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TMI Blog1996 (4) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... long as recognition certificates referring to full exemption granted to them remained in force, the liability of tax could not be altered and tax at the rate of two per cent could not be legally imposed on them by the impugned notification. The recognition certificates in that bunch of writ petitions were operative till the end of the year 1995-96 and, therefore, the petitioners pleaded that until the expiry of the year 1995-96, the petitioners could not be made liable to pay tax at the rate of two per cent. Then the court held that exemption or concession is not granted by a recognition certificate and that merely contains the conditions governing the exemption, but exemption, in fact, is granted by virtue of a notification issued by the State Government from' time to time. Taking such a view, the contentions of the petitioners in the entire bunch of writ petitions were rejected and the impugned notification was held to be valid. 4.. Sri M.G. Ramchandran, learned counsel for the instant petitioners, says that he wants to challenge the impugned notification wholly from a different angle and not on the ground commonly advanced on behalf of the petitioners in the aforesaid bunch o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him, in the State of any notified goods, or in the packing of such notified goods manufactured or processed by him, and such notified goods are intended to be sold by him in the State or in the course of inter State trade or commerce or in the course of export out of India, he may apply to the assessing authority in such form and manner and within such period as may be prescribed, for the grant of a recognition certificate in respect thereof, and if the applicant satisfies such requirements including requirement of depositing late fee and conditions as may be prescribed, the assessing authority shall grant to him in respect of such goods a recognitions certificate in such form, and subject to such conditions, as may be prescribed. Whereas sub-section (1) of section 4-B refers to exemption, sub-section (2) of section 4-B refers to the grant of a recognition certificate. Explanation to sub-section (2) which is also relevant, is reproduced below: "For the purposes of this sub-section, (a) goods required for use in manufacture shall mean raw materials, processing materials, machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub-assemblies, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... August 29, 1987. (3) The impugned notification classifies all manufacturers and all raw materials used in the manufacture of any goods into one class, notwithstanding the difference between them. Such classification being contrary to the objects of section 4-B and the scheme of the Act is arbitrary. (4) The words "notified goods" occurring in sub-section (2) of section 4-B are very significant and the requirement of the goods being notified is not a mere formality, but a condition precedent to give reliefs to those who hold recognition certificates under section 4-B. But for the requirement of notified goods, the provisions of section 4-B would have been unconstitutional being unguided, unchannelised and arbitrary. Notification of goods excludes arbitrariness and implies application of mind, as goods for the manufacture of which raw material is required by a dealer before being notified have to be selected by the State Government after application of mind. (5) Exemption under section 4-B is not to all manufacturers but to the manufacturers of the notified goods. The impugned notification is invalid, inasmuch as it does not notify the goods. Here itaticised. (6) Radical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those goods to tax at such concessional rate or be wholly or partly exempt from tax whether unconditionally or subject to the conditions and restrictions specified in that behalf as may be notified in the gazette by the State Government in that behalf. The words "any goods" occurring in clause (a) are of great significance. They are not restrictive in nature; rather these words may take within their sweep either "one" or "some" or "all goods". A dealer holding a recognition certificate may be given relief in respect of any goods, liable to tax, meaning thereby, all goods required for use in the manufacture may be selected. When relief under clause (a) of section 4-B(1) can be given in respect of any goods, it logically follows that some or all goods can be correspondingly notified, as envisaged by section 4-B(2). The heading of section 4-B also does not indicate that the relief can be granted only to a few manufacturers. The words "certain manufacturers" occurring in the heading of section 4-B do not mean a few manufacturers. Certain manufacturers mean the manufacturers who are well ascertainable. Assuming that the words "certain manufacturers" mean a few manufacturers, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification are concerned and the latter has been issued in regard to larger number of goods, that is, all the goods excepting the goods manufactured by distilleries and breweries. Entry at serial No. 3 of annexure II to the previous notification dated August 29, 1987 is material for the purposes of this case and that is reproduced below: Sl. No. 3 Rice Paddy Complete exemption was granted in respect of the purchases of paddy which is a raw material for the rice. By the impugned notification, raw materials required for use in the manufacture of all the goods which are notified in a residuary fashion, are subjected to a uniform rate of tax, that is, two per cent. 13. Sri Ramchandran does not argue before us that the impugned notification is bad because it does not enumerate the raw materials required for use in the manufacture of the goods but his submission is that the impugned notification is bad in law, because the goods for the manufacture of which raw material is required by a dealer, have not been notified and that a vague and omnibus notification has been issued without specifying the goods, the manufacturers of which may be entitled to a rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e way as an unreasonable or arbitrary administrative order is quashed by the court. The facts of the case of the Indian Express Newspapers (Bombay) Pvt. Ltd. AIR 1986 SC 515, are quite distinguishable and therefore, we are of the view that the same has been misplaced by Sri Ramchandran before us. In that case the petitioners engaged in the business of printing, editing and publishing newspapers, periodicals and magazines, etc., contended that the imposition of import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it has led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation. The court was of the view that the respondents failed to consider the relevant material and taking the note of the fact that the notification withdrawing the complete exemption would affect the fundamental right of the petitioners, directed the authorities to re-examine the whole issue taking into consideration the relevant materials. No such fundamental right can be claimed in respect of paddy in which business transactions are held by the petitioners like other ordinary commercial transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Exemption implies that the goods are taxable, Exemption can be claimed only when it is granted. No one can as a matter of right ask for exemption. Simply because paddy was exempt under the previous notification dated August 29, 1987, the petitioners could have no grievance if exemption is completely withdrawn or purchases of paddy are subjected to tax. So long as the power to grant exemption is exercised within the scope of section 4-B, which we think it was so exercised, challenge to the impugned notification cannot be sustained. 20.. In the past, the goods required for use in the manufacture of notified goods by a manufacturer, were either fully exempt or were subjected to tax at varying rates. To obviate fiscal complications and to rationalise and simplify he tax structure, the State Government thought it fit to issue the impugned notification to bring about uniformity in the tax rate. The uniform tax rate removes the distinction and such a step, unless the fact-situation warrants otherwise is always consistent to article 14 of the Constitution and that cannot be branded arbitrary in any way. 21.. Lastly, we fail to understand the wisdom of the petitioners in filing this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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