AI Structured Summary
Not yet generated for this judgment
Judgment
Manjula Chellur, J.—So far as STA No. 3 of 2009 is concerned, the appellant is a registered dealer of old newspaper and waste paper. The appellant claimed exemption from tax liability on the sale of above items as exempted under the Karnataka Sales Tax Act, 1957 ("the Act", for short). But the assessing authority did not grant exemption and assessed tax on the ground that the appellant is liable to pay tax treating the sale of old newspaper as waste paper. Aggrieved by the order of the assessing authority, an appeal came to be filed by the appellant before the first appellate authority. The first appellate authority set aside the assessment order and exempted the appellant from payment of sales tax on the sale of old newspaper. A suo motu revisional proceedings came to be initiated against the appellant and without hearing the appellant, the revisional authority set aside the order passed by the appellate authority fixing the tax liability on the appellant. Aggrieved by the said order, the appellant/assessee is before this court. This is for the assessment year 2002-03.
STRP Nos. 36 of 2007 and 39 of 2008, pertain to the period between April 1, 2001 to March 31, 2002 and April 1, 2002 to March 31, 2004, respectively.
In these two cases, the dealer was in the business of selling old waste paper and old newspaper and admittedly he is a registered dealer under the Act. The assessment for the aforesaid said two years came to be passed on February 27, 2003 and August 25, 2004, respectively. Aggrieved by the assessment orders questioning the levy of tax on old newspaper, appeals came to be filed before the first appellate authority. The first appellate authority on March 26, 2005, dismissed the appeal in respect of assessment of tax for the year 2001-02. So far as the assessment order for the year 2002-03 is concerned, the appeal is dismissed on the ground of delay and laches. Aggrieved by the orders of the first appellate authority, STA Nos. 792 to 795 of 2005 came to be filed before the Karnataka Appellate Tribunal. On considering the material on record, appeals came to be allowed. Aggrieved by the orders passed by the Karnataka Appellate Tribunal, the State has come up in the present revision petitions.
The following questions of law were raised for our consideration:
In STA No. 3 of 2009:
Whether the impugned order passed by the third respondent without affording an opportunity to the appellant is justified in the facts and circumstances of the case?
Whether the third respondent was justified in ignoring the provision as envisaged in entry 54 of List II of the Seventh Schedule to the Constitution of India, exempting the sale of newspaper from the levy of tax so as to saddle the tax liability on the sale of old newspaper by the appellant?
Whether the impugned order passed by the third respondent is violative of article 141 of the Constitution of India inasmuch as in the impugned order the third respondent discarded the latest ruling of the Supreme Court in Sait Rikhaji Furtarnal and another Vs. State of Andhra Pradesh,
Whether the third respondent was justified in holding that the exemption of tax liability for the sale of newspaper as envisaged in entry 54 of List II of the Seventh Schedule to the Constitution is not available to the sale of old newspapers terming it as waste paper?
In STRP No. 39 of 2008:
Whether the Tribunal is justified in concluding on the facts and circumstances of the case by interpreting the decision of the Full Bench of the Andhra Pradesh High Court, wherein the Full Bench which has rightly distinguished the point involved in this petition of the two Division Bench judgments of the apex court in respect of the similarly situated situations that arose before the Full Bench of the Andhra Pradesh High Court?
Whether the Tribunal has applied its mind before concluding on the ground of the later judgment of the apex court is applicable even if it is distinguished by the Full Bench of the Andhra Pradesh High Court? Therefore, the question arising in this revision petition is required to be reconsidered on the ground that the respondent has sold the old newspapers in the form of weights and not as the single/separate units as newspapers. Admittedly, he has sold the old newspapers to the manufacturing industries and not to the public for reading purpose. Therefore, it is required to be debatable as stated supra.
Whether entry 54 of List II of the Seventh Schedule can be read so as to include ''old newspaper/raddi paper'' having scrap value and no value of news as (newspaper)?
In STRP No. 36 of 2007:
Whether the Tribunal is justified in concluding on the facts and circumstances of the case by interpreting the decision of the Full Bench of the Andhra Pradesh High Court, wherein the Full Bench which has rightly distinguished the point involved in this petition of the two Division Bench judgments of the apex court in respect of the similarly situated situations that arose before the Full Bench of the Andhra Pradesh High Court?
Whether the Tribunal has applied its mind before concluding on the ground that the later judgment of the apex court is applicable even if it is distinguished by the Full Bench of the Andhra Pradesh High Court. Therefore, the question arising in this revision petition is required to be reconsidered on the ground that the respondent, has sold the old newspapers in the form of weights and not as the single/separate units as newspapers. Admittedly, he has sold the old newspapers to the manufacturing industries and not to the public for reading purpose. Therefore, it is required to be debatable as stated supra.
The learned Government Advocate places reliance on the decision in the case of The Indian Express (P.) Ltd. v. State of Tamil Nadu [1987] 67 STC 474 (SC). In this case their Lordships held, when the newspapers are sold to the reading public, they are sold as medium containing information regarded as news. When unsold surplus copies of newspapers are disposed of by weights as waste papers, their, sales cannot be regarded as the sale of newspapers as what is exempted from sales tax is the turnover of newspaper and not the turnover of old newspaper or waste paper.
They also rely on the decision in the case of The Hindu v. State of Tamil Nadu [1987] 67 STC 477 (SC). "The Hindu" had procured glazed newsprint for use in the publication of a magazine. The magazine was discontinued subsequently. Subsequently the unused stock of the glazed newsprint as well as old newspaper, print waste and cut waste were sold. The Madras High Court held that the turnover of the appellant relating to sale of the above items liable to tax under the Tamil Nadu General Sales Tax Act, 1959. Then the matter was taken up before the Supreme Court and the Supreme Court by referring to its earlier decision in the case of The Indian Express (P.) Ltd. referred to [1987] 67 STC 474 (SC), disposed of the matter holding that if unused glazed newsprint as well as old newspaper, print waste and cut waste are sold, they are liable for tax.
The learned counsel for the Revenue also relied upon the decision in the case of State of Karnataka Vs. Kasturi and Sons Ltd., . In this case, their Lordships held that if a commodity falls under any of the entries in the Second Schedule, it cannot be subjected to duty u/s 5(1) of the Act. The description of "paper" in entry 3 of Part P of the Second Schedule includes paper of all kinds including carbon paper. The description of paper at entry 3 is exhaustive and is an inclusive definition. Firstly it refers to paper of all kinds. Secondly, it specifies the items, which but for the specific inclusion may not be treated as paper. Ultimately their Lordships held that if the entries specifically include paper of all kinds, even if waste paper is not capable of being used for printing, writing or packing, it would still fall under entry 3 of Part P of the Second Schedule, so long as it is "paper".
The Revenue also places reliance on the decision of the Andhra Pradesh High Court in the case of Ushodaya Enterprises Ltd. Vs. Commissioner of Commercial Taxes, A.P., Hyderabad, In this case, it was held that old and discarded newspaper when sold which were not used for reading purposes, but for packing and other purposes, cannot still be regarded as "newspapers" within the meaning of entry 54 of List II of the Seventh Schedule to the Constitution so as to claim exemption from taxation.
According to the Revenue, when old newspapers are sold by weight, they lose the characteristic of a newspaper as it would not be used for the purpose of reading and will be used for other purpose, therefore, there cannot be any exemption from payment of sales tax on the turnover of the old newspapers or waste papers.
The learned counsel for the Revenue also refers to the decision in the case of Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, In this case, their Lordships have held as under (page 3 in 85 STC):
In regard to old newspapers, it is the submission of counsel that even if the newspapers are not of the same date or of a current period, their contents had news value and thus they continued to be the newspapers and the mere fact that they were out of date did not take away the news element therefrom, this court in a recent judgment1 held a law journal to come within the meaning of newspaper though not carrying news of contemporary period. On the ratio of that decision the contention of the appellant that old newspapers are also ''newspaper'' and would be entitled to the exemption provided under the Constitution is acceptable. We accordingly uphold the contention of the appellant and direct that old newspapers when sold as such would be covered by the exemption provided in the Constitution and sale thereof would not be liable to sales tax...
They also placed reliance on the decision in the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others,
The expression ''news'' is not defined in the Act. Several definitions of the expression ''news'' collected from the different dictionaries and digests have been cited before us. It is enough if we refer to the meaning of the word ''news'' given in the Shorter Oxford English Dictionary for purposes of this case. It says that ''news'' means ridings, new information of recent events; new occurrences as a subject of report or talk. The law reports which are being published by the first respondent are reports of recent decisions of the Supreme Court of India and of the High Courts in India which are supplied to it by its agents appointed at New Delhi and other places where High Courts are situated. It cannot be disputed that these decisions are of public importance. Article 141 of the Constitution provides that the law declared by the Supreme Court shall be binding on all courts within the territory of India. Even apart from article 141 of the Constitution the decisions of the Supreme Court, which is a court of record, constitute a source of law as they are the judicial precedents of the highest court of the land. They are binding on all the courts throughout India. Similarly the decisions of the every High Court being judicial precedents are binding on all courts situated in the territory over which the High Court exercises jurisdiction. Those decisions also carry persuasive value before courts which are not situated within its territory. The decisions of the Supreme Court and of the High Courts are almost as important as statutes, rules and regulations passed by the competent Legislatures and other bodies since they affect the public generally. It is well-known that the decisions of the Superior Courts while they settle the disputes between the parties to the proceedings in which they are given they are the sources of law insofar as all others are concerned. As soon as a decision is rendered the members of the public would be interested in knowing it. At any rate lawyers and others connected with courts and judicial proceedings who constitute a substantial section of the public are interested in knowing the contents and the effect of the decisions. The first respondent-All India Reporter Limited, and other publishers of law reports in the interests of their own business view with each other to publish the judgments of the Supreme Court or of the High Courts as early as possible in their law reports which are published periodically either weekly, fortnightly or monthly. They believe that faster the decisions are published in their reports, larger will be the number of subscribers. In fact we have a law report which is published from Delhi which publishes the judgments rendered by the Supreme Court within a day or two. The contents of these law reports constitute news insofar as the subscribers and the readers of these reports are concerned. It is by reading these law reports they come to know of the latest legal position prevailing in the country on any question decided in the decisions reported in the said reports. Hence it is difficult to agree with the submission made on behalf of the first respondent that the law reports do not carry any news and that the public is not interested in them. We are of the view that any decision published in the law reports of the first respondent contains information about the recent events which have taken place in the Supreme Court or in the High Courts which are public bodies and these are matters in which the public is interested. We find it also difficult to agree with the submission made on behalf of the first respondent that since the law reports are going to be preserved by the lawyers as reference books after getting them rebound subsequently they should be treated as books. It may be that the decisions contained in these law reports may cease to be items of news after sometime but when they are received by the subscribers they do possess the character of works containing news.
...
It is significant that the expression ''newspaper'' as defined in the Act includes not merely ''public news'' but also ''comments on public news''. Every law report contains the editorial note at the commencement of the decisions printed therein and also comments on some of the recent decisions. Law reports also contain, newly enacted Acts, Rules and Regulations, book, reviews and advertisements relating to law books, handwriting and finger print experts, etc., speeches made at conferences in which the legal fraternity is interested, etc. Though the publication of these items by itself may not occupy a substantial part of a law report to make it a newspaper, the publication of the recent judgments itself is sufficient to make a law report a newspaper which may after sometime cease to be a newspaper and become a book of reference.
The contention of the assessees in these matters is to the effect that the courts have long back given up the use of theory of classification of goods with reference to the entries in the Second Schedule to the Act, therefore, disposal of old or new, the goods if sold as newspapers, there has to be exemption provided in entry 54 of List II. According to them, the decision in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, being the latest judgment, of the apex court which has referred to a Larger Bench decision of the apex court, i.e., All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, the earlier decisions of the apex court pertaining to The Indian Express case [1987] 67 STC 474 (SC) and The Hindu case [1987] 67 STC 477 (SC) cannot be relied upon as both the Benches of the apex court consist of equal number of judges and the later judgment should be followed by the High Courts and other courts.
As against this, the learned Government Advocate contends that when conflict arises from the decisions of co-equal Benches of the apex court, there is no mandate on the High Court to follow the decision which is based on an obvious mistake of fact or the one which purports to follow the ratio of the earlier decision though such ratio is found to be nonexistent. They contend that it is neither necessary nor is there any compulsion to follow the later decision automatically, when such judgment is based on a conclusion drawn from an erroneous impression. They further contend, the conclusion in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, was based on a wrong assumption that the Supreme Court took a view that law reports are newspapers though they do not report contemporary news. They contend, in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, the decision on which the Supreme Court is purported to have placed sole reliance does not say so. Therefore, the law declared in the case of The Indian Express case [1987] 67 STC 474 (SC) has to be preferred to the conclusion reached in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat,
To substantiate this contention, the Revenue places reliance on the decision in the case of Babu Parasu Kaikadi (Dead) by Lrs. Vs. Babu (Dead) through Lrs., to contend that when the conflicting decisions are given by the co-ordinate Benches of the apex court, the later decision having not noticed earlier binding precedent of a co-ordinate Bench it would become per incuriam. A court is bound to follow the earlier judgment which is precisely on the point in preference to the later judgment which was rendered without adequate argument at the Bar and also without reference to the mandatory provisions of the Act. In the very same judgment, they refer to several cases of the apex court on these issues, which are referred to at paras 14, 15, 16, 17 and 18 which read as under:
Having given our anxious thought, we are of the opinion that for the reasons stated; hereinbefore, the decision of this court in Dhondiram Tatoba Kadam [1994] 3 SCC 366, having not noticed the earlier binding precedent of a co-ordinate Bench, and, having not considered the mandatory provisions as contained in sections 15 and 29 of the Act had been rendered per incuriam. It, therefore, does not constitute a binding precedent.
In Halsbury''s Laws of England, 4th Edition, Volume 26, it is stated:
A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a court of co-ordinate jurisdiction which covered the case before it, in which case it must decide which case to follow; or when it has acted in ignorance of a House of Lords decision, in which case it must follow that decision; or when the decision is given in ignorance of the terms of a statute or rule having statutory force.
In State of U.P. and Another Vs. Synthetics and Chemicals Ltd. and Another, this court observed (SCC, pages 162 and 163, para 40):
"Incuria" literally means "carelessness". In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of state decisis. The "quotable in law" is avoided and ignored if it is rendered, "in ignoratium of a statute or other binding authority". [Young v. Bristol Aeroplane Co. Ltd. [1944] 2 All ER 293 CA : [1944] 1 KB 718). Same has been accepted, approved and adopted by this court while interpreting article 141 of the Constitution which embodies the doctrine of precedents as a matter of law.
In Government of Andhra Pradesh and Another Vs. B. Satyanarayana Rao (Dead) by Lrs. and Others, it has been held as follows (SCC, page 264, para 8):
The rule of per incuriam can be applied where a court omits to consider a binding precedent of the same court or the Superior Court rendered on the same issue or where a court omits to consider any statute while deciding that issue.
Furthermore, this court, while rendering judgment in Dhondiram Tatoba Kadam Vs. Ramchandra Balwantrao Dubal (Since Deceased) by his Lrs. and Another, was bound by its earlier decision of a co-ordinate Bench in Ramchandra Keshav Adke (Dead) by Lrs. and Others Vs. Govind Joti Chavare and Others, We are bound to follow the earlier judgment which is precisely on the point in preference to the later judgment which has been rendered without adequate argument at the bar and also without reference to the mandatory provisions of the Act.
As against this, the learned counsel for the assessee places reliance on the decisions rendered in Govindanaik G. Kalaghatigi Vs. West Patent Press Co. Ltd. and Another, and C.N. Rudramurthy Vs. K. Barkathulla Khan and Others,
In the case of Govindanaik G. Kalaghatigi Vs. West Patent Press Co. Ltd. and Another, the relevant paragraphs are paras 5 and 12 which read as under:
In the light of the pronouncements of the Supreme Court in Mattulal Vs. Radhe Lal, and Union of India (UOI) and Another Vs. K.S. Subramanian, we hold that the Full Bench of three Judges in J. A.J. Aramha Vs. Mysore Road Transport Corporation and Others, did not lay down the law correctly and we overrule that decision. The answer to the question referred to this Bench, should in our opinion, be as follows:
If two decisions of the Supreme Court on a question of law cannot be reconciled and one of them is by a Larger Bench while the other is by a Smaller Bench, the decision of the Larger Bench, whether it is earlier or later in point of time, should be followed by High Courts and other courts. However, if both such Benches of the Supreme Court consist of equal number of Judges, the later of the two decisions should be followed by High Courts and other courts.
Opinion of the Full Bench
In view of the majority opinion, the answer to the question referred to this Full Bench, is as follows:
If two decisions of the Supreme Court, on a question of law cannot be reconciled and one of them is by a Larger Bench while the other is by a Smaller Bench, the decision of the Larger Bench, whether it is earlier or later in point of time, should be followed by High Courts and other courts: However, if both such Benches of the Supreme Court consist of equal number of Judges, the later of the two decisions should be followed by High Courts and other courts.
Answered accordingly.
In the case of C.N. Rudramurthy Vs. K. Barkathulla Khan and Others, the apex court held that the mandate of article 141 is not based on any precedents but is an imprimatur to all courts that the law declared by the Supreme Court is binding on them. It is a matter of judicial discipline that when Supreme Court declares as to what the law on the matter is, the same shall be binding on all courts within the territory of India.
On perusal of the above judgments, though in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, they referred to All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, stating that a law journal was held to be a newspaper though it does not carry news of contemporary period but the reading of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, it is not said so in many words. On the other hand, the discussion and observations contained in the case of The Indian Express [1987] 67 STC 474 (SC) was not brought to the notice of their Lordships. Except referring to the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, no separate reasoning or discussion of the facts are forthcoming.
On perusal of the judgment in All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, we note that the controversy was whether the benefits allowed to working journalist employed in newspaper establishments were applicable as well to the All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, which is well-known law publisher. In that context the definition of "newspaper" defined in Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 was referred to. As the Act in question was a beneficial legislation enacted for the purpose of improving the conditions of service "of the employees of the newspaper establishments, even if it is possible to have two opinions on the construction of the provisions of the Act, the one which advances the object of the Act and is in favour of the employees for whose benefit the Act is passed has to be accepted, was the opinion of their Lordships. In that context, their Lordships were persuaded to place wide and liberal construction on the word "newspaper" so as to cover journalist. It was certainly not with reference to old newspapers and waste newspapers. They also said that the law journals lose their characteristic as newspapers in course of time and further held that though the publication of newly enacted Act, Rules, Regulations. Book reviews and advertisements relating to law books, etc., may not occupy a substantial part of law report to make it a newspaper, the publication of the recent judgments itself is sufficient to make a law report a newspaper which may after sometime cease to be a newspaper and become a book of reference.
In view of the above discussion, we can place reliance on earlier judgment which is precisely on the point, in preference to the subsequent judgment as the later decision seems to be on a mistaken impression that in All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, the apex court took the view that the law reports are newspapers though they do not report contemporary news. Here doctrine of sub silentio comes into play. Even on facts, the material placed before us would go to show that the assessees in question are dealing with old newspapers and it is not their case that they are selling these old newspapers to the customers for the purpose of reading the news. The fact that they are dealing in old newspapers and waste paper business, definitely would indicate that they would be selling the newspaper for a purpose of other than the reading of news. It could be for packing, etc.
In view of the above discussion and reasoning, we are of the opinion, the questions of law raised have to be answered in favour of the Revenue.
Accordingly, the appeal in STA No. 3 of 2009, is dismissed and the revision in STRP No. 36 of 2007 and. STRP No. 39 of 2008 are allowed.
B.V. Nagarathna, J.
I have had the benefit of going through the judgment of her Ladyship, honourable Mrs. Manjula Chellur, J., in the aforesaid cases and while concurring with the decision, I wish to add a few words of my own.
The common questions raised in these cases are as follows:
(i) Whether old newspaper when sold as such, would be covered by the exemption provided in the Constitution under entry 92A of List I read with entry 54 of List II of the Seventh Schedule to the Constitution and sale thereof would not be liable to tax under the Karnataka Sales Tax Act?
(ii) In case of a conflict arising from decision of the co-equal Benches of the Supreme Court, whether the High Court can follow the earlier decision which has taken a particular view as, opposed to a later decision on the same point which has taken a contrary view?
Since her Ladyship has narrated the facts in detail, the discussion on the aforesaid points can be straight away dealt with.
It is the case of the assessees in these cases that old "newspaper" continues to be newspaper and entitled to exemption provided in entry 54 of List II of the Seventh Schedule which is subject to entry 92A of, List I and therefore, the State Government cannot impose sales tax on the sale of such newspaper. In support of their contention they have relied upon certain decisions.
According to the assessee, in the case of Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, the Supreme Court by placing reliance on another decision in All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, held that old newspapers are also newspaper within the meaning of the aforementioned legislative entries and would be entitled to the exemption provided under the Constitution and therefore, the sale thereof would not be liable to sales tax. They have also placed reliance on another decision of this court in the case of Reliable Rocks Builders and Suppliers Vs. The State of Karnataka and Another, wherein it has been held that an assessee who purchases boulders under circumstances in which no tax is leviable at the purchase point and who converts them into jelly in a process which is not a manufacturing process is not liable to tax u/s 6 of the Karnataka Sales Tax Act, 1957. It is therefore, submitted that the later decision of the Supreme Court in the case of Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, has to be followed and accordingly, exemption has to be granted in the instant case, as opposed to the earlier decision of the Supreme Court in the case of The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC), wherein it has been held that what is exempt from sales tax is the turnover of newspaper and not the turnover of old newspaper or waste paper. In support of their contention that the later decision of the Supreme Court has to be followed as opposed to an earlier decision on the very same point, though both the decisions are of co-equal Bench strength, they have relied upon the decision in the case of C.N. Rudramurthy Vs. K. Barkathulla Khan and Others, wherein the binding nature of judgments of the Supreme Court under article 141 of the Constitution, all courts in India has been explained and the same is applicable to the present case. They have also relied upon another decision of a five-Judge Bench this court in the case of Govindanaik G. Kalaghatigi Vs. West Patent Press Co. Ltd. and Another, to contend that if two decisions of the Supreme Court on a question of law cannot be reconciled and if both the Benches of the Supreme Court consist of equal number of judges, the later of the two decisions should be followed by High Courts and other courts.
Per contra, learned Government Advocate while reiterating the stand of the Revenue has contended that in the case of The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC), it has been categorically held that when newspapers are sold to the reading public, they are sold as a medium containing information regarded as news and what is exempted from sales tax is the turnover of newspaper and not the turnover of old newspaper which is waste paper. The said decision according to her is directly applicable to the facts of the case and reliance placed on another decision of the Supreme Court in the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, while deciding a point under sales tax in the case of Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, ; which is a later decision, was not appropriate and therefore, she submits that the decision in the case of The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC), has to be applied to the facts of the present case by disregarding the later decision in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, In support of this submission, she has relied upon a Full Bench opinion of the Andhra Pradesh High Court in the case of Ushodaya Enterprises Ltd. Vs. Commissioner of Commercial Taxes, A.P., Hyderabad, to contend that a later decision of the Supreme Court need not be automatically followed, when the same was found on a mistaken impression of another decision of the Supreme Court and which is contrary to an earlier decision on the very same point.
It is on the basis of these rival contentions that the aforesaid questions of law would have to be answered. While answering question No. 1, it is necessary to answer question No. 2 and therefore, the same are taken up together. At the outset, it is necessary to extract entry 92A, List I and entry 54 of List II of the Seventh Schedule to the Constitution:
92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce.
Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.
Entry 54 which is in the State List empowers the State Government to impose tax on sale of goods other than newspapers. Entry 92A enables Central Government to impose tax on sale of goods other than newspapers. In both the entries, there is an embargo on taxing of newspapers. Therefore, sale of newspaper is exempt from sales tax. The meaning of the word "newspaper" in the said entries must be restricted to papers which would convey "news" or a report of recent events and which is published daily or on a regular basis. It is only paper which has the qualities of a "newspaper" which can claim exemption from sales tax. Therefore, newspaper which are old and have lost the character of conveying "news" to its readers cannot be held to be "newspaper" within the meaning of the aforesaid entries.
The case of The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC), is the earlier decision wherein copies of the newspaper which remained unsold were disposed of in the market by weight as waste paper and the appellant-dealer claimed that it was not carrying on business in selling old newspaper and therefore, could not be assessed to tax on such turnover in the assessment proceedings. However, tax on the turnover of the unsold newspaper was imposed and ultimately, the matter was carried up to the High Court of Madras which held that the selling of unsold newspaper as waste paper could be regarded as an ancillary business connected with the main business of printing and publishing newspaper and therefore, sales tax was leviable. Before the Supreme Court it was contended that the surplus copies of the newspaper which was sold possessed the character of newspaper and therefore, exempted from sales tax. The said contention was repelled by holding that when newspaper becomes old they carry information which is no longer news and therefore they lose their character as newspaper and when they are disposed of as old paper, they cannot be regarded as the sale of newspaper as they are not sold for the purpose of reading the news and accordingly, upheld the judgment of the High Court of Madras that sales tax assessment on the turnover of surplus copies of newspaper sold as newspaper was justified. Following the said decision, in the case of The Hindu v. State of Tamil Nadu [1987] 67 STC 477 (SC), it was held that sale of unused glazed newsprint as well as old newspapers print waste and cut waste sold by the publisher of Hindu newspaper attracted sales tax.
Contrary to the view taken in the aforementioned decisions in the case of Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, , reliance was placed on another decision of the Supreme Court in the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, wherein, it was held that old newspaper is also "newspaper" which would be entitled to exemption provided under the Constitution and the sale thereof would not be liable to sales tax. In the said case, there is no reference made to the earlier decision of the Supreme Court in The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC), and the case of The Hindu [1987] 67 STC 477 (SC) though there is also no direct reference to the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, Since the judgment refers to law journals to come within the meaning of a "newspaper" though not carrying news of contemporary period, the reference in all likelihood is to the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, Therefore, it would be appropriate to refer to the said decision.
In the case of All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, the question was whether the law reports, i.e., All India Reporter Criminal Law Journal and other such journals are "newspapers" as defined in the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 and whether the employees engaged in the production or publication of the law reports are entitled to the benefits as the employees of any other newspaper establishment under the aforesaid Act. After analysing the definition clause and other provisions of the said Act, it was held that the law reports which published the decisions of the Supreme Court and various High Courts carry news as they give the latest laws prevailing on the country or any question decided in the decisions reported in the said reports in which the public have an interest and it possesses the character of "news" as they are received by the subscribers though the decisions contained in the reports may ceases to be items of news after sometime. After analysing various features of law reports, it was held that having regard to the beneficial piece of legislation regarding conditions of service of the employees of the newspaper establishment, a construction of the provisions which would advance to object of the Act in favour of the employees for whose benefit the. Act has been legislated to be made and it is in the aforesaid premise, it was held that the employees engaged in the production and publication of the law reports were and entitled to the benefits conferred upon the employees of newspaper establishments under the Act. The said decision was not rendered in the context of applicability of sales tax on sale of old newspaper. Therefore, with respect, reliance placed by the Supreme Court on this decision while disposing of the matter arising under sales tax enactment in the context of sale of old newspaper in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, was not appropriate.
Having said that, the question that would have to be considered is as to whether the decision in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, would still prevail over the earlier decisions in the case of The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC) and in the case of The Hindu v. State of Tamil Nadu [1987] 67 STC 477 (SC); which arise under the sales tax legislation. In order to unravel this conundrum reference may be made to a Full Bench decision of the High Court of Andhra Pradesh in the case of Ushodaya Enterprises Ltd. Vs. Commissioner of Commercial Taxes, A.P., Hyderabad, On a question identical to the cases under consideration. P. Venkatarama Reddy, J., writing the opinion that the Full Bench states as follows (pages 721 and 722 in 111 STC):
... While we have no second thoughts on the principle that the High Court should abide by the decision of the apex court in a spirit of loyalty, we are unable to follow Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, (though a later decision it is), which did not notice the decision of a co-ordinate Bench of the Supreme Court in The Indian Express (P.) Ltd. [1987] 67 STC 474 (SC). For the time being, we shall leave apart from consideration the question whether later decision is bound to be followed and whether it is open to the High Court to disregard the decision of the Supreme Court on the ground of the said decision being ''per incuriam''.
He further opined as follows:
Without making inroads into the settled principles governing the binding force of a decision of the Supreme Court either by virtue of its precedential value or the mandate of article 141, we can safely evolve the principle that in a case of conflict arising from the decisions of coequal Benches of the Supreme Court, the High Court is free to disregard the decision which is based on ah obvious mistake of fact or the one which purports to follow the ratio of an earlier decision though such ratio is found to be non-existent. The High Court can legitimately decline to follow such decision and follow the earlier decision which is backed by reasoning--whether it is acceptable to the High Court or not, and which is free from any such apparent flaw. We are unable to persuade ourselves to subscribe to the view that the later decision should be automatically followed despite the fact that it rests on a conclusion based on an erroneous impression that an earlier decision took a particular view which in fact it has not taken. By doing so, we are neither questioning the hierarchical superiority of the Supreme Court nor the higher wisdom of the honourable Judges of the Supreme Court. We are preferring one decision to the other--both rendered by Division Benches, for obvious reasons so as to avoid an incongruity leading to travesty of justice.
On support of the aforesaid view reliance was placed on decisions of the Supreme Court in the cases of B. Shama Rao Vs. The Union Territory of Pondicherry, Municipal Corporation of Delhi Vs. Gurnam Kaur, , State of U.P. and Another Vs. Synthetics and Chemicals Ltd. and Another, . On the strength of the aforesaid decisions, the High Court of Andhra Pradesh declined to follow the judgment of Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, not so much because it is in conflict with the earlier decision in The Indian Express (P.) Ltd. case [1987] 67 STC 474 (SC), which case which is directly on the point, but because the very judgment which the Lordships purported to follow, i.e., the decision in All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, did not lay down the decision, which their Lordship had laid down in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, I am persuaded to take a similar view in the instant case, as the case of The Indian Express (P.) Ltd. case [1987] 67 STC 474 (SC), is directly applicable to the facts of the cases under consideration wherein the taxability on the turnover of old newspaper or waste paper is involved, whereas, in All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others, the provisions of the Working Journalists and Other Newspaper Employees (Conditions of Service) Act, was under consideration. The object and purpose of the said Act is totally different from the object and purpose of levying sales tax on old newspaper. In fact, it is a settled principle of taxation law that while interpreting the provision of a taxation statute in the context of the tax being leviable on a particular transaction and interpretation thereof, reliance cannot be placed on the meaning given to certain words or phrases in other enactments. Under the circumstances, I am constrained not to follow the later decision of the Supreme Court in Saiyad Mohd. Saiyad Umar Saiyad and Others Vs. State of Gujarat, and are inclined to follow the earlier decisions in The Indian Express (P.) Ltd. case [1987] 67 STC 474 (SC), and in the case of The Hindu.[1987] 67 STC 477 (SC). Hence, the questions raised in these cases are answered against the assessee and in favour of the Revenue. Accordingly, STA No. 3 of .2009 is dismissed and STRP Nos. 36 of 2007 and 39 of 2008 are allowed.
__________________________________________________________ 1. The reference seems to be the case All India Reporter Karamchari Sangh and Others Vs. All India Reporter Limited and Others,