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Judgment
S.C. Sharma, J
Regard being had to the similitude in the controversy involved in the present cases, these Tax References were analogously heard and by a common order, they are being disposed of by this Court. Facts of the Tax Reference No.17/2017 are narrated hereunder.
The present Tax Reference has been forwarded to this Court by the Madhya Pradesh Commercial Tax Appellate Board in exercise of the power conferred under Section 17 of the Madhya Pradesh Commercial Tax Act, 1994.
The following questions of law have been referred to this Court :-
"Question No.1
Whether, on the facts and in the circumstances of the case, the M.P. Commercial Tax Appellate Board was right in law in holding tht the assessing authority had jurisdiction and power u/s 9 (2) of Central Tax Act, 1956 read with section 19 (1) of the M.P. General Sales Tax Act, 1958 and review and revise his own order of assessment on a change of opinion of the interpretation of the Notification No.A-5-1-94/ST-V (55) dated 30.03.1994 and pass a reassessment order under the Central Sales Tax, 1956 ?
Question No.2
Whether, the Appellate Board was right in law in holding that the exemption from payment of tax granted on "all kinds of footwear made of PVC and chappals made of rubber and straps there of the sale price of which did not exceed Rs.50/- per pair" under Notification dated 30.03.1994 issued u/s 12 of M.P. General Sales Tax Act, 1958 was not general to a class of goods and therefore, the assessee was not entitled to the benefit of exemption from payment of tax under Sec. 8 (2A) of the Central Sales Tax Act, 1956 ?"
The facts of the case reveal that the assessee in the present case is a manufacturer of footwear and an assessment order was passed on 06.02.1998. The assessee has availed the benefit of notification dated 30.03.1994 and its contention is that the assessee is manufacturing footwear made of PVC, chappals made of rubber and straps thereof and the sale price of which did not exceed Rs.50/- per pair, and therefore, in light of the notification dated 30.03.1994 under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958, the petitioner is entitled for exemption from payment of tax under Section 8(2A) of the Central Sales Tax Act, 1956.
The proceedings were initiated under Section 9 (2) of the Madhya Pradesh Commercial Tax Act, 1994. A notice was issued to the assessee and the assessee did file a reply in the matter and an order was passed on 29.04.2004 holding that the assessee is liable to pay the tax. The assessee, thereafter, preferred an appeal and the same was dismissed on 06.04.2002. The assessee, thereafter, has preferred a Second Appeal before the Madhya Pradesh Commercial Tax Appellate Board and the Madhya Pradesh Commercial Tax Appellate Board has also dismissed the second appeal by an order dated 10.02.2005. The assessee, after dismissal of its second appeal by the Madhya Pradesh Commercial Tax Appellate Board, has submitted an application under Section 70 of the Madhya Pradesh Commercial Tax Act, 1994 for referring the questions of law before this Court.
Heard learned counsel for the parties at length and perused the record.
The notification, on the basis of which the assessee is claiming exemption in the present case, dated 30.03.1994 came into force w.e.f. 01.04.1994 and the same reads as under:-
"मध्यप्रदेश शासन, वाणिज्यिकर विभाग
अधिसूचना
क्र. ए5/1/94/विक.पांच (55) भोपाल, दिनांक 30-3-94
मध्यप्रदेश सामान्य विक्रयकर अधिनियम, 1958 (क्र.2 सन 1959) की धारा 12 द्वारा प्रदत शक्तियों को प्रयोग में लाते हुए राज्य शासन एतद् द्वारा नीचे दी गई अनुसूची के कालम (2) में विनिर्दिष्ट माल के वर्ग को 1-4-94 से उक्त अधिनियम के अधीन देय संपूर्ण कर से छूट प्रदान करता है :-
अनुसूची
अनुक्रमांक माल का वर्ग
(1) (2)
1 (एक) केन्द्रीय विक्रयकर अधिनियम, 1956 (क्रमांक 74 सन 1956) की धारा 14 के खण्ड (एक) में यथा विनिदिष्ट घाम्य.
(दो) इस प्रविष्टि के अनुक्रमांक (एक) में वर्णित से भित्र खाद्यात्र तथा धान्य.
2 (एक) केन्द्रीय विक्रयकर अधिनियम, 1956 (क्रमांक 74 सन 1956) की धारा 14 के खण्ड (छः-ए) में यथा विनिदिष्ट दाले
(दो) इस प्रविष्टि के अनुक्रमांक (एक) में उल्लिखित दालों को छोड़कर अन्य दाले.
3 खली को छोड़कर खाव.
4 शक्ति तथा ट्रेक्टर की सहायता से क्रियान्वित सब प्रकार के कृषि उपकरण.
5 पम्पिग सेट तथा उसके अतिरिक्त पुर्जे एवं उपसाघन.
6 उपचारित बीज.
7 खाद्यात्र तथा घाश्यों का आटा, मेदा, सूजी, रवा, विसान तथा अन्य उपोत्पाद।
8 बेसन, चुनी और अन्य उपोत्पाद जो दालों को उपयोग में लाकर प्राप्त किये गये हो।
9 बड़ी कुलड़ई, सिचई, फिंगर पापड़, साबुदाना के फूल।
10 गन्ना.
11 सिंघाड़ा.
12 फूल बहारी झाडूं.
13 पी. व्ही. सी. के बने सभी प्रकार के पदत्राण (फुटवियर) एवं रबर की बनी चप्पल तथा उनके स्ट्रेप्स जिनका विक्रय मूल्य 50रू. प्रति जोड़े से अधिक न हो।
(62) मध्यप्रदेश शासन, वाणिज्यिकर विभाग
क्रमांक ए5-1/94/विक्र-पॉंच(53) भोपाल दिनांक 30-3-94
अधिसूचना
मध्यप्रदेश सामान्य विक्रयकर अधिनियम, 1958 (क्रमांक 2 सन 1959) की धारा 11 की उपधारा (1) के द्वारा प्रदत्त शक्तियों को प्रयोग में लाते हुए राज्य शासन एतद द्वारा उक्त अधिसूचना की अनुसूची दो में निम्नलिखित संशोधन करता है, जिसके लिए अधिसूचना क्र.ए5-1/94/विक्र-पॉंच(37) दिनांक 21-3-94 तथा क्रमांक ए5-1/94/विक्र-पॉंच(45), दिनांक 24-3-94 द्वारा मध्यप्रदेश राजपत्र में पुर्व सूचना जारी की गई है।
संशोधन
उक्त अधिनियम की अनुसूची दो मेंः-
भाग एक में -
अनुक्रमांक 4 के कालम (3) में अंक '3' के स्थान पर अंक '4' स्थापित किया जाय।
भाग दो में-"
The aforesaid notification provides exemption from payment of tax on "all kinds of footwear made of PVC and chappals made of rubber and straps there of the sale price of which did not exceed Rs.50/- per pair".
The moot question before this Court is whether proper interpretation has been done by the Madhya Pradesh Commercial Tax Appellate Board by holding that the notification was not general to class of goods, and therefore, the assessee was not entitled for the benefit of exemption from payment of tax under Section 8 (2A) of the Central Sales Tax Act, 1956.
Learned counsel appearing for the assessee has placed reliance on the several judgments delivered in the cases of Nayan Sukh Through Partner Mahmood Alam, Satna v/s Commercial Tax Officer Circle 2, & Others reported in (1998) 26 CUR.T.J. 175, Manish Plastics v/s Commissioner of Commercial Taxes in Karnataka & Another dated 24.02.1995 (W.P. No.16446/1991), Royal PVC Shoes Private Limited v/s The State of Rajasthan & Another dated 17.01.2002 (Civil Special Appeal No.1152/2000), Commissioner of Sales Tax, J & K & Others v/s Pine Chemicals Limited v/s Others reported in (1995) 1 SCC 58 and Sivanesan Company v/s Commercial Tax Officer, Purasawalkam Assst. Circle, Chenni reported in 2010 SCC OnLine Mad 6406.
In the case of Nayan Sukh (supra), this Court in paragraph - 10 has held as under:-
"10. In the back ground of the law declared by the Supreme Court as also the Judgment of Karnataka High Court in Manish Plastics Case (supra) I find that the goods in question cannot be said to have been exempted from payment State Sales Tax generally as the exemption have been granted under specified condition. Exemption is limited to the spectacles and other items valued at Rs.50/- only. Therefore, in my opinion, the exemption is operative under specified condition. Further, I find that for attracting the provisions of Sec. 8(2-A) of the Central Act, the goods generally exempted from payment of the State Sales Tax, would mean, exemption not dependent upon any circumstances or condition. Here, the exemption under notification from payment of State Sales Tax is under specified conditions. Thus, I do not find any merit in the submission of the learned counsel for the petitioner."
In the aforesaid case, the notification regarding exemption of tax, exempted spectacles, lens and frames with a condition that its cost will not exceed Rs.50/-. This Court in the aforesaid case, in similar circumstances, has held that the exemption was limited to the spectacles and other items valued at Rs.50/- only and the notification granting exemption was operative under specified conditions. It was held to be a conditional notification, and therefore, the aforesaid judgment does not help the assessee in any manner.
In the case of Manish Plastics (supra), the issue regarding interpretation and meaning of "exempt from tax generally" has been dealt with in detail. Paragraph - 18 of the aforesaid judgment reads as under:-
In T. M. Mohan v. Additional Agricultural Income-tax Officer [1990] 184 ITR 190, one of the questions that fell for consideration of a Division Bench of this Court was whether the circular issued by the Commissioner of Agricultural Income-tax stating that no surcharge shall be leviable where assessments were pending was binding upon the department. A learned single Judge of this Court had repelled the contention holding that any circular which was contrary to the provisions of the statute was unenforceable and could be ignored. In appeal however, Shivashankar Bhat, J., speaking for the Bench and relying upon the judgments of the apex Court in Navnit Lal C. Javeri v. K. K. Sen, Appellate Assistant Commissioner of Income-tax, Bombay [1965] 56 ITR 198 and in Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal [1971] 82 ITR 913 held that the circulars issued by the Commissioner of Agricultural Income -tax was binding on subordinate officers and that the assessing authorities under the Karnataka Agricultural Income-tax Act, were bound to give effect to any such circular. The view taken by the Division Bench has however been considerably watered down by a later judgment of the Supreme Court in Bengal Iron Corporation v. Commercial Tax Officer [1993] 90 STC 47. That was a case in which the Government of Andhra Pradesh had in exercise of its power under section 42(2) of the Andhra Pradesh General Sales Tax Act, 1957, clarified that cast iron castings were covered within the term cast iron including ingot moulds, occurring in item 2 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957. Section 42 of the Andhra Act empowered the Government to remove difficulties in giving effect to the provisions of the said Act. Reliance upon the clarification issued by the Government was placed by the petitioner/assessee in the said case in support of its claim that case iron castings were included in cast iron. Their Lordships of the Supreme Court however repelled this argument holding that clarifications/circulars issued by the Central Government or a State Government simply represented their understanding of the statutory provisions, and that any such circulars or clarifications were not binding upon the courts nor was there any estoppel against law. Their Lordships observed thus :
"So far as clarifications/circulars issued by the Central Government and/or State Government are concerned, they represent merely their understanding of the statutory provisions. They are not binding upon the courts. It is true that those clarifications and circulars were communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion. It is doubtful whether such clarifications and circulars bind the quasi-judicial functioning of the authorities under the Act. While acting in quasi-judicial capacity, they are bound by law and not by any administrative instructions, opinions, clarifications or circulars. Law is what is declared by this Court and the High Court - to wit, it is for this Court and the High Court to declare what does a particular provision of statute say, and not for the executive. Of course, the Parliament/Legislature never speaks or explains what does a provision enacted by it mean. (See Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. AIR 1983 SC 239).
Now coming to G.O. Ms. 383, it is undoubtedly of a statutory character but, as explained hereinbefore the power under section 42 cannot be utilised for altering the provisions of the Act but only for giving effect to the provisions of the Act. Since the goods manufactured by the appellant are different and distinct goods from case iron, their sale attracts the levy created by the Act. In such a case, the Government cannot say, in exercise of its power under section 42(2) that the levy created by the Act shall not be effective or operative. In other words, the said power cannot be utilised for dispensing with the levy created by the Act, over a class of goods or a class of persons, as the case may be. For doing that, the power of exemption conferred by section 9 of the A.P. Act has to be exercised."
Similarly, in the case of Royal PVC Shoes Private Limited (supra), the High Court of Rajasthan in paragraphs - 38, 39, 40 and 41 has held as under:-
"38. In that view of the matter, we are of the opinion that notwithstanding implied over-ruling of decision in Shiv Sainath Rubber Industries Pvt. Ltd., the exemption under notification dated 7.3.94 is an exemption of class of shoes which are not made to leather and whose value do not exceed Rs. 100/- are exempt generally under RST Act, 1954, therefore, inter-State turnover of such class of shoes is also exempt Under Section 8(2-A) of the CST Act . It is not in dispute before us that turnover in respect of which exemption under Section 8(2-A) is claimed, is related to such footwears which are not made of leather and whose value is only upto Rs. 100/-. Therefore, such inter-State turnover is entitled to claim such exemption and no tax under CST is liable to be imposed.
Reference to a decision of Rajasthan Taxation Tribunal in M/s. Ajay Polymers (P.) Ltd. (supra) has been made in Assessment Order. Said judgment relates to period during which Notification dt.
11.88 was in force. The notification which was in force for the period in question was not before the Tribunal. I fact it does not refer to any other judgment than the II Pine Chemical's case, without referring to contents of Notification. The decision in M/s. Ajay Polymers (P) Ltd. has no relevance in considering the notification dt. 7.3.94. As noticed by us, the question whether any goods, or class of goods or a category of goods are exempt from tax or subjected to lower rate of tax generally or such exemption or concession in rate is subject to certain specified conditions or in specified circumstances, has to be determined with reference to particular notification issued under State Sales Tax Law before arriving at conclusion about extending such exemption under Section 8(2-A) of CST Act, 1956.
This appeal is allowed and the judgment under appeal is set aside. The writ petition is also allowed. The impugned assessment order Annexure-3 annexed with the writ petition is also set aside. Demand notice in pursuance thereof shall stand discharged.
There shall be no order as to costs. "
In the case of Commissioner of Sales Tax, J & K & Others (supra), again the issue of general exemption and conditional exemption has been dealt with.
In the case of Sivanesan Company (supra), the Madras High Court in paragraphs - 7 to 10 has held as under:-
"7. Section 8(2A) of the Central Sales Tax Act defines the term "generally exempt" in the Explanation to section 8(2A), which reads as follows:
"Explanation.-For the purposes of this sub- section, a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State, if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stage or otherwise than with reference to the turnover of the goods."
Referring to the said Explanation, the apex court pointed out that where terms of notification on the exemption from taxation are restricted by reason of certain conditions imposed therein or exemption granted under certain circumstances, then the said exemption is not of a general one. In the background of the said judgment, if one looks at the entry relating to the exemption on aluminium domestic utensils, it is clear that the exemption is not available in respect of aluminium domestic utensils in general and in particular if they are operated by pressure or electricity, which mean aluminium domestic utensils not operated by pressure or electricity alone qualified for exemption.
Applying the abovesaid decision of the Supreme Court to the said entry "aluminium domestic utensils not operated by pressure and electricity", it is difficult to accept the case of the petitioner that the exemption is a general exemption and is not to be read as conditioned by specific circumstances."
In the circumstances, applying the abovesaid decision of the apex court to the facts of the case herein, I hold that the petitioner is not entitled to the benefit of exemption in respect of seized transactions having regard to the Explanation appended to section 8(2A) of the Central Sales Tax Act. Accordingly, the writ petition stands dismissed. No costs."
This Court has carefully gone through the aforesaid judgments. The notification in the present case exempting all kind of footwear made of PVC, chappals made of rubber and straps there of the sale price of which does not exceed Rs.50/- per pair, can never said to be a general exemption, as it is conditioned by specified circumstances.
In the considered opinion of this Court, the Madhya Pradesh Commercial Tax Appellate Board was justified in holding that the exemption granted from payment of tax is not a general exemption and the assessee is not entitled to the benefit of exemption from payment of tax under Section 8 (2A) of the Central Sales Tax Act, 1956.
The questions of law are accordingly, answered in affirmative.
The order passed by this Court in the present case shall govern the connected Tax Reference also. Let a copy of this order be kept in the connected Tax Reference also.
The Tax Reference stands disposed of. The connected Tax Reference also stand disposed of.
Certified copy, as per rules.