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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 ..... 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 is not less than the turnovers specified in the said sub-sections, whether or not the whole or any portion of such turnover is liable to tax under any other provisions of this Act, shall be liable to pay tax. . . " Under section 8-A of the KST Act, the State Government has given exemption of the tax. Section 8-A reads as under: "Section 8-A. Power of State Government to notify exemptions and reductions of tax.-(1) The State Government may, by notification, make an exemption, or reduction in rate, in respect of any tax payable under this Act. . . " In pursuance to section 8-A, the Government of Karnataka issued notification dated March 31, 2001. The said Notification reads as under: "Sl. No. 834 NOTIFICATION No. FD 97 CSL 2001(7), No. 660, dated March 31, 2001 Karnataka Gazette, Extraordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation 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 Sales Tax Act, 1957 which empowers the Commissioner of Commercial Taxes to clarify with regard to rate of tax payable under the Act, if he considers it necessary or expedient so to do for the purpose of maintaining uniformity in the work of assessments and collection of revenue. It was considered that the clarification as sought by the petitioner-association was within the scope of the aforesaid provision and accordingly a clarification was issued. However, the matter has now come up for reconsideration in view of the interpretation of the Government Notification No. FD 54 CSL 2002(4) dated March 30, 2002 as given to it by the Accountant- General. There is now, therefore a need to re-examine in greater detail the matter with regard to applicability of the said notification to computer parts. Hence, the following: Clarification No. CLR.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 falling under entry 20 of Part "C" of the Second Schedule of the Karnataka Sales Tax Act by legal fiction and are exempted from levy of turnover tax payable under section 6-B of the KST Act. The division Bench quashed the circular instructions issued by the Commissioner of Commercial Taxes of Karnataka dated December 31, 2004. The division Bench adjudicated several questions of law in the impugned judgment, but we are confining our judgment to the main controversy in the case regarding liability of the respondents to pay the turnover tax on parts of computer and computer peripherals. The respondents-assessees submitted before the division Bench that parts of computer and computer peripherals were exempted from payment of turnover tax by a dealer under section 6-B of the KST Act. The High Court did not accede to the submission of the appellants that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, 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 Legislature, by means of legal fiction or definition, intended to treat the parts of computer as computers, in that context the words "and their parts" occurring immediately after specific reference to "main-frame, mini, personal micro- computers and the like" should be understood that the parts of computers were also treated as computers by legislative intendment. For proper construction, we deem it necessary to explain how the word "namely" has been described in various dictionaries. In Black's Law Dictionary, Fifth Edition, the word "namely" has been stated as "a difference, in grammatical sense, in strictness exists between the words "namely" and "including". Namely imports interpretation, i.e., indicates what is included in the previous term; but including imports addition, i.e., indicates something not included". In Webster's Encyclopedic Unabridged Dictionary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 belonging to a section of citizens, the language of which is English namely Anglo-Indians and citizens of Non-Asiatic descent. The learned Attorney-General contended that this clause did not limit admission only to Anglo-Indians and citizens of non-Asiatic descent, but permits admission of pupils belonging to any other section of citizens the language of which is English. The learned counsel for the respondents pointed out that one of the meanings of the word 'namely', as given in the Oxford English Dictionary, Volume VII, p.16 is 'that is to say' and he then refers to the decision of the Federal Court in Bhola Prosad v. Emperor reported in AIR 1942 FC 17, where it was stated that the words 'that is to say' were explanatory or illustrative words and not words either of amplification or limitation. It should, however, be remembered that those observations were made in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters 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 peripherals, whether in the light of the language employed in the exemption notifications referred to in the preceding paragraphs of the judgment are parts of computer and computer peripherals are also exempted from levy of turnover tax. The reading of exemption notifications, in that context, makes it clear that it is intended to give exemption to all the items of computers and their parts. This is clear from the fact that the notifications grant exemption to computers, computer peripherals, computer consumables and computer cleaning kits falling under Sl. No. 20 of Part "C" of the Second Schedule to the Act. The same is the language employed in the notifications. The exemption notifications intended to exempt all the items referred to in Sl. No. 20 of Part "C" of the Second Schedule and the intention was not to grant exemption for all items referred to in Sl. No. 20 of Part "C" of the Secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 Excise Rules, 1944 by the Central Government exempting levy of excise duty in respect of "tar", falling under item 11(5) of the First Schedule to the Central Excises and Salt Act, 1944, that the meaning of "tar" has to be gathered from the tariff description given in clause 5 of tariff item No. 11 and, therefore, "tar" will include everything which has been included in the extended definition. It is useful to refer to the observations made at paragraph 4 of the judgment, which read as under: "4. The exemption notification exempts 'tar' falling under item 11 of the First Schedule to the Central Excises and Salt Act, 1944. The meaning of 'tar' has to be gathered from the Tariff description given in clause (5) of Tariff item 11. An inclusive definition has been given to 'tar' which includes 'partially distilled tars and blends of pitch with creosote oils or with other coal tar distillation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 to promote information technology industry in the State by attracting a large number of investors into the State and setting up of information technology industries and provide job opportunities to a large number of youth as aptly observed in the impugned judgment. When that being the object of exemption notifications issued under section 8-A of the Act and various items referred to in Sl. No. 20 of Part "C" of the Second Schedule have been granted exemption even if it is assumed that the things are not made clear in the exemption notifications, it is fair and reasonable to place the construction which is beneficial to the assessee by exempting levy of tax on parts of computer and computer peripherals. In the instant case, all the assessing authorities except one have taken the view ever since the year 1997-98 that parts of computer and computer peripherals are exempted from levy of tax. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (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 nevertheless entitled to considerable weight; it is highly persuasive.' The validity of this rule was also recognised in Baleshwar Bagarti v. Bhagirathi Dass [1908] ILR 35 Cal. 701 where Mookerjee, J. stated the rule in these terms: "It is a well-settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. and this statement of the rule was quoted with approval by this court in Desh Bandhu Gupta and Co. v. Delhi Stock Exchange Association Ltd. [1979] 4 SCC 565. It is clear from these two circulars that the Central Board of Direct Taxes, which is the highest authority entrusted with the execution of the provisions of the Act, understood sub-section (2) as limited to cases where the consideration for the transfer has been understated b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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