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TMI Blog2019 (5) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... ls, restaurants and sweet stalls. This is more so because Section 3-D of the TNGST Act deals with payment of tax by hotels, restaurants and sweet stalls. Section 3-D of the TNGST Act does not state any other eating house but this is found in Subsection (1) of Section 3-D. Therefore, necessarily the interpretation for the words any other eating houses should be tandem with with a hotel, a restaurant or a sweet stall - The point of first sale is to the establishment which has set up the facility for its employees or the people who visit the establishment such as shopping malls. Therefore, the petitioner would not stand qualified for concessional rate of tax under Section 3-D(1) of the TNGST Act. The second limb of argument is based upon the amended Section 3-D of the TNGST Act which came into effect from 01.04.2002. Admittedly, the assessment years under consideration in these cases are 2002-2001 and 2001- 2002. Therefore, the amended Section 3-D of the TNGST Act would have no application to the cases on hand. There are several features which have been added in the amended Section 3-D, as it originally stood related only to the sale of food and drinks in the establishments na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing houses other than those covered by item 20 Part-C First Schedule to TNGST Act, 1959? 3.Is not the Appellate Tribunal wrong in concluding that after 01.04.2002, as the caterer is specifically included, therefore, excluded prior to 01.04.2002 when apparently caterer has been included within Section 3-D ibid as a matter of abundant caution so that,caterer are not held to be outside the scope of expression any other eating house ? 4.Is not amendment to Section 3D effective from 01.04.2003, clarificatory? 3.The assessment under the TNGST Act for the assessment years 2000- 2001 and 2001-2002 was completed by the Assessing Officer vide order dated 31.12.2004. Aggrieved by the same, the assessee preferred appeals before the Appellate Assistant Commissioner (CT)-III, Chennai in A.P.Nos.110 and 111 of 2005. The appeals were partly allowed and certain issues were remanded to the Assessing Officer for fresh decision by an order dated 01.06.2005. Aggrieved by the same, the State preferred appeals before the Tribunal in S.T.A.Nos.308 and 309 of 2007 which were allowed by order dated 25.08.2012. Challenging the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions made on behalf of the State and allowed the appeals and set aside the order passed by the first appellate authority. 5.Mr.R.Raghavan, learned counsel assisted by Mr.N.Murali, learned counsel for the petitioner/assessee contended that the assessee is running a canteen in the hospital, various industrial establishments, defence establishments, shopping malls, etc. and the sale of food and drinks done by them would fall within the ambit of Section 3-D of the TNGST Act as they would fall within the scope of any other eating house as contained in Section 3- D(1) of the TNGST Act. The learned counsel referred to the clarification dated 12.05.2000 which was issued in favour of a catering agency wherein the Commissioner of Commercial taxes clarified that Catering Centres will not fall under the classification of hotels, restaurants, sweet stalls and any other eating houses specified in Section 3-D of the TNGST Act and hence they are liable to tax at 8%. It is submitted that this clarification clearly shows that the food and drinks supplied by a caterer is not being consumed by the person who pays for it. It is further submitted that the TNGST Act does not term t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order had held that the assessee is a caterer and would be liable for the benefit of Section 3-D only with effect from 01.04.2002 when the word caterer was inserted in Section 3-D(1) of the TNGST Act. It is further submitted that if a subsequent Act amends an earlier one in such a way as it incorporates itself or a part of itself into the earlier, the Act must be construed as 'retrospective'. Further, it is submitted that a careful reading of the amended provision makes it amply clear that the amendment was carried out only to clarify certain ambiguities and uncertainty in Section 3-D of the TNGST Act and to state the pre-existing position. On the above ground, the learned counsel prayed for setting aside the order passed by the Tribunal and restoring the order of the appellate authority. 7.Mr.Mohammed Shaffiq, learned Special Government Pleader (Taxes) appearing for the respondent submitted that three questions arise for consideration in these tax case revisions, namely, what is the scope of Section 3-D of the TNGST Act; what is the effect of the amendment made to Section 3- D of the TNGST Act with effect from 01.04.2002 whether it is clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To support the stand that the amendment is prospective, the learned Special Government Pleader placed reliance on the decision of the Hon'ble Supreme Court in the case of Government of Andhra Pradesh and another vs. Corporation Bank [(2007) 9 SCC 55], Commissioner of Wealth Tax, Gujarat-III, Ahmedabad vs. Ellis Bridge Gymkhana [(1998) 1 SCC 384] and Union of India and others vs. Martin Lottery Agencies Ltd. [(2009) 12 SCC 209]. It was further argued that the circulars are not binding on Courts and in support of such contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Bolpur vs. Ratan Melting Wire Industries [(2008) 13 SCC 1], Commissioner of Central Excise, Mumbai vs. Hindoostan Spinning and Weaving Mills Ltd. and another [(2009) 14 SCC 231] and State of Madhya Pradesh and another vs. M/s.G.S.Dall and Flour Mills [1992 Supp(1) SCC 150]. It is further submitted that the definition of a word in a particular enactment cannot be transplanted into another enactment and therefore, the Tribunal was right in rejecting the contention raised by the assessee. In support of such contention, relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope any other eating house . As noted above, Section 3-D of the TNGST Act is a stand alone provision, as it commences with a non obstante clause and would apply to case of every dealer whose total turnover is not less than twenty five lakhs of rupees notwithstanding anything contained in Sub-Section (1) of Section 3-D. Therefore, the provision needs to be strictly construed and what is crucial is the manner in which the provision is to be interpreted. Section 3-D of the TNGST Act forms part of a fiscal statute and there is no room for adding words or phrases in the statutory provision. The first requirement for Section 3-D(1) of the TNGST Act to apply is the total turnover of the dealer should not be less than twenty five lakhs of rupees. The second aspect is that the provision stands attracted on the first point of sale. Now we have to examine as to what are the items to which this concessional rate would be applicable because Section 3-D of the TNGST Act exclusively deals with payment of tax by hotels, restaurants and sweet stalls. Sub-Section (1) of Section 3-D of the TNGST Act makes it clear that in case of a dealer whose turnover is less than twenty five lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2002. Admittedly, the assessment years under consideration in these cases are 2002-2001 and 2001- 2002. Therefore, the amended Section 3-D of the TNGST Act would have no application to the cases on hand. 14.The argument of Mr.R.Raghavan, learned counsel for the petitioner is that Section 3-D of the TNGST Act has included caterers and the benefit of the concessional rate of tax in terms of Section 3-D of the TNGST Act as amended should be extended to the petitioner since the amendment is by way of substitution. In this regard, the learned counsel referred to the Tamil Nadu General Sales Tax (Sixth Amendment) Act. 2002 (Act No.20/2002). In Section 3 of the Amendment Act, it is stated that in Section 3-D of the Principal Act for the Sub-Sections (1) and (2), the following Sub-Sections shall be substituted. Fort better appreciation, we quote the amended Section 3-D of the Act: Section 3-D. Payment of tax by hotels, restaurants and sweet stalls :- (1) Notwithstanding anything contained in sub-section (1) of Section 3, every dealer whose total turnover is not less than ten lakhs of rupees for the year shall pay tax at the rate of two per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said case also, the legislature had stated that the provision shall come into force with effect from 01.08.1996 which was held to be one of the circumstances to show that the amending Act was not to operate before 01.08.1996. The case on hand is also identical. The legislature while enacting the amending Act gave effect to it retrospectively from 01.04.2002 though it was published in the Government gazette on 03.06.2002. We cannot therefore be called upon to fix an anterior date ahead on 01.04.2002. 17.Having held so, we need to examine the import or the meaning to be given to the word substitution since admittedly the Act 20/2002 uses the word substituted . This came up for consideration before the Hon'ble Supreme Court in the case of Bhagat Ram Sharma (supra). It was pointed out that in the case of executive instructions, the bare issue of a fresh instrument on the same subject would replace a previous instrument. But in the case of a legislative enactment, there would be no repeal of an existing law unless the substituting act or provision has been validly enacted with all the required formalities. After referring to several earlier decisions it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and retroactive operation. The Hon'ble Supreme Court pointed out that the explanation appended to the said provision cannot be said to be a simple clarification as it introduces a new concept stating that organising of the lottery is a form of entertainment; introduction of a new concept itself would have a constitutional implication. Further it was held that the question as to whether a subordinate legislation or a parliamentary statute would be held to be clarificatory or directory or not would undisputably depend upon the nature thereof are also the object it seeks to achieve. Further, in the case of Co-operative Company Ltd. vs. Commissioner of Trade Tax, U.P. [(2007) 4 SCC 480] , the Hon'ble Supreme Court pointed out that the Act having been brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. For all the above reasons, we hold that the amended Section 3-D of the TNGST Act would have no application to the case of the petitioner and the said provision is not retrospective i.e. it cannot be made applicable prior to 01.04.2002. 21.We have pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under Article 141 of the Constitution of India, the circulars cannot be given primacy over the decisions. It was pointed out that the consequence of issuing a circular are that the authorities cannot act contrary. Once the circular is brought to the notice of the Court the challenge to the revenue should be turned out and the revenue cannot lodge an appeal taking the ground which is contrary to the circular. 23.Following the decision in the case of Ratan Melting and Wire Industries (supra) in the case of Hindoostan Spinning and Weaving Mills Ltd. (supra), it was held that the law laid down by Supreme Court or High Court prevails over circulars or instructions of Board. In the case of G.S.Dall and Flour Mills (supra), it was held that executive instructions can supplement a statute or cover areas to which the statute does not extend, but they cannot run contrary to statutory provisions or whittle down their effect. 24.In the light of the above reasoning, the petitioner cannot rest his case based on the clarifications which were issued much prior to the amendment and those clarifications were assessee specific and does not bind the Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged by the Department and the issue attained finality. It was argued that the said issue cannot be disturbed in the subsequent years. This argument of the Bank was rejected by the Hon'ble Supreme Court holding that merely because the orders of the Tribunal were not assailed in appeal by the Department itself, would not take away the right of the revenue to question the correctness of the orders of assessment particularly when a question of law is involved. Further, it was pointed out that the question raised before the Hon'ble Supreme Court goes to the root of the matter and a question of law in relation to introduction of the provision of Income Tax Act and accordingly rejected the contention of the Bank that the findings recorded in the earlier assessment years would be binding on the Department for subsequent years as well. 28.In the instant case we are deciding substantial questions of law which have been framed for consideration. Therefore, any order passed by the First Appellate Authority in the assessee's case in the earlier assessment years cannot operate as a bar for the Court to consider the substantial questions of law which goes to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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