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TMI Blog2006 (12) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... or Advocate, N.N. Harish, T.N. Keshava Murthy and P.R. Ramasesh Advocates for the respondents. Sanjay R. Hedge, Advocate for the appellants. -------------------------------------------------- The judgment of the court was delivered by DALVEER BHANDARI J. These appeals are directed against the judgments of the division Bench of the High Court of Karnataka at Bangalore dated September 1, 2005 See [2006] 147 STC 269 (Karn). passed in Writ Appeal No. 1931 of 2005 and dated October 24, 2005 passed in Writ Appeal No. 2383 of 2005. The controversy in both these appeals is identical, therefore, both the appeals are disposed of by common order. For the sake of convenience, we are referring to the facts of Civil Appeal No. 1120 of 2006. The respondents are registered as dealers under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the KST Act"). Under section 6-B of the KST Act, turnover tax is imposed. Section 6-B reads as under: "Section 6-B. Levy of turnover tax. (1) Every registered dealer and every dealer who is liable to get himself registered under sub- sections (1) and (2) of section 10 whose total turnover in a year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kits, plotters, modem and their parts." It would be relevant to mention that the Commissioner of Commercial Taxes, Karnataka, issued a clarification dated December 15, 2004 clarifying that parts of computer and parts of computer peripherals were not liable to payment of turnover tax by virtue of exemption notifications issued under section 8-A of the KST Act. This clarification issued under section 3-A(2) of the KST Act was withdrawn by the Commissioner of Commercial Taxes, Karnataka, on December 23, 2004 which reads as under: "Proceedings of the Commissioner of Commercial Taxes (Karnataka), Bangalore, under section 3-A(2) of Karnataka Sales Tax Act, 1957 Sub: KST Act, 1957 Clarification under section 3-A(2) Regarding RST on 'computer parts'. Ref.: (1) Application dated November 26, 2004 of the Vice President, Association for Information Technology, 15/13 Floor, Dickenson Road, Bangalore. (2) This office proceedings vide No. CLR.CR.157/04-05, dated December 15, 2004. In the application cited above, the respondents-association has sought clarification on turnover tax applicable to computer parts. The matter was examined with reference to section 3-A(2) of the Karnataka Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and March 30, 2002 and also sought for a direction that turnover tax is exempted on the sale of parts of computer and parts of computer peripherals as per the said Government notifications issued under section 8-A of the KST Act. The respondents filed Writ Petition Nos. 5158-5161 of 2005 before the learned single Judge of the Karnataka High Court, who vide order dated February 10, 2005 See [2006] 147 STC 98 (Karn). dismissed the writ petition as not maintainable since the dealers had not exhausted the alternate remedy available to them under the statute before filing writ petitions under article 226 of the Constitution. The respondents aggrieved by the order of the learned single Judge filed a Writ Appeal No. 1931 of 2005 See [2006] 147 STC 269 (Karn). before the division Bench of the Karnataka High Court. In the meantime, during the pendency of the writ appeal, re-assessment orders were passed by the assessing authority confirming the levy of turnover tax on parts of computer and parts of computer peripherals. The division Bench in the impugned judgment has held that parts of computer and parts of computer peripherals are to be treated as computers and computer peripherals f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd micro-computers have been exempted from payment of tax under section 8-A of the KST Act. Immediately after the description of various types of computers, the words "and the like" and the words "and their parts" are referred to. The question was whether the words "and their parts" following the words "and the like" were to be read conjunctively as contended by the respondents or disjunctively as contended by the appellants and should they be excluded from the definition of "computer"? It is not proper to read the words "and their parts" disjunctively. The legislative intention becomes clear when these words are read conjunctively. On proper construction of the statute, it would be reasonable to take the view, by legal fiction, that the Legislature, for the purposes of levy of tax under the KST Act wanted parts of computer also to be treated as computers. Similarly, when the appellants in exercise of its powers under section 8-A of the KST Act exempted computers from payment of tax, the parts of computer are also exempt from payment of tax. The computers are produced by assembling various parts or configuration. Therefore, for the purpose of levy of turnover tax, if the Legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat follows with the clause described before. Further, the word "namely" has also been explained in the said decision and also in the Oxford English Dictionary as "that is to say". In this connection, it is useful to refer to the observation made by the court in paragraph 12 of the judgment which reads as under: "12. Re(1): As already indicated Barnes High School is a recognized Anglo-Indian School which has all along been imparting education through the medium of English. It receives aid out of State funds. The daughter of Major Pinto and the son of Dr. Gujar are citizens of India and they claim admission to Barnes High School in exercise of the fundamental right said to have been guaranteed to them by article 29(2) of the Constitution. The school has declined to admit either of them in view of the circular order of the State of Bombay. The provisions of the circular order, issued by the State of Bombay on the January 6, 1954, have already been summarised above. The operative portion of the order, set forth in clause 5 thereof, clearly forbids all primary or secondary schools, where English is used as a medium of instruction, to admit to any class any pupil other than a pupil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2753), it is observed: "That is to say. (1) 'That is to say' is the commencement of an ancillary clause which explains the meaning of the principal clause. It has the following properties: (1) it must not be contrary to the principal clause; (2) it must neither increase nor diminish it; (3) but where the principal clause is general in terms it may restrict it." The quotation, given above, from Stroud's Judicial Dictionary shows that, ordinarily, the expression "That is to say" is employed to make clear and fix the meaning of what is to be explained or defined. Such words are not used, as a rule, to amplify a meaning while removing a possible doubt for which purpose the word "includes" is generally employed. In view of the ratio of various judgments and on plain construction of the statute, it is clear that parts of computer, by legal fiction, need to be treated as computers under Sl. No. 20(i) of Part 'C' of the Second Schedule to the Act. When parts of computer and computer peripherals are treated as "computers and computer peripherals", there cannot be any doubt that parts of computer and computer peripherals are not to be treated as computer and computer periphera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94] 6 SCC 465, the question that came up for consideration before this court was, as to what is the true meaning and purport of notification issued by the Central Government under rule 8(1) of the Central Excise Rules, 1944 which exempted the goods falling under item 68 of the First Schedule to the Central Excises and Salt Act, 1944 manufactured in a factory as a job work from exemption of duty of excise leviable thereon as is in excess of the duty calculated on the basis of the amount charged for the job work. While considering the said question, after referring to the cleavage of opinion expressed by various High Courts and various Benches of Customs, Excise and Gold Appellate Tribunal, this court held that once an expression is defined in the Act, that expression wherever it occurs in the Act, Rules or Notifications issued thereunder, should be understood in the same sense. In the case of Steel Authority of India Ltd. v. Collector of Central Excise, Bolpur, West Bengal reported in [1997] 10 SCC 335, this court took the view, while considering the question as to what is the meaning that is required to be given to the exemption notification issued under rule 8(1) of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no material on record to show that this has been rescinded or departed from, and even so, to what extent. Even assuming that the later tariff advice No. 6 of 1985 has taken a different view about which there is no positive material the facts point out that the concerned department itself was having considerable doubts about the matter. The position was not free from doubt. It was far from clear. In such a case, where two opinions are possible, the assessee should be given the benefit of doubt and that opinion which is in its favour should be given effect to." In the instant case, computer, computer peripherals, computer consumables, computer cleaning kits and computer software are exempted from levy of turnover tax. Under these circumstances, even assuming for the sake of argument that the exemption notifications and circulars do not clearly specify as to whether they are exempted from turnover tax, it is not possible to take the view in the background in which exemption notifications came to be issued that the State would have picked up only computer parts and parts of computer peripherals for levy of tax. Obviously, the intention of the State in granting exemption is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guous. It is useful to refer to the observation made by the court, which reads as under: "These two circulars of the Central Board of Direct Taxes are, as we shall presently point out, binding on the Tax Department in administering or executing the provision enacted in sub-section (2), but quite apart from their binding character, they are clearly in the nature of contemporanea expositio furnishing legitimate aid in the construction of sub-section (2). The rule of construction by reference to contemporanea expositio is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. This rule has been succinctly and felicitously expressed in Crawford on Statutory Construction (1940 Edn.) where it is stated in paragraph 219 that 'administrative construction (i.e., contemporaneous construction placed by administrative or executive officers charged with executing a statute) generally should be clearly wrong before it is overturned; such a construction, commonly referred to as practical construction, although non-controlling, is nevertheles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be appropriate to hold that parts of computer and its peripheral are also exempted from payment of tax; 3.. The language employed in the exemption notifications and items in respect of which exemption was granted had to be understood in the context in which exemption notifications were issued; 4.. The rule of construction by reference to contemporanea expositio is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authorities. When language of the statute is plain and unambiguous, the method of contemporanea expositio need not be employed; 5.. It is well-settled that even if it is assumed that the things are not made clear and explicit in the exemption notifications, it is proper and reasonable to place the construction which is beneficial to the assessee by exempting levy of tax on parts of computer and computer peripherals; 6.. It is our duty and obligation to properly comprehend legislative intention while constructing the Statute. In the instant case, computer, computer peripherals, computer consumables, computer cleaning kit and computer software are exempted from the levy of tax. To reach the concl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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