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TMI Blog2007 (4) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... y the clarification No.91/2000, D.Dis.Acts Cell II/52300/2000, dated 4.10.2000 issued by the Revenue to the effect that the stock transfer of turmeric to other States is liable to purchase tax under Section 7-A of the Act if it is purchased from unregistered dealers within the State; that purchase tax under Section 7-A of the Act is leviable only if the turnover of the dealer under the Act exceeds Rupees Three hundred crores in a year; that the exemption granted under Third Schedule to the Act is not a general exemption, but on conditional that the sale of turmeric by a dealer whose turnover exceeds Rupees three hundred crores per year does not fall under Third Schedule; that since there is no other entry in the Schedules, such dealers are liable to pay tax at 11% under Entry 67 of Part- D of the First Schedule; and that turmeric in any form such as balls, fingers and powder continue to be the same commodity, if tax was paid in one stage, the subsequent change in forms will not attract sales tax since it is only second sale of the tax suffered commodity. 2. Concededly, the Revenue issued show causes notices to the dealers, who have escaped assessment of purchase tax and have purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F INDIA LTD., [2002] 256 ITR 1 (Delhi); viii.COLLECTOR OF CENTRAL EXCISE, VADODRA v. DHIREN CHEMICAL INDUSTRIES, [2002] 126 STC 122 (SC); ix. COLLECTOR OF CENTRAL EXCISE, VADODARA v. DHIREN CHEMICAL INDUSTRIES, [2002] 143 ELT 19 (SC); and x. COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN OIL CORPORATION LTD., [2004] 165 ELT 257 (SC). 3.3. Mr.C.Natarajan, learned Senior Counsel also relied on the decision of the First Bench of this Court in an unreported judgment dated 19.9.2006 in W.A.No.1101 of 2006, etc (between Om Plastics and The Deputy Commercial Tax Officer), and also the decision of this Bench in INDIA CEMENTS LTD. v. ASST. COMMISSIONER (CT), [2007] 6 VST 140 whereunder the applicability of the circular and clarification issued under Section 28-A of the Act was dealt with and the ratio laid down by the Apex Court and other High Courts on the point, as followed in Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer (139 STC 477), was referred to. 3.4. According to Mr.C.Natarajan, learned Senior Counsel, as the circular and the clarification referred to above, were in existence during the relevant period, in view of the settled proposition of law that the circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28-A of the Act refers to only the clarifications relating to the rate of tax, but not with reference to the exemption of any tax. 5. We have given careful consideration to the submissions of both sides. 6. Before proceeding further, it is apt to refer Sections 2(ooo), 2(q), 2(r) , 7-A, 8, 28-A of the Act and Entry 16 of Part-B of Third Schedule, which read as under: "Section 2(ooo): "tax" means and includes a sales tax, purchase tax, resale tax or surcharge, as the case may be, payable under this Act; Section 2(q): "total turnover" means the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax; Section 2(r): "turnover" means the aggregate amount for which goods are bought or sold, or delivered or 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 3 or 4, as the case may be, (not being a circumstance in which goods liable to tax under sub-section (2) (2-A) or (2-C) of section 3 or section 4, were purchased at a point other than the taxable point specified in Schedule in the First the Fifth, the Eleventh or the Second Schedule respectively and either.- (a) consumes or uses such goods in or for the manufacture of other goods for sale or otherwise, or (b) disposes of such goods in any manner or other than by way of sale in the State; or (c) despatches or carries 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, or (d) installs and uses such goods in the factory for the manufacture of any goods, shall pay tax on the turnover relating to the purchase as aforesaid at the rate mentioned in section 3 or 4, as the case may be. (2) Notwithstanding anything contained in sub-section (1), the provisions of section 7 shall apply to a dealer referred to in sub-section (1) who purchases goods the sale of which is liable to tax under sub- section (1) of section 3 and whose total turnover for a year is not less than one lakh of rupees but not mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are liable to be paid on the whole or any portion of such turnover. 8. The Apex Court, while considering the scope and object of Section 7-A of the Act, in THE STATE OF TAMIL NADU v. M.K.KANDASWAMI & OTHERS, [1975] 36 STC 191, held that the main object of Section 7-A of the Act is to plug leakage and prevent evasion of tax and therefore, while interpreting Section 7-A of the Act, construction which would defeat its purpose and, in effect, obliterate it from the statute book should be eschewed. If more than one construction is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile. 9. With this rule of interpretation, we do not have any hesitation to hold that Section 7-A of the Act is held to be a charging section as well as a remedial one, inasmuch as it levies a tax on the purchases of goods by a dealer from a registered dealer or from any other persons who may be either unregistered dealer or other persons (such as agriculturists and other producers) who are not liable to pay tax under this Act on their sales or purchases. A careful reading of Section 7-A of the Act makes it clear that if the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Section 28-A(1) of the Act deals with the power of the Commissioner of Commercial Taxes on an application by a registered dealer, to clarify any point concerning the rate of tax under the Act, provided such application is accompanied by proof of payment of such fee. 11.3. Section 28-A(2) of the Act confers suo motu power on the Commissioner of Commercial Taxes to issue clarification, if and when he considers it necessary or expedient to do so, the purpose being (i) to maintain uniformity in the work of assessment and collection of tax; (ii) to clarify any point concerning the rate of tax under the Act; and (iii) to clarify the procedure relating to assessment and collection of tax. 12.1. A careful reading of Sections 28-A(1) and 28-A(2) of the Act make it clear that the suo motu power conferred on the Commissioner of Commercial Taxes under Section 28- A(2) of the Act is wider, inasmuch Section 28-A(1) of the Act only empowers the Commissioner of Commercial Taxes to clarify any point concerning the 'rate of tax' under the Act, as applicable to the goods specified in the application, but as per Section 28-A(2) of the Act, the Commissioner of Commercial Taxes has got suo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DINAKARAN,J.), interpreting the power of issuing clarifications u/s.28A of the TNGST Act, held as follows: "....the law is well settled on the point in the light of the following decisions, which are discussed hereunder. 8.6.2. The Apex Court in STATE BANK OF TRAVANCORE v. C.I.T., [1986] 158 ITR 102 held that even though the clarifications issued by the revenue being executive in character cannot alter the provisions of the Act, since they are in the nature of concessions, they can always be prospectively withdrawn. In the instant case, even though the clarification dated 9.11.1989 is executive in nature, the concessions given to the assessee could be withdrawn only prospectively, but not retrospectively because, such executive circulars are binding on the authorities, as held by the Apex Court in KESHAVJI RAVJI & CO. v. COMMISSIONER OF INCOME TAX, [1990] 183 ITR 1. In KESHAVJI RAVJI & CO. v. COMMISSIONER OF INCOME TAX, referred supra, while dealing with Section 119 of the Income Tax Act, which is pari materia to Section 28-A of the Tamil Nadu General Sales Tax Act, the Apex Court held that the benefits of such circulars to assessees have been held to be permissible even tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be heard to advance an argument that is contrary to that interpretation. 8.6.7. In COMMISSIONER OF INCOME TAX v. KELVINATOR OF INDIA LTD., [2002] 256 ITR 1, it was held that the Board has power to issue circulars under Section 119 of the Income Tax Act and it is trite that circulars which are issued by the Central Board of Direct Taxes are legally binding on the revenue. 8.6.8. The Constitution Bench of the Apex Court in COLLECTOR OF CENTRAL EXCISE, VADODRA v. DHIREN CHEMICAL INDUSTRIES, [2002] 126 STC 122, held that if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the revenue. Similar view was taken by the Apex Court in COLLECTOR OF CENTRAL EXCISE, VADODARA v. DHIREN CHEMICAL INDUSTRIES, [2002] 143 ELT 19. 8.6.9. In COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN OIL CORPORATION LTD., [2004] 165 ELT 257, the Apex Court held that the circulars issued by the revenue under Section 37-B of the Central Excise Act, 1944 (which is pari materia to Section 28-A of the Act) are binding primarily on basis of language of statutory provisions buttre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held in COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN OIL CORPORATION LTD., [2004] 165 ELT 257 and PAPER PRODUCTS LTD. v. COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT 765, whereunder the circular relied upon was directly applicable to the case of the dealers therein. But, in these batch of cases, the applicability of the Circular D.Dis.Acts Cell II/75893/99, dated 24.12.1999, as amended by the clarification No.91/2000, D.Dis.Acts Cell II/52300/2000, dated 4.10.2000 itself is disputed by the Revenue, and as the applicability of the circular and clarification referred to above depends on the facts of each case, we are unable to apply the ratio laid down in COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN OIL CORPORATION LTD., [2004] 165 ELT 257 and PAPER PRODUCTS LTD. v. COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT 765. 16. It is true that a dealer, who deals with the goods specified under the Third Schedule of the Act shall not be liable to pay any tax under the Act and the words "any tax" used in Section 8 of the Act includes 'purchase tax'. But, such power to exempt is subject to the restrictions and conditions that may be prescribed. Entry 16 of Part-B of Thir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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