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TMI Blog2018 (10) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and packed. In common parlance, it is understood in its popular sense, and in conversant with the class of people uses it as tooth powder. There is no doubt that it is the product of tobacco. It is applied on gum for consumption of Nicotine. It is also to be noted that for the purpose of MVAT ACT, 2002 the schedule entry provided was A-45A- as Unmanufactured tobacco covered by Tariff heading 2401for earlier periods. The appellant has stated that the Hon. Apex court held that the product is tooth powder and covered by the Excise heading 3306. So the product is manufactured tobacco product. Hence the masher is manufactured tobacco product - the nature of impugned product, Masheri is roasted or burnt powdered tobacco with addition of salt is prepared from tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. In common parlance it is identified as tobacco product and is advertised accordingly. Even Hon. Apex court in the appellant case held that it is tooth powder and classified under CETH No.3306.10. Analysis of Schedule entry D-12 and schedule entry E-1 - Held that:- On analysis of both entries, we found that the schedule e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed that the investigation unit visited the place of business of applicant and had asked to discharge the tax liability. Hence, he has applied for Advance Ruling. 02. Fact of case:- Mr. Vinayak P. Patkar (Advocate) along with Mr. Mahapatra (C.F.O.) attended and briefed the case. The applicant produces and does marketing of the impugned goods. The applicant has shown samples of the products to the authority and submitted the related documents. He has informed the nature of the product and its ascription. The relevant facts leading to the application are set out as under. 2.1 The applicant has informed that the product manufactured and distributed by the applicant is Shaheen-Misri. The 'Dust' and 'Rava' of tobacco is used for manufacturing of the product. It is submitted that the Masheri is roasted or burnt powdered tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. The addiction of this product leads to number of diseases especially oral cancer, gum disease, etc. 2.2 The 'Shahin Bhajki Masheri' is known in the market as tooth powder for cleaning the teeth. He has relied on the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disorders and the same is being used by the poor people for such uses. The appellant is entitled to the beneficial interpretation. 2.8 The prospective Effect: - With this submission, the Mr. Vinayak Patkar , Advocate stated that the Product 'Shahin Masheri' to be held as covered by the Entry E-1 Of the MVAT Act, 2002. However, in the event of adverse decision, the appellant prays that prospective effect may please be granted to the ARA Ruling. 03. The legal position, Analysis and discussion:- On this background, it would be worthwhile to have a closer look at the statutory provisions under the MVAT Act, 2002 and relevant schedule entry under the Act. 3.1 The charging Section- 6: Levy of sales tax on the goods specified in the Schedules:- (1) There shall be levied a sales tax on the turnover of sales of goods specified in column (2) in Schedule B, C, D or, as the case may be, E, at the rates set out against each of them in column (3) of the respective Schedule. Thus, section-6 of MVAT Act provides that the tax is to be levied on commodity which is sold. In fact, the dealer liable to pay tax, should discharge the tax liability as per the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil % 1.4.2005 to 31.1.2006 A-45 Sugar, fabrics and tobacco as described, from time to time, in column (3) of the First Schedule to the Additional Duties of Excise ( Goods of Special Importance), Act, 1957(58 of 1957). Nil % 1.2.2006 to 31.3.2007 Explanation: For removal of doubts, it is hereby declared that tobacco shall not include Pan masala, that is to say, any preparation containing betel nuts and tobacco and any one or more of the following ingredients, namely:- (i) lime; and ii) Kattha (catechu), whether or not containing any other ingredients such as cardamom, copra and menthol. A-45 Sugar and fabrics as described from time to time in column (3) of the First Schedule to the Add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C applies. 20% 1.7.2009 to 31.3.2012 D-12 Tobacco, manufactured tobacco and products thereof including cigar and cigarettes but excluding Beedi and those to which entry 45 A of SCHEDULE A applies. 20% 1.4.2012 to 30.4.2012 D-12 Tobacco, manufactured tobacco and products there of including cigar and cigarettes but excluding, Unmanufactured tobacco when sold in packets under brand name and; those to which entry 45A of SCHEDULE A , and sub-entry (b) of 12 of SCHEDULE C applies. 20% 1.5.2012 to 31.3.2013 D-12 Tobacco, manufactured tobacco and products thereof but excluding,- (a) Beedi and unmanufactured tobacco whether sold under brand name or not; (b) Cigar and cigarettes to which entry 14 of this Schedule applies. 20% 1.4.2013 to date D-14 Cigar and cigarettes. 35% 1.10.2015 to da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The conforming term tobacco product is not defined under MVAT ACT, 2002. Since we are dealing with Sales Tax Statute, it is necessary to refer the principles laid by various court authorities to interpret the schedule entry under that statute. Under the sales tax statutes, it is a well-settled proposition that such expressions occurring in sales tax enactments must be understood in their popular sense, that is in the sense in which people conversant with the subject-matter with which the statute is dealing would attribute to it . 4.3 Under these circumstances, we would like to cite and refer the judgment of various court authorities as under. a) The Hon. Supreme Court in the case of State of U.P. VS. Kores (INDIA) LTD. reported in STC V.39 PAGE 8 has held as under: It is well settled that a word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs. b) The Hon. Supreme Court in the case of Ram Avtar Budhai Prasad Versus Assistant Sales Tax Officer, 12 STC 286 held that the word vegetable in Schedule of C.P. and Berar Sales Tax Act must be construed not in any technical sense no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tific or technical terms. In that event, the interpretation ought to be in accordance with the statutory definition or meaning and not according to common parlance understanding. Hence, the test of common parlance is applied. With this analogy, the nature of impugned product, Masheri is roasted or burnt powdered tobacco with addition of salt is prepared from tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. In common parlance it is identified as tobacco product and is advertised accordingly. Even Hon. Apex court in the appellant case held that it is tooth powder and classified under CETH No.3306.10. Now, to deal with contention of applicant two schedule entries provided under MVAT ACT, 2002 are required to be considered for the purpose of classification of impugned product. I) The Schedule entry D-12:- Tobacco, manufactured tobacco and products thereof but excluding,- (a) Beedi and unmanufactured tobacco whether sold under brand name or not; (b) Cigar and cigarettes to which entry 14 of this Schedule applies. II) As per contention of applicant, the Hon. Apex court held that the product is tooth powder and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule to a Taxing Statute, the same would override a general Entry. 15. We are unable to agree with the submissions of the applicant on this point. As far as the bearings are concerned, there is special Entry which deals with bearings of all types including Ball or Roller bearings. This Entry is Schedule Entry C-II-146. There being a specific/special Entry for bearings (Entry C-II-146), we are unable to hold that the bearings sold by the applicant would fall either under Entry C-II-102(2) [as a components, parts of a motor vehicle] or under Entry C-II-135 read with the Notification Entry A-35 [as a components and/or parts of tractors specifically designed for agricultural use]. When there is a specific Entry in the schedule to a Taxing Statute, the same would override a general Entry. In fact, resort should be taken to the general Entry only when a liberal construction of the specific Entry would not cover the goods in question. As far as bearings sold by the applicant are concerned, it can hardly be disputed that Entry C-II-102(2) and C-II-135 read with the Notification Entry A-35 would be general entries in comparison to Entry C-ll-146 which specifically deals with all types o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try under sales tax statutes. Hence, it is necessary to see whether decisions under Excise Act are squarely applicable to MVAT ACT or otherwise. 5.1 Whether decisions of court authorities under Excise Act when decided on the basis of provisions under the said act are squarely applicable to schedule entry under MVAT Act under the absence of said provisions?:- a) The Applicant has mostly relied on the decision of court authorities related to Excise Act. The applicant specifically relied on Hon. Apex Court judgment in case of Borsad. Hence, it is necessary to observe microscopically the ratio of Apex court judgment. b) The Hon. Supreme Court in the case of Borsad Tobacco [Civil Appeal No. 3207 of 2006] came across the classification products under chapter 24 or 33 for levy of Excise duty. The Hon Apex court has relied on the own judgment in the case of Commissioner of Central Excise Versus Shree Baidyanath Ayurved Bhawan Ltd. And vice versa, 2009 (4) TMI 6 - SC The issue involved was whether the product is classified in CETH 3306 or otherwise. The apex court has applied common parlance test and since the impugned product is used as tooth powder has ruled that it falls u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various defined terms as per Excise Act etc.) and classified or interpreted the nature of impugned products as medicaments or otherwise for the purpose of Excise Act. Under the Excise Act, the term medicament for Ayurvedic medicines and cosmetics are referred to different chapters. Under Excise Act, the Ayurvedic medicines are decided on the test of whether ingredients used in the product mentioned in the authoritative textbooks on Ayurveda? The circulars and notifications are issued for the said purpose. The products are classified on the basis of Tariff Headings, notes appended to chapters and circulars and notification issued for the said products. Thus, it is summarized that the Hon. Apex court has relied on the specific provisions of Excise Act, and interpreted the nature of product. The Apex Court has not preferred to apply the common parlance test as the term medicaments and cosmetics are specified in Excise Act. It is relevant to note that such type of provisions are not provided in the MVAT ACT, 2002.We do not find these terms defined under the MVAT ACT. We have dealt the provisions and the schedule entry for specific Schedule entry under MVAT ACT, 2002 at length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned to it in the Karnataka Forest Act, 1963. The same is not relevant. Similarly, he cited two other judgments which are not germane to the point and need not even be noticed. The Legislature has deliberately excluded certain items from being agricultural produce and therefore while interpreting the provisions of the present Act, the legislative intention will have to be given effect to in consonance with the definition as contained in the statute. Thus, the meaning assigned to the agricultural produce in the present Act is different from what was assigned to it in the Karnataka Forest Act, 1963. The same is not relevant. When the provisions are different, then context of the Act in which we are dealing is most important and that decisions relatable to the other statutes would not therefore apply. There is no justification in importing the terms for the purpose of interpretation. f) The Applicant is buying tobacco dust and manufactures the impugned product. The Tooth powder is a distinct and different commercial commodity prepared from tobacco dust/rawa. We have gone through the Apex court judgment in the case of Global impex. The issue involved was whether the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 or COPTA -2003. As per the provisions of COPTA the product is not to be used by children below 18 years unlike in case of normal tooth powder. As per the provisions of COPTA the warning message that the product is injurious to heath has to be printed on the packing of the product unlike normal tooth powder. 5.2 Mr. Patkar, Advocate relied on the judgment in case of Bharat Vijay Mills, 85 STC 23 (Kar) and argued that if an article is to be taxed and may fall within two different entries, the entry which is more beneficial to the assessee will have to be accepted as applicable to the article in question. We have gone through the judgment. The issue involved was whether sintex water drums fall within entry 118 of the Second Schedule (containers other than gunnies) or falls under entry 110 that is articles made of polythene i.e. two specific entries. As discussed above, it is settled principle for applicability of specific entry or residuary entry that only such goods as cannot be brought under the various specific entries in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability under the MVAT Act of the applicant or if the circumstances so warrant, of any other person a similarly situated, as respects any sale or purchase effected prior to a determination. Therefore, this is not a mandate but a discretionary power vested in the Commissioner. This discretionary power has to be exercised and while exercising it, the Commissioner, has to be guided by certain inbuilt checks and safeguards. He cannot in the garb of giving relief of the nature contemplated by subsection (2) totally wipe out the liability of any and every dealer. 11. The Commissioner is expected to exercise this discretionary power so as not to defeat the law or render its provisions meaningless or redundant. The power must be exercised bearing in mind the facts and circumstances in each case. No general rule can be laid down. The exercise of this discretionary power must be bonafide and reasonable so also sub-serving the larger public interest. The highest officer in the hierarchy is chosen by the legislature as there is a presumption that this executive functionary will exercise the discretion in genuine and bonafide cases. He must be satisfied that there is a real need and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een changed under MVAT ACT, 2002. The applicant fails to establish his case. He is very well aware about the rate of tax of said products. (c) The applicant has preferred the path of litigation in spite of the clear legal position of the terms provided in the schedule entry D-12 of MVAT ACT, 2002. The applicant is well aware of the pros and cons of litigations along with its cost. The schedule entry related to tobacco and its product is very specific in nature and does not create any situation which gives different logical meanings. As discussed above, it is settled principle for applicability of specific entry or residuary entry that only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry . In present case, there is specific entry applicable to tobacco products so the ratio of various judgments relied upon are not applicable. Thus, the applicant cannot prove existence of circumstances which warrant us to use the discretionary power. In fact use of such discretionary powers in the absence of compelling circumstances would be detrimental to legitimate government revenue and woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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