001.
4. Dual benefit under notifications dated 06.05.1986 and 21.01.2000.
5. Interpretation of the notifications and circulars.

Detailed Analysis:

1. Eligibility for Partial Exemption under Notification Dated 06.05.1986:
The appellant, a Public Limited Company, sought partial exemption from sales tax on inter-State sales of Grey Portland Cement under Notification No. F4(72)FD/Gr.IV/81-18 dated 06.05.1986. This notification allowed partial exemptions at rates of 50% and 75% based on the increase in inter-State sales and decrease in stock transfers. However, the benefit was not available on levy cement. The appellant had been granted this benefit from the assessment year 1989-90 to 1997-98, except for 1995-96 and 1996-97.

2. Validity of Reassessment Notices for Excluding Levy Cement Sales:
Disputes arose for the assessment years 1997-98, 1999-2000, and 2000-2001 regarding whether the sale of levy cement in the base year (1984-85) should be included for calculating benefits under the notification dated 06.05.1986. The reassessment notices issued to the appellant were challenged and formed the subject matter of various writ petitions. The Rajasthan High Court dismissed some of these petitions, and appeals were pending.

3. Applicability of Circulars Dated 15.04.1994 and 16.04.2001:
The CCT issued Circular No. 2/94-95 dated 15.04.1994, clarifying that inter-State sales of cement supported by 'C' and 'D' forms were eligible for partial exemption under the notification dated 06.05.1986. However, Circular No. 94-95/119 dated 16.04.2001 withdrew the earlier circular, stating that a dealer could avail benefits of either the notification dated 06.05.1986 or the notification dated 21.01.2000 in any financial year but not both.

4. Dual Benefit under Notifications Dated 06.05.1986 and 21.01.2000:
The central issue was whether the appellant could claim dual benefits under both notifications. The notification dated 21.01.2000 allowed a lower tax rate of 6% on inter-State sales of cement but precluded claiming benefits under the notification dated 06.05.1986. The Court held that the language of the notifications was clear and did not allow dual benefits. The intention was to prevent distortion and anomalies in turnover calculations.

5. Interpretation of the Notifications and Circulars:
The Court analyzed the language and purpose of the notifications and circulars. It was evident that the notification dated 06.05.1986 aimed to encourage inter-State sales by offering partial exemptions based on increased sales. The notification dated 21.01.2000 provided a concessional tax rate but explicitly stated that benefits under the earlier notification could not be claimed simultaneously. The Court rejected the appellant's argument for a liberal interpretation allowing dual benefits, emphasizing that the language of the notifications was unambiguous.

Conclusion:
The Supreme Court dismissed the appeal, holding that the appellant was not entitled to dual benefits under the notifications dated 06.05.1986 and 21.01.2000. The Court affirmed that the circular dated 15.04.1994, which was withdrawn, could not be relied upon, and the principle of contemporanea exposition was not applicable. The judgment emphasized the clear and plain language of the notifications, which precluded simultaneous benefits.