TaxTMI 
TaxTMI 
1992 (9) TMI 315
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....ts from taking recovery proceedings pursuant to exhibit P9 notice till final disposal of the appeal. The third and fourth prayers in the original petition are to restrain the first respondent, viz., Assistant Commissioner (Assessment)-I, Special Circle, Kottayam, from imposing tax on the purchase turnover of rubber in excess of 3 per cent for the years 1986-87 to 1989-90 till final decision is rendered on the appeals and other proceedings against exhibit P6 series of assessment and to restrain the first respondent from taking any further proceedings to reopen or reassess the purchase turnover of rubber used by the petitioner for the manufacture of compound rubber during the years 1982-83, 1983-84, 1984-85 and 1985-86 at more than 3 per cent. 3. The facts leading to the petition are as follows: The petitioner is a company carrying on business of manufacturing and selling of automobile tyres, tubes and other rubber products. Its registered office is at 826, Anna Road, Madras. One of its factories is situated at Vadavathoor near Kottayam in the State of Kerala wherein it manufactures tread rubber, tubes and compound rubber according to the petitioner. For the purpose of m....
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....otification was issued by another notification dated November 2, 1990, explaining the finished rubber products for the purpose of notification to mean any goods manufactured, utilising rubber in any form as one of the raw materials and to include tread rubber but to exclude any form of rubber taxable at the point of last purchase in the State or which are subjected to processing by mixing with chemicals, gas, fumigation or any other similar process to make any compound rubber. The said notification, produced by the petitioner as exhibit P5, was deemed to have come into force on April 1, 1989, subject to the condition that taxes if any remitted by any dealer shall not be refunded. When provisional return in form No. 9 for the month of April, 1990 was submitted, the department made a departure from the earlier position and appears to have taken the view that even if rubber is used for making compound rubber inside the State, the petitioner is not entitled for concessional rate as masticated rubber produced by the company is not the finished rubber product. It also took the view that the compound rubber is not a finished rubber product. Hence, by notice dated February 2, 1991, issued ....
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....on condition of the petitioner paying an amount of Rs. 30 lakhs within a period of one month. 7.. Immediately after the provisional assessments, the first respondent also completed the final assessment for the year 1986-87 on March 12, 1991, in which the assessing officer held that the compound rubber is not a finished product and, therefore, not eligible for concession. An appeal was filed before the Deputy Commissioner (Appeals) by the assessee which was dismissed and, thereafter the petitioner filed second appeal before the Tribunal on April 30, 1992 and that appeal is also still pending. To make the picture complete, 1 may add that it is stated at the Bar by counsel appearing for the petitioner, that for the years 1987-88, 1988-89 and 1989-90, assessments have not yet been completed even though annual returns were filed for the said years.. 8.. Appeals filed against the provisional assessments for the months of April to December, 1990, evidenced by exhibit P7 series were subsequently disposed of by the second respondent pending this original petition upholding the provisional assessment and the petitioner filed appeal against the order of the Deputy Commissioner (Appeals)....
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....been so held by this Court in Assistant Commissioner (Assessment), Sales Tax v. Duroflex Coir Industries Pvt. Ltd. [1992] 85 STC 150, Kunjahammad Haji v. State of Kerala 1960 KLT 930, McDowell Co. Ltd. v. Assistant Commissioner of Sales Tax [1986] 62 STC 164 and by the Supreme Court in Shamalbhai Lallubhai Patel v. Additional Special Land Acquisition Officer AIR 1977 SC 899, Shrivastava v. Bhupendra Kumar Jain AIR 1977 SC 1703, Bar Council of Delhi v. Surjeet Singh AIR 1980 SC 1612, Gujarat University v. N.U. Rajguru AIR 1988 SC 66. When the appeal is pending the appellate authority becomes vested with the legal jurisdiction of adjudicating the matter and this Court normally will not divest the appellate authority of that right in exercise of extraordinary jurisdiction. I find no exceptional or extraordinary circumstances existing in this case to justify the exercise of extraordinary power under article 226 of the Constitution of India. 10.. The question, whether the petitioner manufactured finished rubber products within the State out of the rubber purchased will have to be gone into. by the Appellate Tribunal and on the said question of fact a finding has to be entered. From e....
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....estrain the respondents from assessing the petitioner in excess of 3 per cent for the assessment years 1987-88 to 1989-90 at this stage as the question is now pending, for the assessment year 1986-87, by way of appeal before the Tribunal. 12.. The fourth prayer in the original petition is to restrain the first respondent from taking any further proceedings to reopen or reassess the purchase turnover of rubber used by the petitioner for the manufacture of compound rubber during the years 1982-83, 1983-84, 1984-85 and 1985-86 at more than 3 per cent. Under section 19 of the Kerala General Sales Tax Act, 1963, power is given to the Sales Tax Officers to reopen the assessment for assessment of escaped turnover wherein it is provided that where for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to tax in any year or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or any deduction has been wrongly made therefrom, the assessing authority may, at any time within four years from the expiry of the year to which the tax relates, proceed to determine to the best of its judgment the turnover....
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....exhibit P10 dated January 24, 1991, issued by the office of the Assistant Commissioner (Assessment) directing the petitioner to produce books of accounts during the years 1982-83 to 1985-86. Exhibit P10 is not a notice under section 19 or under section 35. The fourth prayer, therefore, to restrain the first respondent from taking any further proceedings to reopen or reassess the purchase turnover of rubber used by the petitioner for the manufacture of compound rubber during the years 1982-83 to 1985-86 at more than 3 per cent is also premature. Thus, even though the original petition will have to be dismissed on the above short grounds, Mr. Nariman, counsel for the petitioner submitted that in the light of exhibit P5 notification it has to be held that the respondents have no jurisdiction to treat compound rubber as not a finished product. Exhibit P5 is an amendment to S.R.O. No. 641/81 (exhibit PI) adding an explanation that the finished rubber products for the purpose of the said notification shall be any goods manufactured utilising rubber in any form coming under entry 161 of the First Schedule to the Act as one of the raw materials including tread rubber but excluding any form....
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....an explanation except that the purpose and intendment of the 'explanation' are determined by its own words. An explanation, depending on its language, might supply or take away something from the contents of a provision. It is also true that an explanation may be introduced by way of abundant caution in order to clear any mental cob-webs surrounding the meaning of a statutory provision spun by interpretative errors and to place what the Legislature considers to be the true meaning beyond any controversy or doubt. Hypothetically, that such can be the possible purpose of an 'explanation' cannot be doubted." The retrospectivity given to exhibit P5 notification with effect from April 1, 1989, perhaps may be a fact to be looked into when examining the contention of the Government Pleader that the explanation is only the exposition law or clarification of the existing law. 15.. It was clarified by the amendment that tread rubber is a finished product. The retrospective effect given from April 1, 1989, subject to the condition, the tax, if any remitted by any dealer, shall not be refunded is intended to cover such person who manufactured tread rubber. If that be so, it is to be obse....
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.... though it has no controlling effect upon the court. Any such interpretation also can be disregarded for cogent and persuasive reasons. The principles have been further applied in Indian Metals & Ferro Alloys Ltd. v. Collector of Central Excise JT (1990) 4 SC 763 at para 15 and State of Madhya Pradesh v. G.S. Dall and Flour Mills [1991] 80 STC 138 (SC); JT [1990] 4 SC 430. The doctrine of contemporaneo expositio can be invoked where statutory instrument is ambiguous but is shown to have been clearly understood and explained by the administrative authorities of the law in a particular manner. A contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expression used in the statutory instrument. An assessment order cannot be considered exposition of the term of the notification. In any case an assessment cannot be considered a final determination of the statutory notification. 17.. But on a reading of exhibit P2 it will be seen that the question considered there is whether masticated rubber produced in the factory is rubber compound which is a rubber product. The question whether rubber compound itself is a finis....
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....lly irrelevant. In short, merely because manufactured goods are used subsequently for manufacturing another article, it cannot be stated that the earlier manufactured goods are not finished goods. It may be that the vegetable tallow is used further for manufacture of soaps or other products. That would not make vegetable tallow as unfinished goods. Therefore, it was held that the vegetable tallow manufactured by the process of hydrogenation from vegetable non-essential oil is a finished excisable goods. In that case the court was examining the contention of the department to the effect that the manufacturer is not entitled to exemption from payment of duty on vegetable non-essential oil because the vegetable non-essential oil is used in the manufacture of finished excisable goods. The contention of the manufacturer was that the vegetable tallow is not a finished excisable goods. It is in that context the words "finished excisable goods" have been examined by the Bombay High Court. In Lakshmi Industries v. Deputy Commercial Tax Officer [1990] 77 STC 291 (Mad.), the question was whether iron and steel scrap left over in the course of manufacture of shaped and finished products by a s....
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....respondents is to reopen the assessment. Of course the averment that the assessments were made for the years 1982-83 to 1985-86 based on a false representation cannot be prima facie considered to be correct but that question may arise if there is an attempt to impose penalty. The counter-affidavit also states that what is produced by the petitioner is only masticated rubber which is not a finished rubber product. According to the respondents, it is only an intermediate product in the manufacture of tyre and tubes. The additional contention of the respondents is that the change of opinion can be a ground for reopening the assessment and it has been so held by this Court in Deputy Commissioner of Sales Tax (Law) v. T.P. Elias [1993] 90 STC 25. In what cases reopening of the assessment already made can be done is laid down by the decision reported in Calcutta Discount Co. Ltd. v. Income-tax Officer AIR 1961 SC 372 at page 380; [1961] 41 ITR 191 (SC) at 207 and in Raja Bahadur Motilal Private Ltd. v. KR. Vishwanathan, Income-tax Officer [1990] 82 CTR 381. But all these considerations will arise only when steps in this regard to reopen assessment is taken. The counter-affidavit filed....
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....lled for in this case. Notifications, whether it is exhibit P1 or exhibit P5, have to be read and understood according to its language. If the language is plain and unambiguous one must look into the language only and interpret it and give effect to the purpose of the notification. Of course, tax law has to be interpreted reasonably and in consonance with justice adopting purposive interpretation. A provision for relief shall be interpreted reasonably and in favour of the assessee. A provision in the taxing statute granting incentive for promoting growth and development should be construed liberally to advance the object of the notification. While a notification under it can be prospective or retrospective, only prospective operation can be given to a notification rescinding an exemption granted earlier. [See State of Madhya Pradesh v. G.S. Dall and Flour Mills [1991] 80 STC 138 (SC); JT [1990] 4 SC 430]. The notification is issued under section 10 of the Act in public interest. Since the exercise of power is in public interest, the court of course will require the Government to exercise the power reasonably as mandated by the decision in Associated Provincial Picture Houses Ltd. v....