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TMI Blog2009 (11) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... om mentha oil. Rest of the petitioners are rice millers and purchase paddy for the purposes of manufacturing rice out of it. Except Writ Petition No. 1390 of 2007, all the nine writ petitions have been filed against the orders passed by the authority concerned on various dates relating to different assessment years ranging 2000-01 to 2005-06 under section 21(2) of the Act granting permission to reopen the assessment on the basis of a judgment of the apex court in Monga Rice Mill v. State of Haryana [2004] 135 STC 549; [2004] 24 NTN 545; [2004] UPTC 782. The arguments were advanced with reference to the facts of Writ Petition No. 419 of 2007. Therefore, the facts of the said writ petition may be noticed. Regular assessment for the assessment year 2000-01 was completed under rule 41(5)/section 9(2) of the Central Sales Tax Act, 1956. In the assessment proceedings, the claim of the dealer that it purchased mentha oil for the purposes of manufacturing menthol and the purchases of mentha oil were exempted totally under the notification dated February 12, 1999 was accepted. Besides the export sale of menthol, the dealer also claimed exemption from trade tax on the turnover of 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The initiation of the proceedings under section 21 of the Act has been sought to be justified on the ground that in view of the judgment of the apex court in the case of Monga Rice Mill [2004] 135 STC 549; [2004] 24 NTN 545; [2004] UPTC 782, the petitioner is not entitled for exemption of purchase tax on the purchases of mentha oil, if it sells the manufactured goods to the exporter. It has been further stated that the expression export out of India has not been defined under the U.P. Trade Tax Act, therefore, the meaning as assigned to it under sections 3, 4 and 5 of the Central Sales Tax Act shall respectively apply. Further it has been stated that the circular of the Commissioner, Trade Tax is not binding if it is against the provisions of law as has been held by the apex court in Bengal Iron Corporation [1993] 90 STC 47; [1993] UPTC 1312. In the rejoinder affidavit, the contents of the writ petition have been reiterated. Heard Sri Rakesh Ranjan Agrawal, learned counsel for the petitioner and Sri U.K. Pandey, learned standing counsel for the respondents. The learned counsel for the petitioner submits that the decision of the apex court in Monga Rice Mill [2004] 135 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H, has complied with the conditions of section 4B and the notification issued thereunder in respect of the purchases of such raw materials granting total exemption or the concessional rate of tax. At the outset, it would be advantageous to have a clear picture of section 4B of the Act and the relevant notification issued thereunder. Heading of the said section gives sufficient indication that the Legislature by way of section 4B has provided special relief to certain manufacturers. It provides special relief to the manufacturer of notified goods of concessional rate of tax or exemption from tax on purchases of raw materials and packing materials, etc., for use in the manufacture of notified goods. The said section gives an overriding effect on other sections, namely, sections 3, 3A, 3AAAA and 3D. In the case on hand, there is absolutely no dispute that the recognition certificates were rightly granted to the petitioners for the manufacture of menthol/rice which are notified goods and each of them were entitled to purchase raw materials, i.e., mentha oil or paddy without paying tax thereon as per terms of section 4B. Sub-section (2) of section 4B, excluding the Explanation pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sub-section (7) of section 4B of the Act which provides that for determining whether a sale or purchase is in the course of inter-State trade or commerce, within the State, or in the course of export out of India, the provisions of sections 3, 4 and 5 of the entral Sales Tax Act shall respectively apply. Indisputably, the above notification, being Notification No. 289 dated February 12, 1999, which falls for consideration before this court, was issued in exercise of powers conferred under section 4B of the Act. The said notification is in the nature of subordinate piece of legislation as it has been issued by the executive and not by the State Legislature. The notification in the case of any ambiguity will have to be read and understood in the light of the contents of section 4B of the Act. What meaning should be assigned to the words exported out of India can be gathered from the language employed in section 4B of the Act. Its sub-section (2), already reproduced above, in no uncertain terms provides that the notified goods are to be sold by the dealer locally or in inter-State sale or in the course of export out of India. The words in the course of export out of India ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export. To constitute a purchase exempt from State purchase tax, the purchase must occasion export. The question which we have to decide in these civil appeals is: whether purchase of paddy by the appellant (miller), who procures rice from it and sells the rice to the exporter is purchase which occasions export or is it a purchase for export? Section 5(1) of the 1956 Act exempts export sales. There are three categories of sales, namely, local sale, inter-State sale and export sale. Section 5(1), therefore, covers direct export whereas section 5(3) covers last sale or purchase preceding direct export which is deemed to be in the course of export. The last sale or purchase preceding the direct export is deemed to be in the course of export as the two are so closely connected that breach of one may result in breach of composite contract. It is for this reason that section 5(3), inter alia, requires such sale or purchase transactions being entered into after and in compliance with the export order being placed by the foreign buyer. The underlying rationale of section 5(3) is that such penultimate sale or purchase must occasion export in order to constitute sale or purchase in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was involved. The distinction pointed out by the learned counsel for the petitioner is a distinction for the sake of distinction and carry no force. At the end the learned counsel for the petitioner has referred following cases for the proposition that the circular interpreting notification is binding on the authorities: (1) Commissioner of Sales Tax, U.P. v. Indra Industries [2001] 122 STC 100 (SC); [2001] 248 ITR 338 (SC); [2000] UPTC 472. (2) ES. Kay Remedies v. State of Uttar Pradesh [2004] 138 STC 389 (All); [2003] UPTC 254. The said submission, on the facts of the present case, does not hold good for the simple reason that the circular dated February 6, 2004 issued by the Commissioner, Trade Tax and relied upon by the learned counsel for the petitioner is anterior in point of time to the judgment of the apex court in Monga Rice Mill [2004] 135 STC 549; [2004] 24 NTN 545; [2004] UPTC 782. The said judgment is dated April 13, 2004, being subsequent to the circular, will have precedence over the circular. The Constitution of India provides that law declared by the Supreme Court shall be binding on all. This being so, even if there is a conflict in between a circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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