2022 (2) TMI 1111 - SC - VAT and Sales Tax

Supreme Court Affirms Broad 'Hank Yarn' Exemption

THE AUTHORITY FOR CLARIFICATION AND ADVANCE RULING & ANR. Versus M/s. AAKAVI SPINNING MILLS (P) LTD.

The Supreme Court upheld the Division Bench's decision, affirming that the term 'Hank Yarn' in the Tamil Nadu Value Added Tax Act, 2006, provided ... Interpretation of statute - Entry 44 of Part B of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006 - Cotton Hank Yarn - Division Bench was of the view that no external aid for interpretation was called for when the language of the Entry in question was clear in itself - HELD THAT:- When the Entry in question specifically provides for exemption to the goods described as “Hank Yarn” without any ambiguity or qualification, its import cannot be restricted by describing it as being available only for the hank form of one raw material like cotton nor could it be restricted with reference to its user industry. That being the position, reference to the decision in K.P. Varghese (supraKP VARGHESE VERSUS INCOME-TAX OFFICER, ERNAKULAM, AND ANOTHER [1981 (9) TMI 1 - SUPREME COURT] remains entirely inapposite to the facts of the present case. Therein, this Court was dealing with the interpretation of the language of sub-section (2) of Section 52 of the Income Tax Act, 1961 and it was found that a literal interpretation might not cover several eventualities concerning the value of consideration declared by the assessee in respect of the transfer of a capital asset vis-a-vis its fair market value as on the date of its transfer - the observations in the said decision, based on the rules of interpretation to cull out meaning of a sentence (vide paragraph 5 thereof), do not apply to the question at hand because the Entry in question is clear, direct and unambiguous; and simply reads: “Hank Yarn”. There are no question of law worth consideration so as to entertain this petition - SLP dismissed. Issues:Interpretation of the Entry 'Hank Yarn' under the Tamil Nadu Value Added Tax Act, 2006.Analysis:1. Clarification Orders by Petitioner No. 1: The Authority for Clarification and Advance Ruling held that the term 'Hank Yarn' in Entry 44 of the Fourth Schedule of the Act referred only to 'Cotton Hank Yarn' and not 'Viscose Staple Fiber (VSF) Hank Yarn.'2. Single Judge's Interpretation: The Single Judge agreed with the petitioner's interpretation, considering the purpose of the Entry and referring to the Budget speech and a notification by the Ministry of Textiles to support the decision.3. Division Bench's View: The Division Bench disagreed, stating that external aids for interpretation were unnecessary when the language of the Entry was clear. The Bench also noted that the Budget speech did not explicitly restrict the exemption to 'Cotton Hank Yarn.'4. Supreme Court's Decision: After hearing arguments and examining the records, the Supreme Court found no reason to interfere with the High Court's decision, dismissing the petition.5. Arguments by Petitioner's Counsel: The petitioner's counsel argued based on the Budget speech, the notification by the Ministry of Textiles, and a previous court decision to support the interpretation that the exemption was meant for the handloom industry.6. Division Bench's Analysis: The Division Bench compared relevant Entries in the Act, emphasizing that the plain language of the statute did not require external interpretation and that the exemption applied to various types of hank yarn.7. Court's Conclusion: The Supreme Court upheld the Division Bench's decision, emphasizing that the Entry was clear and unambiguous, providing exemption for 'Hank Yarn' without restrictions based on raw material or industry use. The Court rejected the petitioner's arguments for a narrow interpretation.8. Application of Precedent: The Court distinguished a previous case involving Income Tax Act interpretation, stating that the clear language of the Entry did not necessitate departing from its plain meaning.In conclusion, the Supreme Court dismissed the special leave petition, affirming the Division Bench's decision regarding the interpretation of the term 'Hank Yarn' under the Tamil Nadu Value Added Tax Act, 2006.