THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.102 OF 2010
J.K. Lakshmi Cement Ltd. ... Appellant
Versus
Commercial Tax Officer, Pali ...Respondent
WITH
CIVIL APPEAL NO. 6136 OF 2013
J U D G M E N T
Dipak Misra, J.
Civil Appeal No. 102 of 2010
The appellant is a Public Limited Company incorporated under the
Companies Act, 1956 and engaged in the business of manufacturing and
selling Grey Portland Cement. In exercise of powers conferred by
Section 8(5) of the Central Sales Tax Act, 1956 (for short, “CST Act”), the
Government of Rajasthan had issued a Notification No.
F4(72)FD/Gr.IV/81-18 dated 06.05.1986 allowing partial exemptions from the
sales tax payable in respect of inter-State sales in the manner and subject
to the conditions mentioned therein. Partial exemption was granted under
the said notification at the rate of 50%/75% on the basis of increase in
the percentage of the entire inter-State sales and decrease in percentage
of stock transfers but the benefit under the said notification was not
available on levy cement. From the assessment year 1989-90 to 1997-98 the
appellant had been granted benefit of partial exemption under the
notification dated 06.05.1986 except for the assessment year 1995-96 and
1996-97 as no claims were made by the appellants being not eligible.
2. It is necessary to state here that the State, in exercise of powers
conferred by Section 8(5) of the CST Act, issued Notification No.
F4(8)FD/GR.IV/94-70 dated 07.03.1994 superseding the notification dated
09.01.1990 and directing that in respect of inter-State sales of cement,
tax payable under sub-sections (1) and (2) of the said Section shall be
calculated at the rate of 4% without furnishing declaration in Form ‘C’,
inter alia, subject to the condition that the dealer making inter-State
sales under this notification shall not be eligible to claim benefit
provided by partial exemption notification dated 06.05.1986. This
notification remained in force from 01.04.1994 to 31.03.1997.
3. The CCT vide Circular No. 2/94-95 dated 15.04.1994 clarified that
inter-State sales of cement duly supported by ‘C’ and ‘D’ forms shall be
eligible for benefit of partial exemption notification dated 06.05.1986 and
that such benefit would not apply to inter-State sales which are not
supported by declarations in declarations in Forms ‘C’/‘D’.
4. By Notification No. 97-122 dated 12.03.1997 issued under Section
8(5) of the CST Act, the State Government rescinded the Notification No. 94-
70 dated 07.03.1994 and directed that CST on inter-State sales of cement
shall be calculated at the rate of 4% inter alia subject to fulfilment of
the condition that the dealer making inter-State sales under this
notification shall not be eligible to claim benefit provided by partial
exemption notification dated 06.05.1986. This notification remained in
force upto 31.03.1998.
5. As the factual score has been depicted, for the assessment year 1997-
98, dispute arose whether the sale of levy cement in the base year, i.e.,
1984-85, can be included and taken into consideration for calculating the
base year’s figure for the purpose of calculating the benefits under the
notification dated 06.05.1986. A re-assessment notice was issued to the
appellant for disallowing the said partial exemption on the ground that
while calculating the benefits under notification dated 06.05.1986 the
appellant-company had not included the figure of sale of levy cement made
in the base year, that is, 1984-85. The said re-assessment notice was
challenged by the appellant which formed the subject matter of Writ
Petition No. 1790 of 2001 which was dismissed by the Rajasthan High Court
vide order dated 24.07.2002. A Special Appeal bearing No. 497 of 2002 was
filed against the order dated 24.07.2002 before the Division Bench and on a
reference being made by the Division Bench, the matter was referred to a
larger Bench and the same is pending consideration. A similar dispute about
inclusion of levy cement had also arisen for the assessment year 1991-92
which had been decided by the Tax Board, Rajasthan vide order dated
16.01.2003 in favour of the appellant which attained finality since no
revision petition was filed by the State against the said decision. For
the assessment year 1999-2000, the appellant was asked vide show cause
notice dated 16.10.2001 to explain why the benefit of partial exemption
under notification dated 06.05.1986 should not be disallowed on the ground
that while calculating the benefits under notification dated 06.05.1986 the
appellant had not included the figure of sale of levy cement made in the
base year, that is, 1984-85. Against the said show cause notice writ
petition bearing No. 4300 of 2001 was filed and vide order dated 14.08.2002
the High Court disposed of the said writ petition in light of the order
dated 24.07.2002 passed in Writ Petition No. 1790 of 2001. Being
aggrieved by the said order, the appellant had filed a DB Special Appeal
No. 539 of 2002 which is pending consideration. We may immediately clarify
that we are not concerned with the said assessment years.
6. For the assessment year 2000-2001, a Show Cause Notice dated
11.01.2001 was issued to the appellant seeking to disallow the benefit
under notification dated 06.05.1986 on the ground that the appellant had
not calculated the benefits under notification dated 06.05.1986 after
including the figure of sale of levy cement in the base year, that is, 1984-
85. Against the said show cause notice Writ Petition bearing No. 551 of
2002 was filed which is pending before the High Court.
7. In exercise of power under Section 8(5) of the CST Act the State
Government vide Notification No. 97-266 dated 21.1.2000 directed that tax
payable under sub-sections (1) and (2) of the said Section on the inter-
State sales of cement shall be calculated at the rate of 6% inter alia
subject to the condition that the dealer making inter-State sales under
this notification shall not be eligible to claim benefit provided under
partial exemption notification dated 06.05.1986.
8. After a lapse of seven years from the previous circular dated
15.04.1994, the CCT issued another Circular No. 94-95/119 dated
16.04.2001 purporting to clarify the applicability of partial exemption
notification dated 06.05.1986 vis-a-vis notification dated 07.03.1994 and
subsequent notifications dated 12.03.1997 and 21.01.2000. By the said
circular the competent authority purported to state that the dealer can
avail of the benefit of either of these two notifications in any financial
year meaning thereby that if he opts for the benefit under notification
dated 06.05.1986 for the year 2000-2001, he would not be entitled to claim
simultaneous benefit in respect of the same year under the notification
dated 21.01.2000.
9. For the assessment year 2000-2001, a show cause notice dated
19.08.2003 was issued by the Commercial Taxes Officer to the appellant
seeking to disallow the benefits under notification dated 06.05.1986 on a
purported retrospective application of the Circular dated 16.04.2001.
Appellant challenged the said show cause notice before the High Court by
way of a Writ Petition bearing No. 6192 of 2003. The High Court vide order
dated 18.11.2003 held that the said show cause notice dated 19.08.2003 was
not justified as Circular dated 16.04.2001 could apply only prospectively
and not retrospectively.
10. While finalizing the assessment for the assessment year 2001-2002, a
show cause notice dated 19.08.2003 was issued purportedly based on Circular
dated 16.04.2001 requiring the appellant to show cause why the partial
exemption claimed under State Government’s notification No.
F4(72)FD/Gr.IV/81-18 dated 06.05.1986 should not be disallowed. The
appellant submitted its reply but the assessing authority vide order dated
26.08.2003 rejected the claim of partial exemption only on the basis of
Circular dated 16.04.2001 and imposed additional tax on the assessee for
the assessment year 2001-2002.
11. The appellant filed an appeal before the Deputy Commissioner
(Appeals), who allowed the appeal on 03.01.2004 holding that the appellant
would be entitled to avail such partial exemption in respect of inter-State
sales made on which concessional rate of 6% was not availed of by it under
notification dated 21.01.2000.
12. Being aggrieved by the order of the appellate authority, the revenue
approached the Rajasthan Tax Board in appeal contending, inter alia, that
as per circular dated 16.04.2001 the benefit could not be claimed under
notification dated 06.05.1986 if the unit had made sales under notification
dated 21.01.2000. In essence, it was urged that benefit of both the
notifications could not be availed of in the same financial year. The Tax
Board allowed the appeal filed by the revenue. Against the order of the
Tax Board, the appellant filed revision petition before the High Court and
the learned Single Judge vide order dated 17.04.2009 considering the
submissions put forth by the parties and upon analysing the principle
stated in Tata Cummins Ltd. v. State of Jharkhand[1], M/s Vividh Marbles
Pvt. Ltd. v. Commercial Tax Officer[2], State of Rajasthan v. J.K. Udaipur
Udyog Ltd. and another[3], MRF Ltd. Kottayam v. Asstt. Commissioner
(Assessment) Sales Tax and ors.[4] and other authorities came to hold that
condition no. 3 of Notification No. 21.01.2000 has to be given its plain
and clear meaning and cannot be restricted only to the specific transaction
of sale covered by notification dated 21.01.2000 itself and when the
condition no. 3 unequivocally states that once the assessee avails of the
benefit of concessional rate of tax under notification dated 21.01.2000, he
cannot get the partial benefit as envisaged in the Notification dated
06.05.1986 and accordingly repelled the stand of the assessee.
13. We have heard Mr. S. Ganesh, learned senior counsel for the appellant
and Mr. Jatinder Kumar Bhatia, learned counsel for the respondent.
14. The seminal issue that arises for consideration, succinctly put, is
whether the appellant is entitled to dual benefit of partial exemption
under the notification dated 06.05.1986 and also the lower rate of tax @ 6%
under notification dated 21.01.2000. To answer the issue raised, it is
necessary to refer to the notifications and the language employed therein
to ascertain the fundamental intention therein and to appreciate whether
grant of simultaneous exemptions and benefits would be contrary to the said
notifications. The first notification dated 06.05.1986 reads as under:-
“Notification No.F.4(72)FD/Gr.IV/81-18, S.O. 23, May 6, 1986.
In exercise of the powers conferred by sub-section (5) of section 8 of the
Central Sales Tax Act, 1956( Central Act 74 of 1956), the State Government,
on being satisfied that it is necessary so to do in the public interest, in
supersession of the Finance Department Notification No. F.4 (72) FD/Gr.
IV/81-36, dated December 3, 1985, hereby directs that, with immediate
effect, any dealer, having his place of business and manufacturing goods in
the State of Rajasthan, may claim partial exemption from the tax payable in
respect of the sales by him of such goods in the course of inter-State
trade or commerce by way of reduction at the rate of 50% of the tax so
payable on increased sales upto 50% and at the rate of 75% of the tax so
payable on increased sales made over and above the aforesaid 50%, in the
manner and subject to the conditions as follows:-
(1) Such reduction of tax shall be allowed to a dealer only after and in
respect of the increase which is effected in the percentage of the quantum
of goods sold in the course of inter-State trade or commerce out of the
total quantum of goods sold within the State and in the course of inter-
State trade or commerce and dispatched to Head Office, Branch Office, Depot
or agent outside the State for sale outside the State, during any
accounting year as against such percentage during the accounting year 1984-
85.
(2)In the case of a dealer who commenced the manufacture of goods in the
State of Rajasthan “on or after 1.1.1985”, the average of the aforesaid
percentages in respect of the other manufacturers in the State in the
relevant industry during the accounting year 1984-85, calculated and
determined by the assessing authority with the approval of the
Commissioner, shall be deemed to be the percentage in respect of such
dealer for the accounting year 1984-85;
(3) This increase effected in the percentage, as referred to in clause (1)
above in respect of the sales in the course of inter-State trade or
commerce, to be considered shall be limited to the extent of the decrease
in the percentage in respect of the despatch of goods to Head Office,
Branch Office, Depot or agent outside the State for sale outside the State,
during the relevant accounting year as against such percentage during the
accounting year 1984-85; and
(4) No claim for such reduction of tax shall be allowed in respect of levy-
cement.”
15. The notification dated 21.01.2000 is as under:-
“[No.F.4(1) FD/Tax Div. 97-266]
Jaipur, 21st January, 2000
In exercise of the powers conferred by sub-section (5) of section 8
of the Central Sales Tax Act, 1956 the State Government being satisfied
that it is necessary in the public interest so to do, hereby directs that
the tax payable under sub-sections (1) and (2) of the said section, by any
dealer having his place of business in the State, in respect of sale of
cement made by him from any such place of business in the State, in the
course of inter-state trade or commerce, shall be calculated at the rate of
6% on the following conditions, namely:-
1. That the dealer shall record the correct name with full and complete
address of the purchaser in the bill or cash memorandum for such inter-
State sale to be issued by him;
2. That the burden of proof that the transaction was in the nature of inter-
State sale shall be on the dealer; and
3. That the dealer making inter-State sales under this notification shall
not be eligible to claim benefits provided by notification No.F.4(72)
FD/GR.IV/81-18 dated 6.5.1986 as amended from time to time.”
16. On a careful scanning of the notification dated 06.05.1986, it is
evident that it allows partial exemption from sales-tax on inter-State
sales, subject to and in the manner stipulated therein. The exemption of
75% or 50% is granted with reference to the quantum of goods sold in the
course of inter-State trade or commerce out of the total quantum of goods
sold within the State, as against such percentage during the accounting
year 1984-85, which is treated as the base year. As per the notification,
it is applicable to a dealer who has his place of business; and he must be
manufacturing goods inside the State. The intention is to encourage inter-
State sale of goods manufactured and sold by a dealer in the State of
Rajasthan. It has a purpose. The increase in quantum of goods sold in
inter-State trade or commerce with reduction in quantum of stock transfers
by way of branch or depot transfers on which NIL or no Central Sales tax is
applicable would increase the revenue of the State. Clause 4 of the
notification envisages that no reduction of tax is to be allowed in respect
of levy cement. Computation of the total quantum of goods with reference
to the exclusion of levy cement is not a subject matter of the present
appeal and that is pending for consideration before the Appellate Bench and
Single Judge of the High Court. Nevertheless, it is apparent that changes
in figures of the quantum of goods, whether with reference to inter-State
sales and intra-State sales in the base year and in the year in which
benefit is claimed, would impact the determination and quantification of
the benefit. Therefore, the exclusion or inclusion in the quantum or
turnover is critical and significant.
17. The 21.01.2000 notification applies to a dealer having a place of
business in the State and is in respect of sale of cement made by him from
any place of business within the State in the course of inter-State trade
or commerce. Apart from the above, certain other conditions are to be
satisfied. They are (a) sales-tax in respect of inter-State sales as per
the notification would be calculated at the rate of 6% and (b) the dealer
making inter-State sales under notification dated 21.01.2000 would not be
eligible to claim benefit provided in the notification dated 06.05.1986.
Clause 3 of the notification lays down that if a dealer claims benefit
under notification dated 21.01.2000, he is not eligible to claim the
benefit under notification dated 06.05.1986. Benefit under the two
notifications cannot be claimed at the same time. It is simple and clear.
18. A dealer making inter-State sales under the notification dated
21.01.2000 is disqualified and not eligible to claim benefit under the
notification dated 06.05.1986. The reason is to deny dual benefit and also
the notification dated 06.05.1986 computes the benefit on the basis of
turnover. Bifurcation and division of turnover would lead to distortion
and cause anomalies.
19. To get over the aforesaid impasse, the learned counsel for the
appellant has raised three contentions. The two notifications being
beneficial should be liberally construed, for it cannot be assumed that the
intendment was that if an assessee claims and was entitled to a relatively
small or partial exemption under notification dated 06.05.1986, he would be
deprived of the exemption even if he meets the conditions in paragraphs 1
and 2 of the notification dated 21.01.2000. The submission is that the
assessee can get benefit of both the notifications but not the dual benefit
in the sense that inter-State sales on which benefit of concessional rate
of tax of 6% is not availed of could be granted partial exemption under
notification dated 06.05.1986. Quite apart from the aforesaid argument, it
is urged that partial exemption could be granted under the notification
dated 06.05.1986 in respect of such intra- State sales not covered by the
notification dated 21.01.2000; and benefit of partial exemption under
notification dated 06.05.1986 would co-exist with the notification dated
21.01.2000, though in respect of different and distinct transactions. The
second limb of argument is that this interpretation was the understanding
of the respondents, as they had issued circular dated 15.04.1994 and
pursuant to the said circular, the appellant and the other assessees were
extended benefit of the notification dated 06.05.1986 and also the
notification dated 07.03.1994, which has now been replaced and re-
introduced in the form of notification dated 21.01.2000. The plea of
consistency especially when the revenue in earlier years had accepted the
said interpretation is highlighted. The last plank of argument is the
circular dated 15.04.1994 was clarificatory and had rightly interpreted and
expounded the interplay between the two notifications. Therefore, the
circular dated 15.04.1994 under the notification dated 07.03.1994 would
equally apply and would guide the interpretation of the notification
dated 21.01.2000.
20. In order to appreciate the contentions raised, it is imperative to
reproduce notification dated 07.03.1994 and the circular dated 15.04.1994,
and the circular dated 16.04.2001 by which circular dated 15.04.1994 was
withdrawn. The notification dated 07.03.1994 reads as under:-
“Notification No.F.4 (8) FD/Gr.IV/94-70 S.O. No. 200, Jaipur, dated March
7, 1994.
In exercise of the powers conferred by sub-section (5) of section 8 of the
Central Sales Tax Act, 1956 (Central Act 74 of 1956), and in supersession
of this Department Notification No.F.4 (72) FD/Gr.IV/82-34, dated
27.06.1990, the State Government being satisfied that it is necessary in
the public interest so to do, hereby directs that the tax payable under sub-
sections (1) and (2) of the said section, by any dealer having his place of
business in the State, in respect of the sales of cement made by him from
any such place of business in the course of inter-State trade or commerce
shall be calculated at the rate of 4 percent without furnishing of
declaration in form “C” or certification in form “D” on the following
conditions, namely:-
(i) that the dealer shall record the name and full and complete address of
the purchaser in the bill or cash memorandum for such inter-State sale to
be issued by him;
(ii) that the burden to prove that the transaction was in the nature of
inter-State sale, shall be on the dealer; and
(iii) that the dealer making inter-State sales under this notification
shall not be eligible to claim benefit provided for by the notification
No.F.4. (72) FD/Gr.IV/81-18, dated 6.5.1986, as amended from time to time.
This notification shall come into force from 1st April, 1994 and shall
remain in force upto 31st March, 1997.”
21. The circular dated 15.4.1994 is reproduced below:-
“Tax Policy circular No.2/94-95
State of Rajasthan
Commercial Tax Department
No. Pa. 16/Budget/Tax/Commissioner/94-95/108
Dated 15/4/1994
To,
All Deputy Commissioners, Commercial Tax
All Assistant Commissioners, Commercial Tax
All Commercial/Assistant Commercial Tax Officers
Circular
The notification No. Pa. 4 (8) FD/Group-4/94-70 dated 7/3/1994 was issued
by the State Government and the rate of central tax on the inter-State sale
of cement is fixed unconditionally at 4 percent in case the declaration
form-‘C’ or form-‘D’ is not submitted between 1/4/1994 to 31/3/1997. Under
the said notification the trader doing the inter-State sale shall not be
entitled to claim for the benefit made available through the notification
No. F4 (72) FD/Group-4/61-18 dated 6/5/1986 amended from time to time.
It is made clear in this respect that the benefits made available through
the notification No. F 4 (72) FDR-Group-4/81-18 dated 6/5/1986 as amended
from time to time with respect to the inter-State sale of the cement done
with the form-‘C’ or form-‘D’, but aforesaid benefit shall not be available
in case the inter-State sale is done without the form-‘C’ or form-‘D’.”
22. The circular dated 16.04.2001 withdrawing the circular dated
15.04.1994 is as follows:-
“GOVERNMENT OF RAJASTHAN
COMMERCIAL TAXES DEPARTMENT
No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001
All Dy. Commissioners
All Assistant Commissioners
All Commercial Taxes Officers.
All Assistant Commercial Taxes Officers.
CIRCULAR
A question has been raised as to the applicability of Finance Department
notification No.F.4(72)FD/Br.IV/ 81-18 dated 06.05.1986 vis-a-vis
notification No.F/(8) FD/Gr.IV/94-70 dated 07.03.1994 and similar
subsequent notification dated 12.03.1997 and the existing notification
dated 21.01.2000. The issue has been examined and it is clarified that a
dealer can avail the benefit of either of these two notifications in any
financial year. For instance, if he opts for benefit under notification
dated 06.05.1986 for the financial year 2000-2001, he would not be entitled
to claim simultaneous benefit in the same year under the notification
providing for reduce rate of tax on cement in course of inter-state trade
or commerce without any supportive Form C or D. Consequently, if the
benefit of notification dated 21.01.2000 is being availed in any financial
year, the dealer shall be debarred from claiming any benefit under
notification dated 6.5.1986 for the same assessment year.
Keeping in view the above status, the Circular No.F.16 (Budget)Tax/CCT/94-
95/108 dated 15.04.1994 is hereby withdrawn and the dealers will be
entitled to claim benefit of either of the two notifications in any
financial year. Action may be taken accordingly.
Sd/-
(P.K.Deb) Commissioner”
23. As the factual score would depict, Notification dated 07.03.1994 was
applicable from 1st April, 1994 to 31st March, 1997. It was not applicable
with effect from 1st April, 1997. In such a situation, the plea of the
appellant that dual benefits were availed of under notification dated
07.03.1994 post 1st April, 1997 is unacceptable and has to be rejected. Be
it noted, by another notification No. 97-122 dated 12.03.1997, the State
Government had rescinded notification dated 07.03.1994 and directed that
the Central Sales Tax shall be calculated @ 4%, subject to the condition
that the dealer making inter State sales in this notification would not be
eligible to claim benefit of partial exemption under the notification dated
06.05.1986. The notification dated 12.03.1997 had remained in force upto
31st March, 1998. The circular dated 15.04.1994 in express words was not
applicable to the notification dated 21.01.2000.
24. It is limpid that the circular dated 15.04.1994, when in force, had
referred to the notifications dated 07.03.1994 as well as 06.05.1986. Under
the notification dated 07.03.1994, the rate of central tax on inter-State
sale of cement was unconditionally fixed at 4%, even when there was no
declaration in Form C and Form D. The notification dated 06.05.1986
relating to inter-State sale required Form C and Form D, for availing the
benefit. The circular did not in clear and categorical terms lay down that
dual or multiple benefits under the two notifications could be availed of
by the same dealer. It, however, appears that both the assessee and the
Revenue had understood the circular dated 15.04.1994 to mean that inter-
State transactions would qualify and would be entitled to partial exemption
under the notification dated 06.05.1986, when accompanied with Form C and D
and for inter-State sale transactions without Form C and D, benefit of
notification dated 07.03.1994 would apply.
25. The understanding by the assessee and the Revenue, in the obtaining
factual matrix, has its own limitation. It is because the principle of res
judicata would have no application in spite of the understanding by the
assessee and the Revenue, for the circular dated 15.04.1994, is not to the
specific effect as suggested and, further notification dated 07.03.1994 was
valid between 1st April, 1994 up to 31st March, 1997 (upto 31st March, 1997
vide notification dated 12.03.1997) and not thereafter. The Commercial
Tax Department, by a circular, could have extended the benefit under a
notification and, therefore, principle of estoppel would apply, though
there are authorities which opine that a circular could not have altered
and restricted the notification to the determent of the assessee. Circulars
issued under tax enactments can tone down the rigour of law, for an
authority which wields power for its own advantage is given right to forego
advantage when required and considered necessary. This power to issue
circulars is for just, proper and efficient management of the work and in
public interest. It is a beneficial power for proper administration of
fiscal law, so that undue hardship may not be caused. Circulars are binding
on the authorities administering the enactment but cannot alter the
provision of the enactment, etc. to the detriment of the assessee.
Needless to emphasise that a circular should not be adverse and cause
prejudice to the assessee. (See : UCO Bank, Calcutta v. Commissioner of
Income Tax, West Bengal[5]).
26. In Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire
Industries[6], it has been held that circulars and instructions issued by
the Board are binding on the authorities under respective statute, but when
this Court or High Court lays down a principle, it would be appropriate for
the Court to direct that the circular should not be given effect to, for
the circulars are not binding on the Court. In the case at hand, once
circular dated 15.04.1994 stands withdrawn vide circular dated 16.04.2001,
the appellant-assessee cannot claim the benefit of the withdrawn circular.
27. The controversy herein centres round the period from 1st April, 2001
to 31st March, 2002. The period in question is mostly post the circular
dated 16.04.2001. As we find, the appellant-assessee has pleaded to take
benefit of the circular dated 15.04.1994, which stands withdrawn and was
only applicable to the notification dated 07.03.1994. It was not
specifically applicable to the notification dated 21.01.2000. The fact that
the third paragraph of the notification dated 21.01.2000 is identically
worded to the third paragraph of the notification dated 07.03.1994 but that
would not by itself justify the applicability of circular dated 15.04.1994.
28. In this context, we may note another contention that has been
advanced before us. It is based upon the doctrine of contemporanea
exposition. In our considered opinion, the said doctrine would not be
applicable and cannot be pressed into service. Usage or practice developed
under a statute is indicative of the meaning prescribed to its words by
contemporary opinion. In case of an ancient statute, doctrine of
contemporanea exposition is applied as an admissible aid to its
construction. The doctrine is based upon the precept that the words used
in a statutory provision must be understood in the same way in which they
are usually understood in ordinary common parlance by the people in the
area and business. (See : G.P. Singh’s Principles of Statutory
Interpretation, 13th Edition-2012 at page 344). It has been held in
Rohitash Kumar and others v. Om Prakash Sharma and others[7] that the said
doctrine has to be applied with caution and the Rule must give way when the
language of the statute is plain and unambiguous. On a careful scrutiny of
the language employed in paragraph 3 of the notification dated 21.01.2000,
it is difficult to hold that the said notification is ambiguous or
susceptible to two views of interpretations. The language being plain and
clear, it does not admit of two different interpretations.
29. In this regard, we may state that the circular dated 15.04.1994 was
ambiguous and, therefore, as long as it was in operation and applicable
possibly doctrine of contemporanea exposition could be taken aid of for its
applicability. It is absolutely clear that the benefit and advantage was
given under the circular and not under the notification dated 07.03.1994,
which was lucid and couched in different terms. The circular having been
withdrawn, the contention of contemporanea exposition does not commend
acceptation and has to be repelled and we do so. We hold that it would
certainly not apply to the notification dated 21.01.2000.
30. In view of the aforesaid analysis, we do not find any merit in the
instant appeal and the same is, accordingly, dismissed. There shall be no
order as to costs.
Civil Appeal No. 6136 of 2013
31. In view of the judgment passed in Civil Appeal No. 102 of 2010, this
appeal also stands dismissed. There shall be no order as to costs.
…………………………..J.
[Dipak Misra]
……………………….….J.
[C. Nagappan]
New Delhi;
September 16, 2016
-----------------------
[1] 2006 (16) Tax update 199
[2] 2007 (17) Tax update 307
[3] (2004) 137 STC 438
[4] (2006) 8 SCC 702
[5] (1999) 4 SCC 599
[6] (2008) 13 SCC 1
[7] (2013) 11 SCC 451
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.102 OF 2010
J.K. Lakshmi Cement Ltd. ... Appellant
Versus
Commercial Tax Officer, Pali ...Respondent
WITH
CIVIL APPEAL NO. 6136 OF 2013
J U D G M E N T
Dipak Misra, J.
Civil Appeal No. 102 of 2010
The appellant is a Public Limited Company incorporated under the
Companies Act, 1956 and engaged in the business of manufacturing and
selling Grey Portland Cement. In exercise of powers conferred by
Section 8(5) of the Central Sales Tax Act, 1956 (for short, “CST Act”), the
Government of Rajasthan had issued a Notification No.
F4(72)FD/Gr.IV/81-18 dated 06.05.1986 allowing partial exemptions from the
sales tax payable in respect of inter-State sales in the manner and subject
to the conditions mentioned therein. Partial exemption was granted under
the said notification at the rate of 50%/75% on the basis of increase in
the percentage of the entire inter-State sales and decrease in percentage
of stock transfers but the benefit under the said notification was not
available on levy cement. From the assessment year 1989-90 to 1997-98 the
appellant had been granted benefit of partial exemption under the
notification dated 06.05.1986 except for the assessment year 1995-96 and
1996-97 as no claims were made by the appellants being not eligible.
2. It is necessary to state here that the State, in exercise of powers
conferred by Section 8(5) of the CST Act, issued Notification No.
F4(8)FD/GR.IV/94-70 dated 07.03.1994 superseding the notification dated
09.01.1990 and directing that in respect of inter-State sales of cement,
tax payable under sub-sections (1) and (2) of the said Section shall be
calculated at the rate of 4% without furnishing declaration in Form ‘C’,
inter alia, subject to the condition that the dealer making inter-State
sales under this notification shall not be eligible to claim benefit
provided by partial exemption notification dated 06.05.1986. This
notification remained in force from 01.04.1994 to 31.03.1997.
3. The CCT vide Circular No. 2/94-95 dated 15.04.1994 clarified that
inter-State sales of cement duly supported by ‘C’ and ‘D’ forms shall be
eligible for benefit of partial exemption notification dated 06.05.1986 and
that such benefit would not apply to inter-State sales which are not
supported by declarations in declarations in Forms ‘C’/‘D’.
4. By Notification No. 97-122 dated 12.03.1997 issued under Section
8(5) of the CST Act, the State Government rescinded the Notification No. 94-
70 dated 07.03.1994 and directed that CST on inter-State sales of cement
shall be calculated at the rate of 4% inter alia subject to fulfilment of
the condition that the dealer making inter-State sales under this
notification shall not be eligible to claim benefit provided by partial
exemption notification dated 06.05.1986. This notification remained in
force upto 31.03.1998.
5. As the factual score has been depicted, for the assessment year 1997-
98, dispute arose whether the sale of levy cement in the base year, i.e.,
1984-85, can be included and taken into consideration for calculating the
base year’s figure for the purpose of calculating the benefits under the
notification dated 06.05.1986. A re-assessment notice was issued to the
appellant for disallowing the said partial exemption on the ground that
while calculating the benefits under notification dated 06.05.1986 the
appellant-company had not included the figure of sale of levy cement made
in the base year, that is, 1984-85. The said re-assessment notice was
challenged by the appellant which formed the subject matter of Writ
Petition No. 1790 of 2001 which was dismissed by the Rajasthan High Court
vide order dated 24.07.2002. A Special Appeal bearing No. 497 of 2002 was
filed against the order dated 24.07.2002 before the Division Bench and on a
reference being made by the Division Bench, the matter was referred to a
larger Bench and the same is pending consideration. A similar dispute about
inclusion of levy cement had also arisen for the assessment year 1991-92
which had been decided by the Tax Board, Rajasthan vide order dated
16.01.2003 in favour of the appellant which attained finality since no
revision petition was filed by the State against the said decision. For
the assessment year 1999-2000, the appellant was asked vide show cause
notice dated 16.10.2001 to explain why the benefit of partial exemption
under notification dated 06.05.1986 should not be disallowed on the ground
that while calculating the benefits under notification dated 06.05.1986 the
appellant had not included the figure of sale of levy cement made in the
base year, that is, 1984-85. Against the said show cause notice writ
petition bearing No. 4300 of 2001 was filed and vide order dated 14.08.2002
the High Court disposed of the said writ petition in light of the order
dated 24.07.2002 passed in Writ Petition No. 1790 of 2001. Being
aggrieved by the said order, the appellant had filed a DB Special Appeal
No. 539 of 2002 which is pending consideration. We may immediately clarify
that we are not concerned with the said assessment years.
6. For the assessment year 2000-2001, a Show Cause Notice dated
11.01.2001 was issued to the appellant seeking to disallow the benefit
under notification dated 06.05.1986 on the ground that the appellant had
not calculated the benefits under notification dated 06.05.1986 after
including the figure of sale of levy cement in the base year, that is, 1984-
85. Against the said show cause notice Writ Petition bearing No. 551 of
2002 was filed which is pending before the High Court.
7. In exercise of power under Section 8(5) of the CST Act the State
Government vide Notification No. 97-266 dated 21.1.2000 directed that tax
payable under sub-sections (1) and (2) of the said Section on the inter-
State sales of cement shall be calculated at the rate of 6% inter alia
subject to the condition that the dealer making inter-State sales under
this notification shall not be eligible to claim benefit provided under
partial exemption notification dated 06.05.1986.
8. After a lapse of seven years from the previous circular dated
15.04.1994, the CCT issued another Circular No. 94-95/119 dated
16.04.2001 purporting to clarify the applicability of partial exemption
notification dated 06.05.1986 vis-a-vis notification dated 07.03.1994 and
subsequent notifications dated 12.03.1997 and 21.01.2000. By the said
circular the competent authority purported to state that the dealer can
avail of the benefit of either of these two notifications in any financial
year meaning thereby that if he opts for the benefit under notification
dated 06.05.1986 for the year 2000-2001, he would not be entitled to claim
simultaneous benefit in respect of the same year under the notification
dated 21.01.2000.
9. For the assessment year 2000-2001, a show cause notice dated
19.08.2003 was issued by the Commercial Taxes Officer to the appellant
seeking to disallow the benefits under notification dated 06.05.1986 on a
purported retrospective application of the Circular dated 16.04.2001.
Appellant challenged the said show cause notice before the High Court by
way of a Writ Petition bearing No. 6192 of 2003. The High Court vide order
dated 18.11.2003 held that the said show cause notice dated 19.08.2003 was
not justified as Circular dated 16.04.2001 could apply only prospectively
and not retrospectively.
10. While finalizing the assessment for the assessment year 2001-2002, a
show cause notice dated 19.08.2003 was issued purportedly based on Circular
dated 16.04.2001 requiring the appellant to show cause why the partial
exemption claimed under State Government’s notification No.
F4(72)FD/Gr.IV/81-18 dated 06.05.1986 should not be disallowed. The
appellant submitted its reply but the assessing authority vide order dated
26.08.2003 rejected the claim of partial exemption only on the basis of
Circular dated 16.04.2001 and imposed additional tax on the assessee for
the assessment year 2001-2002.
11. The appellant filed an appeal before the Deputy Commissioner
(Appeals), who allowed the appeal on 03.01.2004 holding that the appellant
would be entitled to avail such partial exemption in respect of inter-State
sales made on which concessional rate of 6% was not availed of by it under
notification dated 21.01.2000.
12. Being aggrieved by the order of the appellate authority, the revenue
approached the Rajasthan Tax Board in appeal contending, inter alia, that
as per circular dated 16.04.2001 the benefit could not be claimed under
notification dated 06.05.1986 if the unit had made sales under notification
dated 21.01.2000. In essence, it was urged that benefit of both the
notifications could not be availed of in the same financial year. The Tax
Board allowed the appeal filed by the revenue. Against the order of the
Tax Board, the appellant filed revision petition before the High Court and
the learned Single Judge vide order dated 17.04.2009 considering the
submissions put forth by the parties and upon analysing the principle
stated in Tata Cummins Ltd. v. State of Jharkhand[1], M/s Vividh Marbles
Pvt. Ltd. v. Commercial Tax Officer[2], State of Rajasthan v. J.K. Udaipur
Udyog Ltd. and another[3], MRF Ltd. Kottayam v. Asstt. Commissioner
(Assessment) Sales Tax and ors.[4] and other authorities came to hold that
condition no. 3 of Notification No. 21.01.2000 has to be given its plain
and clear meaning and cannot be restricted only to the specific transaction
of sale covered by notification dated 21.01.2000 itself and when the
condition no. 3 unequivocally states that once the assessee avails of the
benefit of concessional rate of tax under notification dated 21.01.2000, he
cannot get the partial benefit as envisaged in the Notification dated
06.05.1986 and accordingly repelled the stand of the assessee.
13. We have heard Mr. S. Ganesh, learned senior counsel for the appellant
and Mr. Jatinder Kumar Bhatia, learned counsel for the respondent.
14. The seminal issue that arises for consideration, succinctly put, is
whether the appellant is entitled to dual benefit of partial exemption
under the notification dated 06.05.1986 and also the lower rate of tax @ 6%
under notification dated 21.01.2000. To answer the issue raised, it is
necessary to refer to the notifications and the language employed therein
to ascertain the fundamental intention therein and to appreciate whether
grant of simultaneous exemptions and benefits would be contrary to the said
notifications. The first notification dated 06.05.1986 reads as under:-
“Notification No.F.4(72)FD/Gr.IV/81-18, S.O. 23, May 6, 1986.
In exercise of the powers conferred by sub-section (5) of section 8 of the
Central Sales Tax Act, 1956( Central Act 74 of 1956), the State Government,
on being satisfied that it is necessary so to do in the public interest, in
supersession of the Finance Department Notification No. F.4 (72) FD/Gr.
IV/81-36, dated December 3, 1985, hereby directs that, with immediate
effect, any dealer, having his place of business and manufacturing goods in
the State of Rajasthan, may claim partial exemption from the tax payable in
respect of the sales by him of such goods in the course of inter-State
trade or commerce by way of reduction at the rate of 50% of the tax so
payable on increased sales upto 50% and at the rate of 75% of the tax so
payable on increased sales made over and above the aforesaid 50%, in the
manner and subject to the conditions as follows:-
(1) Such reduction of tax shall be allowed to a dealer only after and in
respect of the increase which is effected in the percentage of the quantum
of goods sold in the course of inter-State trade or commerce out of the
total quantum of goods sold within the State and in the course of inter-
State trade or commerce and dispatched to Head Office, Branch Office, Depot
or agent outside the State for sale outside the State, during any
accounting year as against such percentage during the accounting year 1984-
85.
(2)In the case of a dealer who commenced the manufacture of goods in the
State of Rajasthan “on or after 1.1.1985”, the average of the aforesaid
percentages in respect of the other manufacturers in the State in the
relevant industry during the accounting year 1984-85, calculated and
determined by the assessing authority with the approval of the
Commissioner, shall be deemed to be the percentage in respect of such
dealer for the accounting year 1984-85;
(3) This increase effected in the percentage, as referred to in clause (1)
above in respect of the sales in the course of inter-State trade or
commerce, to be considered shall be limited to the extent of the decrease
in the percentage in respect of the despatch of goods to Head Office,
Branch Office, Depot or agent outside the State for sale outside the State,
during the relevant accounting year as against such percentage during the
accounting year 1984-85; and
(4) No claim for such reduction of tax shall be allowed in respect of levy-
cement.”
15. The notification dated 21.01.2000 is as under:-
“[No.F.4(1) FD/Tax Div. 97-266]
Jaipur, 21st January, 2000
In exercise of the powers conferred by sub-section (5) of section 8
of the Central Sales Tax Act, 1956 the State Government being satisfied
that it is necessary in the public interest so to do, hereby directs that
the tax payable under sub-sections (1) and (2) of the said section, by any
dealer having his place of business in the State, in respect of sale of
cement made by him from any such place of business in the State, in the
course of inter-state trade or commerce, shall be calculated at the rate of
6% on the following conditions, namely:-
1. That the dealer shall record the correct name with full and complete
address of the purchaser in the bill or cash memorandum for such inter-
State sale to be issued by him;
2. That the burden of proof that the transaction was in the nature of inter-
State sale shall be on the dealer; and
3. That the dealer making inter-State sales under this notification shall
not be eligible to claim benefits provided by notification No.F.4(72)
FD/GR.IV/81-18 dated 6.5.1986 as amended from time to time.”
16. On a careful scanning of the notification dated 06.05.1986, it is
evident that it allows partial exemption from sales-tax on inter-State
sales, subject to and in the manner stipulated therein. The exemption of
75% or 50% is granted with reference to the quantum of goods sold in the
course of inter-State trade or commerce out of the total quantum of goods
sold within the State, as against such percentage during the accounting
year 1984-85, which is treated as the base year. As per the notification,
it is applicable to a dealer who has his place of business; and he must be
manufacturing goods inside the State. The intention is to encourage inter-
State sale of goods manufactured and sold by a dealer in the State of
Rajasthan. It has a purpose. The increase in quantum of goods sold in
inter-State trade or commerce with reduction in quantum of stock transfers
by way of branch or depot transfers on which NIL or no Central Sales tax is
applicable would increase the revenue of the State. Clause 4 of the
notification envisages that no reduction of tax is to be allowed in respect
of levy cement. Computation of the total quantum of goods with reference
to the exclusion of levy cement is not a subject matter of the present
appeal and that is pending for consideration before the Appellate Bench and
Single Judge of the High Court. Nevertheless, it is apparent that changes
in figures of the quantum of goods, whether with reference to inter-State
sales and intra-State sales in the base year and in the year in which
benefit is claimed, would impact the determination and quantification of
the benefit. Therefore, the exclusion or inclusion in the quantum or
turnover is critical and significant.
17. The 21.01.2000 notification applies to a dealer having a place of
business in the State and is in respect of sale of cement made by him from
any place of business within the State in the course of inter-State trade
or commerce. Apart from the above, certain other conditions are to be
satisfied. They are (a) sales-tax in respect of inter-State sales as per
the notification would be calculated at the rate of 6% and (b) the dealer
making inter-State sales under notification dated 21.01.2000 would not be
eligible to claim benefit provided in the notification dated 06.05.1986.
Clause 3 of the notification lays down that if a dealer claims benefit
under notification dated 21.01.2000, he is not eligible to claim the
benefit under notification dated 06.05.1986. Benefit under the two
notifications cannot be claimed at the same time. It is simple and clear.
18. A dealer making inter-State sales under the notification dated
21.01.2000 is disqualified and not eligible to claim benefit under the
notification dated 06.05.1986. The reason is to deny dual benefit and also
the notification dated 06.05.1986 computes the benefit on the basis of
turnover. Bifurcation and division of turnover would lead to distortion
and cause anomalies.
19. To get over the aforesaid impasse, the learned counsel for the
appellant has raised three contentions. The two notifications being
beneficial should be liberally construed, for it cannot be assumed that the
intendment was that if an assessee claims and was entitled to a relatively
small or partial exemption under notification dated 06.05.1986, he would be
deprived of the exemption even if he meets the conditions in paragraphs 1
and 2 of the notification dated 21.01.2000. The submission is that the
assessee can get benefit of both the notifications but not the dual benefit
in the sense that inter-State sales on which benefit of concessional rate
of tax of 6% is not availed of could be granted partial exemption under
notification dated 06.05.1986. Quite apart from the aforesaid argument, it
is urged that partial exemption could be granted under the notification
dated 06.05.1986 in respect of such intra- State sales not covered by the
notification dated 21.01.2000; and benefit of partial exemption under
notification dated 06.05.1986 would co-exist with the notification dated
21.01.2000, though in respect of different and distinct transactions. The
second limb of argument is that this interpretation was the understanding
of the respondents, as they had issued circular dated 15.04.1994 and
pursuant to the said circular, the appellant and the other assessees were
extended benefit of the notification dated 06.05.1986 and also the
notification dated 07.03.1994, which has now been replaced and re-
introduced in the form of notification dated 21.01.2000. The plea of
consistency especially when the revenue in earlier years had accepted the
said interpretation is highlighted. The last plank of argument is the
circular dated 15.04.1994 was clarificatory and had rightly interpreted and
expounded the interplay between the two notifications. Therefore, the
circular dated 15.04.1994 under the notification dated 07.03.1994 would
equally apply and would guide the interpretation of the notification
dated 21.01.2000.
20. In order to appreciate the contentions raised, it is imperative to
reproduce notification dated 07.03.1994 and the circular dated 15.04.1994,
and the circular dated 16.04.2001 by which circular dated 15.04.1994 was
withdrawn. The notification dated 07.03.1994 reads as under:-
“Notification No.F.4 (8) FD/Gr.IV/94-70 S.O. No. 200, Jaipur, dated March
7, 1994.
In exercise of the powers conferred by sub-section (5) of section 8 of the
Central Sales Tax Act, 1956 (Central Act 74 of 1956), and in supersession
of this Department Notification No.F.4 (72) FD/Gr.IV/82-34, dated
27.06.1990, the State Government being satisfied that it is necessary in
the public interest so to do, hereby directs that the tax payable under sub-
sections (1) and (2) of the said section, by any dealer having his place of
business in the State, in respect of the sales of cement made by him from
any such place of business in the course of inter-State trade or commerce
shall be calculated at the rate of 4 percent without furnishing of
declaration in form “C” or certification in form “D” on the following
conditions, namely:-
(i) that the dealer shall record the name and full and complete address of
the purchaser in the bill or cash memorandum for such inter-State sale to
be issued by him;
(ii) that the burden to prove that the transaction was in the nature of
inter-State sale, shall be on the dealer; and
(iii) that the dealer making inter-State sales under this notification
shall not be eligible to claim benefit provided for by the notification
No.F.4. (72) FD/Gr.IV/81-18, dated 6.5.1986, as amended from time to time.
This notification shall come into force from 1st April, 1994 and shall
remain in force upto 31st March, 1997.”
21. The circular dated 15.4.1994 is reproduced below:-
“Tax Policy circular No.2/94-95
State of Rajasthan
Commercial Tax Department
No. Pa. 16/Budget/Tax/Commissioner/94-95/108
Dated 15/4/1994
To,
All Deputy Commissioners, Commercial Tax
All Assistant Commissioners, Commercial Tax
All Commercial/Assistant Commercial Tax Officers
Circular
The notification No. Pa. 4 (8) FD/Group-4/94-70 dated 7/3/1994 was issued
by the State Government and the rate of central tax on the inter-State sale
of cement is fixed unconditionally at 4 percent in case the declaration
form-‘C’ or form-‘D’ is not submitted between 1/4/1994 to 31/3/1997. Under
the said notification the trader doing the inter-State sale shall not be
entitled to claim for the benefit made available through the notification
No. F4 (72) FD/Group-4/61-18 dated 6/5/1986 amended from time to time.
It is made clear in this respect that the benefits made available through
the notification No. F 4 (72) FDR-Group-4/81-18 dated 6/5/1986 as amended
from time to time with respect to the inter-State sale of the cement done
with the form-‘C’ or form-‘D’, but aforesaid benefit shall not be available
in case the inter-State sale is done without the form-‘C’ or form-‘D’.”
22. The circular dated 16.04.2001 withdrawing the circular dated
15.04.1994 is as follows:-
“GOVERNMENT OF RAJASTHAN
COMMERCIAL TAXES DEPARTMENT
No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001
All Dy. Commissioners
All Assistant Commissioners
All Commercial Taxes Officers.
All Assistant Commercial Taxes Officers.
CIRCULAR
A question has been raised as to the applicability of Finance Department
notification No.F.4(72)FD/Br.IV/ 81-18 dated 06.05.1986 vis-a-vis
notification No.F/(8) FD/Gr.IV/94-70 dated 07.03.1994 and similar
subsequent notification dated 12.03.1997 and the existing notification
dated 21.01.2000. The issue has been examined and it is clarified that a
dealer can avail the benefit of either of these two notifications in any
financial year. For instance, if he opts for benefit under notification
dated 06.05.1986 for the financial year 2000-2001, he would not be entitled
to claim simultaneous benefit in the same year under the notification
providing for reduce rate of tax on cement in course of inter-state trade
or commerce without any supportive Form C or D. Consequently, if the
benefit of notification dated 21.01.2000 is being availed in any financial
year, the dealer shall be debarred from claiming any benefit under
notification dated 6.5.1986 for the same assessment year.
Keeping in view the above status, the Circular No.F.16 (Budget)Tax/CCT/94-
95/108 dated 15.04.1994 is hereby withdrawn and the dealers will be
entitled to claim benefit of either of the two notifications in any
financial year. Action may be taken accordingly.
Sd/-
(P.K.Deb) Commissioner”
23. As the factual score would depict, Notification dated 07.03.1994 was
applicable from 1st April, 1994 to 31st March, 1997. It was not applicable
with effect from 1st April, 1997. In such a situation, the plea of the
appellant that dual benefits were availed of under notification dated
07.03.1994 post 1st April, 1997 is unacceptable and has to be rejected. Be
it noted, by another notification No. 97-122 dated 12.03.1997, the State
Government had rescinded notification dated 07.03.1994 and directed that
the Central Sales Tax shall be calculated @ 4%, subject to the condition
that the dealer making inter State sales in this notification would not be
eligible to claim benefit of partial exemption under the notification dated
06.05.1986. The notification dated 12.03.1997 had remained in force upto
31st March, 1998. The circular dated 15.04.1994 in express words was not
applicable to the notification dated 21.01.2000.
24. It is limpid that the circular dated 15.04.1994, when in force, had
referred to the notifications dated 07.03.1994 as well as 06.05.1986. Under
the notification dated 07.03.1994, the rate of central tax on inter-State
sale of cement was unconditionally fixed at 4%, even when there was no
declaration in Form C and Form D. The notification dated 06.05.1986
relating to inter-State sale required Form C and Form D, for availing the
benefit. The circular did not in clear and categorical terms lay down that
dual or multiple benefits under the two notifications could be availed of
by the same dealer. It, however, appears that both the assessee and the
Revenue had understood the circular dated 15.04.1994 to mean that inter-
State transactions would qualify and would be entitled to partial exemption
under the notification dated 06.05.1986, when accompanied with Form C and D
and for inter-State sale transactions without Form C and D, benefit of
notification dated 07.03.1994 would apply.
25. The understanding by the assessee and the Revenue, in the obtaining
factual matrix, has its own limitation. It is because the principle of res
judicata would have no application in spite of the understanding by the
assessee and the Revenue, for the circular dated 15.04.1994, is not to the
specific effect as suggested and, further notification dated 07.03.1994 was
valid between 1st April, 1994 up to 31st March, 1997 (upto 31st March, 1997
vide notification dated 12.03.1997) and not thereafter. The Commercial
Tax Department, by a circular, could have extended the benefit under a
notification and, therefore, principle of estoppel would apply, though
there are authorities which opine that a circular could not have altered
and restricted the notification to the determent of the assessee. Circulars
issued under tax enactments can tone down the rigour of law, for an
authority which wields power for its own advantage is given right to forego
advantage when required and considered necessary. This power to issue
circulars is for just, proper and efficient management of the work and in
public interest. It is a beneficial power for proper administration of
fiscal law, so that undue hardship may not be caused. Circulars are binding
on the authorities administering the enactment but cannot alter the
provision of the enactment, etc. to the detriment of the assessee.
Needless to emphasise that a circular should not be adverse and cause
prejudice to the assessee. (See : UCO Bank, Calcutta v. Commissioner of
Income Tax, West Bengal[5]).
26. In Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire
Industries[6], it has been held that circulars and instructions issued by
the Board are binding on the authorities under respective statute, but when
this Court or High Court lays down a principle, it would be appropriate for
the Court to direct that the circular should not be given effect to, for
the circulars are not binding on the Court. In the case at hand, once
circular dated 15.04.1994 stands withdrawn vide circular dated 16.04.2001,
the appellant-assessee cannot claim the benefit of the withdrawn circular.
27. The controversy herein centres round the period from 1st April, 2001
to 31st March, 2002. The period in question is mostly post the circular
dated 16.04.2001. As we find, the appellant-assessee has pleaded to take
benefit of the circular dated 15.04.1994, which stands withdrawn and was
only applicable to the notification dated 07.03.1994. It was not
specifically applicable to the notification dated 21.01.2000. The fact that
the third paragraph of the notification dated 21.01.2000 is identically
worded to the third paragraph of the notification dated 07.03.1994 but that
would not by itself justify the applicability of circular dated 15.04.1994.
28. In this context, we may note another contention that has been
advanced before us. It is based upon the doctrine of contemporanea
exposition. In our considered opinion, the said doctrine would not be
applicable and cannot be pressed into service. Usage or practice developed
under a statute is indicative of the meaning prescribed to its words by
contemporary opinion. In case of an ancient statute, doctrine of
contemporanea exposition is applied as an admissible aid to its
construction. The doctrine is based upon the precept that the words used
in a statutory provision must be understood in the same way in which they
are usually understood in ordinary common parlance by the people in the
area and business. (See : G.P. Singh’s Principles of Statutory
Interpretation, 13th Edition-2012 at page 344). It has been held in
Rohitash Kumar and others v. Om Prakash Sharma and others[7] that the said
doctrine has to be applied with caution and the Rule must give way when the
language of the statute is plain and unambiguous. On a careful scrutiny of
the language employed in paragraph 3 of the notification dated 21.01.2000,
it is difficult to hold that the said notification is ambiguous or
susceptible to two views of interpretations. The language being plain and
clear, it does not admit of two different interpretations.
29. In this regard, we may state that the circular dated 15.04.1994 was
ambiguous and, therefore, as long as it was in operation and applicable
possibly doctrine of contemporanea exposition could be taken aid of for its
applicability. It is absolutely clear that the benefit and advantage was
given under the circular and not under the notification dated 07.03.1994,
which was lucid and couched in different terms. The circular having been
withdrawn, the contention of contemporanea exposition does not commend
acceptation and has to be repelled and we do so. We hold that it would
certainly not apply to the notification dated 21.01.2000.
30. In view of the aforesaid analysis, we do not find any merit in the
instant appeal and the same is, accordingly, dismissed. There shall be no
order as to costs.
Civil Appeal No. 6136 of 2013
31. In view of the judgment passed in Civil Appeal No. 102 of 2010, this
appeal also stands dismissed. There shall be no order as to costs.
…………………………..J.
[Dipak Misra]
……………………….….J.
[C. Nagappan]
New Delhi;
September 16, 2016
-----------------------
[1] 2006 (16) Tax update 199
[2] 2007 (17) Tax update 307
[3] (2004) 137 STC 438
[4] (2006) 8 SCC 702
[5] (1999) 4 SCC 599
[6] (2008) 13 SCC 1
[7] (2013) 11 SCC 451
