Bal Govind Awasty vs State of Madhya Pradesh

A short controversy involved in this case is that whether the "dried singhada", which is included in Schedule II of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (for short, "the Commercial Tax Act") is liable for commercial tax, while "green singhada" is exempted in Schedule I. It is also submitted that in Schedules I and II both, "singhada" finds place and item No. 2 of Schedule II word "singhada" has been explained by the Commissioner, Commercial Tax as "dried singhada", which is used for preparing flour. It is submitted by Shri Jain that the controversy has been decided by a Division Bench of this court in Writ Appeal No. 384 of 2006 (State of M.P. v. Ashok Kumar Dubey) vide order dated April 26, 2007, by which, the Division Bench considering the controversy has held thus:

"7. To appreciate the rival proponements put forth at the Bar it is seemly to reproduce section 15 of the Act which pertains to tax-free goods:

''15. Tax free goods.--(1) No tax shall be payable on the sales or purchase of goods specified in the second column of Schedule I, subject to the restrictions and exception, if any, set out in the corresponding entry in the third column thereof.

(2) The State Government may in respect of any goods, by notification amend Schedule I, so as to include therein any goods not already specified or may relax or omit any of the conditions and exceptions set out in the corresponding entry in the third column thereof.''

A bare reading of section 15 makes it crystal clear that the State Government cannot by notification exclude any item mentioned in Schedule I as a tax-free goods. It has the power only to include any further goods or relax any conditions or exception contained in Schedule I subject to which a particular item is made tax-free. Sr. No. 16 of Schedule I in which ''singhada'' is mentioned as one of the exempted goods reads as under:

''16. Fresh vegetables (including potatoes and onion), ginger (excluding dried ginger), garlic, singhada, fresh fruits, fresh flowers and sugar cane.''

The question that falls for consideration is whether the State Government could have issued the notification excluding ''dried singhada''. It is worth noting here that section 9 of the Act relates to levy of tax. It provides that the tax shall be levied on the taxable turnover relating to goods specified in Schedule II. In Part V of the Schedule II it has been mentioned that ''"kirana" goods, as the State Government may by notification specify''. Submission of Mr. Kumaresh Pathak, learned counsel for the State, is that ''singhada'' has been notified in the list of ''kirana'' goods of Schedule II. In Schedule I ''singhada'' has been treated as a tax-free goods. Section 15(2) confers power on the State Government to amend Schedule I. The said power is a restricted and constricted one. To elaborate, it only confers power for inclusion or adding certain qualifiers. In Ruchi Fabrics Ltd. Vs. State of M.P. and Others, a two-Judge Bench of the apex court while dealing with section 10(2) of the Madhya Pradesh General Sales Tax Act, 1958 and the issuance of notification u/s 21 of the M.P. General Clauses Act, 1957 by which certain items were excluded expressed the view as under:

''By virtue of section 10(2) of the Madhya Pradesh General Sales Tax Act, 1958, the State Government is given power, by notification to amend Schedule I only "so as to include therein goods not already specified or relax or omit any of the conditions and exceptions set out in the corresponding entry in the third column thereof. The Legislature, therefore, empowered the State Government to amend Schedule I only to the extent of widening the scope thereof either by including therein goods which had not already got its benefit or by relaxing or removing conditions which were a pre-requisite for obtaining the exemptions thereunder. No power was conferred by the statute upon the State Government in any way to curtail the scope of Schedule I. Therefore, notification dated September 20, 1990 by which certain varieties of cloth that were covered by the First Schedule as it originally stood were excluded, is ultra vires the powers of the State Government u/s 10(2).''

In the said case their Lordships expressed the opinion that Schedule I is a part of the original statute and it is a creation of the Legislature. In view of the aforesaid pronouncement, the State Government could not have excluded any item by issue of a notification. Serial No. 16 of Schedule I uses the terms ''singhada''. The intention of the Legislature, as is manifest, is to include dried ''singhada''. It is noticeable wherever Legislature wanted exclusion of dried item has specifically mentioned the same and this is evincible from the words used ''excluding dried ginger in entry No. 16. The same is not the tenor in case of ''dried singhada''. Had the Legislature intended only to except green (fresh) alone ''singhada'' that would have been clearly indicated. In the absence of such exclusion, we are of the considered opinion that the notification issued by the State Government travels beyond the statutory limits. The clarificatory circulars, in our considered opinion, is totally inconsequential. Therefore, we conclude and hold that, as long as, section 15(2) remains in force and Schedule I being the creation of Legislature, its effect cannot be nullified and its scope cannot be curtailed by issuance of a notification.

In view of our aforesaid analysis, we concur with the view taken by the learned single judge and the inevitable result thereof is dismissal of the appeals, which we direct. There shall be no order as to costs."

As the controversy has already been considered and decided by the Division Bench, we find no reason to differ with the aforesaid decision, this petition is allowed in terms of the order passed by the Division Bench in State of M.P. v. Ashok Kumar Dubey (Writ Appeal No. 384 of 2006 decided on April 26, 2007). This petition is accordingly finally disposed of with no order as to costs.