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TMI Blog2009 (7) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... ents that the writ petitions filed challenging the reassessment notice to reopen the assessment is not maintainable as the writ petitions are premature in nature, cannot be sustained. Similarly, the revised orders passed are also bad in law. Admittedly, the second respondent issued the notice to reopen the assessments already finalised based on the clarification of the first respondent dated May 30, 2008. Once the clarification itself is found untenable and also found not having any retrospective effect, the second respondent is not justified in issuing the impugned notices to the petitioner for reopening the already finalised assessments as well as to pass reassessment orders. In view of the said findings the objections raised by the respondents to maintain the writ petition challenging the notices are also untenable.The writ petitions are allowed. - W.P. No. 16867 of 2007 - - - Dated:- 17-7-2009 - PAUL VASANTHAKUMAR N. , J. ORDER:- N. PAYL VASANTHAKUMAR J. In W.P. Nos. 20474 to 20476 of 2008, the petitioners have prayed to quash the clarification issued by the Commissioner of Commercial Taxes dated May 30, 2008, enhancing the rate of tax to 16 per cent from ten per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sudden received revision notice from the respective assessing officer stating that the assessing officers proposed to reopen completed assessments and proposed to reassess the sales turnover of paper based decorative laminated sheets at 16 per cent. In some cases, revised orders were passed. The said show-cause notices/revised orders were issued on the basis of the clarification issued by the first respondent dated May 30, 2008. The said clarification is challenged in W.P. No. 20474 to 20476 of 2008. (e) In all other writ petitions, the petitioners have challenged the show-cause notices/revised orders on the ground that there is no purpose in giving reply to the show-cause notices on reopening the assessment or filing appeal, since the assessing officers relied upon the clarification issued by the first respondents, which is binding on the assessing officers. The jurisdiction of the first respondent in issuing the clarification is also challenged on the ground that the Special Tribunal has given an order as early as on April 12, 1996 and the said order was accepted without challenging the same by the Department. The relevant entry in the TNGST Act, 1959, also has not been ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials or not , tax could be levied on such products at 16 per cent by treating them as falling under entry 8(ii) of Part E in the First Schedule. It is also stated in the counter-affidavit that this was correctly clarified in the clarification dated August 17, 2005 and subsequently reviewed based on the order passed in Balaji Timber Corporation v. State of Tamil Nadu [1997] 105 STC 213 (O.P. No. 120 of 1996 dated April 12, 1996) by the Tamil Nadu Taxation Special Tribunal and the impugned clarification is issued based on the judgments of the Supreme Court above referred and in some cases the already concluded assessments were reopened and show-cause notices were issued and in some cases revised assessment orders were passed. It is further stated in the counter-affidavit that while manufacturing paper based decorative laminated sheets, the paper used in the manufacturing process as raw material completely disappears on the creation of altogether new products and therefore there is no nexus or relation with either paper or board. The law having been declared by the Supreme Court, though under the Central Excise Tariff Act, 1985, the interpretation given by the Supreme Court equall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guity with regard to the collection of tax to the Department with regard to the paper based laminated sheets and the respondents have collected only ten per cent of tax and the benefit of doubt/ambiguity has to be extended to the assessees and on such ground also the impugned show-cause notices/assessment orders, passed after reassessment are liable to be set aside. The learned counsels cited the judgments of the Supreme Court in Binani Industries Limited v. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore reported in [2007] 6 VST 783, Mauri Yeast India Pvt. Ltd. v. State of U.P. [2008] 14 VST 259; [2008] 10 RC 607, MSCO Pvt. Ltd. v. Union of India AIR 1985 SC 76 and Union of India v. R.C. Jain AIR 1981 SC 951 in support of their above said contentions. The learned Special Government Pleader, appearing for the respondents submitted that the Supreme Court having declared the law on the subject giving interpretation with regard to the paper based laminated sheets, though under the entries contained in Central Excise Tariff Act, 1985, the product being the same, the clarification issued by the first respondent stating that the paper based laminated sheets on sale is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entry as existed in Part C of the First Schedule during the years 2002-03, 2003-04, 2004-05, 2005-06 under 22(iv), viz., paper and board laminated, quoted or interlined with other materials are liable for tax at ten per cent. The issue as to whether laminated papers are liable for tax at ten per cent or 16 per cent, came up for consideration before the Tamil Nadu Taxation Special Tribunal in O.P. No. 120 of 1996 (Balaji Timber Corporation v. State of Tamil Nadu [1997] 105 STC 213) and the Tribunal after obtaining the opinion of the Joint Director of Industries and Commerce (Chemical), Chennai 32, (namely expert opinion) held that the paper based resin reinforced decorative sheets (laminated paper as described by the Joint Director of Industries and Commerce) fell under entry 44(v) of Part C year 1994-95 and paper based decorative laminated sheets are taxable at eight per cent. The respondents accepted the said findings and issued clarification on November 12, 1998 by cancelling the earlier clarification issued on April 22, 1998 and allowed eight per cent of tax. The said eight per cent tax was raised to ten per cent subsequently. Again the first, respondent issued another clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and filed copies of earlier clarifications issued from this office dated November 12, 1998 and October 30, 1998 and stated that in the above clarifications, their product was clarified as taxable at eight per cent (old rate) and the same entry is now available under entry No. 22(iv), Part C, First Schedule to the Act, taxable at ten per cent. He also filed a copy of Tamil Nadu Taxation Special Tribunal's decision in O.P. No. 120/1996 dated April 12, 1996 in the case of Balaji Timber Corporation, Madras v. State of Tamil [1997] 105 STC 213, in which the issue in question has been elaborately discussed as under: 'The samples (paper based decorative laminated sheet) one, produced by the assessee and the other purchased by the Revenue were sent to the Joint Director of Industries and Commerce (Chemical), Chennai 32, to submit a report as to whether the said samples would fall under which of the two entries extracted above, i.e., entry 13(i), Part E, First Schedule (at 16 per cent) and entry 44(v), Part C, First Schedule (at eight per cent old entry). In his report in Rc. 3097/CW.4/ 96, dated March 29, 2006, the Joint Director, reported as follows: With reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to collect tax under TNGST Act, 1959, which is a separate enactment passed by the State Legislature, is the issue to be decided. (a) In Associated Agencies v. State of Tamil Nadu [1993] 89 STC 447 a Division Bench of this court considered similar issue with regard to the expression pesticides and insecticides , which were defined under section 3(e) of the Insecticides Act, 1968 (Central Act 46 of 1968). The Division Bench held that (pages 451 and 452 in 89 STC): . . . the reliance placed by the learned counsel for the appellant on the Insecticides Act, 1969, to show that fungicides and weedicides are included in the expression 'pesticides' cannot improve the situation. The Legislature is presumed to be aware of the need of the people and while classifying the entries in a particular Schedule, if it chose not to include certain commodities in the First Schedule, its intention is obvious that it did not wish to extend the benefit of single point taxation in respect of those commodities. Since 'fungicides' was not included in entry 66, as it existed at the relevant time, and it was specifically added in the original entry by the Amending Act, it is obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o apply or be given effect while applying the provisions of another statute. Moreover, even the CEGAT ruling under the Central Excise Act is not to the effect that 'paper based decorative laminated sheets' are 'paper board or coated board' as contended by the petitioners. All that is held in that case is that the goods in question are not classifiable as 'plastic sheets' under item 15A(2) of the Central Excise Tariff but are classifiable under the residuary entry 68 of the Central Excise Tariff. Prior to amendment, entry C-II-61 referred to 'plastic laminates' and not 'plastic sheets'. Therefore, the decision rendered under the Central Excise Act has no relevance in interpreting the words 'plastic laminates' in entry C-II-61. (c) A Division Bench of this court in the decision in State of Tamil Nadu v. Hajee P. Syed Mohammed (Decd.) reported in [1993] 91 STC 195 considered similar issue and held that the description of paper as contained in entry 117 of the First Schedule to the TNGST Act, 1959, is not only all comprehensive but includes paper of all sorts and all kinds of paper even other than those illustrated or enumerated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court with regard to the exemption notification issued under the DBPB Scheme of Customs Tariff Act. In paragraphs 28 and 29 it is held as follows: 28. The doctrine of fairness also is now considered to be a relevant factor for construing a statute. In a case of this nature where the effect of a beneficent statute was sought to be extended keeping in view the fact that the benefit was already availed of by the agriculturalists of tobacco in Guntur, it would be highly unfair if the benefit granted to them is taken away, although the same was meant to be extended to them also. For such purposes the statute need not be given retrospective effect by express words but the intent and object of the Legislature in relation thereto can be culled out from the background facts. 29.. The question has futhermore to be considered having regard to the language and object discernible from the statute read as a whole. The respondents were not ineligible from obtaining the benefits. Once they are held to be eligible for obtaining the benefit, the amended notification being an exemption notification should receive the beneficent construction. (b) In Commissioner of Central Excise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned counsel for the appellant is covered by the recent judgment of this court in Civil Appeal No. 4488 of 2005, Commissioner of Central Excise v. Mysore Electricals Industries Ltd. reported in [2007] 8 RC 1; [2007] 204 ELT 517. In the said judgment, this court held that a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Thus, when the circular is against the assessee, they have right to claim enforcement of the same prospectively. From the above cited decisions it is evident that in tax matters, the clarifications issued can be applied only prospectively, failing which it will cause hardship to the assessees. It is an admitted fact that there was ambiguity/doubt with regard to the collection of tax on paper based laminated sheets to the respondents, i.e., whether tax is leviable at ten per cent or 16 per cent. Till May 30, 2008, the tax leviable was only ten per cent even according to the respondents and the petitioners have also paid the said rate of tax for their sales turnovers. Since the respondents were not firm in their view with regard to collection of tax, viz., percentage of tax, the benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprises v. Commissioner of Customs [2006] 7 SCC 714, 721; [2006] 7 RC 531 it was held (SCC page 721, para 24), (RC page 539): '24. While dealing with a taxing provision, the principle of strict interpretation should be applied. The court shall not interpret, the statutory provision in such a manner which would create an additional fiscal burden on a person. It would never be done by invoking the provisions of another Act, which are not attracted. It is also trite that while two interpretations are possible, the court ordinarily would interpret the provisions in favour of a taxpayer and against the Revenue'. (c) Recently in Commissioner of Trade Tax, U.P. v. S.S. Ayodhya Distillery [2009] 19 VST 251 (SC); [2009] 233 ELT 146 (SC) again the same issue was considered in paragraph 10, (paragraph 28 in 19 VST) wherein it is held that if an entry contained in a notification imposing tax is ambiguous, the assessee cannot suffer therefor . In paragraph 14 it is held thus (paragraph 38 in 19 VST): 14 . . . . Furthermore, if there is a doubt or dispute as to whether paddy husk or the rice husk denotes the same commodity or not, the benefit thereof shall be given t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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