TaxTMI 
TaxTMI 
2009 (9) TMI 875
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....ting the correct sales turnover as under: First sales of survey instruments Rs.49,64,207-00 First sales of spares and accessories of survey instruments at 16% Rs. 5,03,700-00 Miscellaneous income Rs. 46,642-00 Total and taxable turnover determined at 16% Rs. 55,14,547-00 That apart the Assessing Authority levied a penalty under Section 12(3)(b). Similarly, for the year 1994-95 the Assessing Authority assessed a turnover of Rs.8,75,039/- at the rate of 16% treating the same as sales of survey instruments and also levied a penalty of Rs.1,92,603/- under Section 12(3)(b) and under Section 12(3)(c) a penalty of Rs.1,714/-. Aggrieved against this order, the appellant filed an appeal before the Appellate Assistant Commissioner and the learned Appellate Assistant Commissioner dismissed both the appeals. Aggrieved against that order, the appellants filed these Tax Cases and a Writ Petition before this Court. As all the matters are connected, all the three matters are taken up jointly by consent of parties. 3. The main contention of the learned Senior Counsel appearing for the petitioner is that the commodities dealt with by the petitioner are electronic equipments which a....
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....ed that when there were two entries, the special entry will cancel the general one and therefore, the entry 14 Part F of the First Schedule will override the general entry of other electronic goods. The learned Special Government Pleader relied on the decisions reported in 34 STC 153, 39 STC 194 and drew our attention to various case laws where the judicial forums upheld the interpretation that the specific entry excludes the general entry. In short, it was contended that the commodity was correctly assessed by the assessing authority and the same was upheld by the learned Appellate Assistant Commissioner and therefore, contended for dismissing the appeal. It is further contended that regarding the levy of penalty, it was pleaded that the levy was upheld by this Court in W.P.No.19218 of 1996, in the case of Chennai Textiles Chemicals Pvt., Ltd., Vs. State of Tamil Nadu and therefore pleaded for confirming the same. 5. Heard the learned Senior Counsel appearing for the petitioner as well as the learned Special Government Pleader appearing for the respondents. 6. The only question of law which was sought to be argued before this Court is whether the commodity dealt with by the ....
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....not to the electronically operated goods. In fact, at this juncture, it is pertinent to extract the relevant provisions which both the parties relied upon to substantiate their case. Tamil Nadu General Sales Tax Act. First Schedule Part B 50. Electronic systems, instruments, apparatus, appliances and other electronic goods (other than those specified elsewhere in the Schedule) but including electronic cash registering, indexing, card punching, franking, addressing machines and computers of analog and digital varieties, one record units, word processor and other electronic goods and parts and accessories of all such goods . Tamil Nadu General Sales Tax Act First Schedule Part F 14. Binoculars, monoculars, opera glasses, other optical telescope, astronomical instruments, microscopes, binocular microscopes, magnifying glasses, diffraction apparatus and mountings therefor including theodolite, survey instruments and optical lenses, parts and accessories thereof. (underlining is ours) 9. The learned Senior Counsel appearing for the petitioner would contend that on a reading of the two provisions, there is no question of electronic theod....
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....y as well as the wrong declaration in charging of the rate. 12. To decide the question involved, whether the tax has to be levied in respect of these items whether it is called as a surveying instrument or electronic survey instrument what is the rate of tax to be levied, we are specifically governed by the very Act itself. On a careful reading of the two portions of the First Schedule as claimed by both the parties would reveal one thing clear that the entry 50 would clearly state that it would apply to all electronic instruments, apparatus excepting as specified in the very section itself (other than those specified elsewhere in the Schedule) the words which has been shown in the bracket would clearly indicate that if any other item is mentioned elsewhere in the Schedule, it will not be covered under the First Schedule Part B 50, this was mainly relied upon by the Special Government Pleader and also brought to the notice of this Court that on a reading of Part F-14 of the First Schedule the specific words used there are including theodolite, surveying instruments, ... and accessories thereof. Therefore, when there are specific recitals for a particular material, na....
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.... tax whereas if we take Part D entry 41 which would denote non-electronic weighing machines, dipping measures, metre scales, the sales tax would be at 8% and if we take Part E entry 20 which will denote electrical appliances (domestic and commercial) including Coffee roasting appliances and so many things under the explanation it will say all the above goods notwithstanding that they contain electronic circuits, switchings or control device systems, shall be deemed to be electrical appliances (domestic and commercial) and which would be taxable at the rate of 12% and in the case of Part F entry 10, 11, 12 and 14 it denotes typewriters, teleprinters, tabulating, calculating machines, duplicating machines, binoculars, monoculars, wherein theodolite and survey instrument which mentioned in entry F - 14 these are all items will include at 16%. Therefore, his contention is wherever electronic items have come the rate have been specifically made at 3% and he was under the bona fide impression that this being an electronic goods automatically it is liable to be levied only at 3% and he cannot be expected to pay 16% as he would mainly contend that it can only be an electrical item. Therefo....
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....hting, fuel, washing and lubricants at the low rate of Re.0.05 per litre while liquor brought within its limits for use as an article of intoxication was intended to be subjected to levy of octroi duty at the higher rate of Re.1 per litre. 19. Further, the learned Senior Counsel appearing for the petitioner would rely upon 88 ITR 192 (SC) for the proposition that if the language of taxing provision is ambiguous or capable of more meanings than one, then the Courts have to adopt the interpretation which favours the assessee. In fact, the Hon'ble Supreme Court has held that (on the other hand) if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This is a well accepted rule of construction recognised by this Court in several of its decisions. He would also further contend that since the classification had accepted by the Department for long time the petitioner is of the opinion it was for department to show as to why the different interpretation should be resorted to. In this connection, the Hon'ble Supreme Court has held as in the earlier case, it is now well settled principle of law that when tw....
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....onal tax under section 5-A and surcharge on sales tax under section 6-B of the said Act. The term electronic goods was also defined in the notification as electronic goods means electronic systems, instruments, appliances, apparatus, equipment operating on electronic principles and all types of electronic components, parts and materials and includes (i) consumer electronics; (ii) electronic test and measuring instruments; (iii) medical electronic equipment; (iv) electronic analytical instruments; (v) electronic equipment/instrument for nuclear geoscientific and other special applications; (vi) electronic process control equipment; (vii) power electronic equipment; (viii) electronic industrial automation and control equipment; (ix) electronic data processing systems and electronic office equipment; (x) electronic broadcasting equipment; (xi) electronic communication equipment; and (xii) electronic aerospace and defence equipment. Basing on the said notification the appellants claimed that fully automatic washing machines were micro-computer-controlled washing machines that actually worked on the principle of auto selection of the various parameters. But, the Department did not accep....
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....llowing rulings to the notice of this Court: 1. 139 STC 504 (Ker) Southern Gas Ltd vs. 2. 84 STC 571 (Guj) C.K.Gause Bandage Mfg. Co. 3. 147 STC 421 (SC) Carrier Aircon Ltd. 4. 147 STC 329 (Ker) Stovekraft Pvt. Ltd. 5. 47 STC 359 (SC) Indo International Indusries. 6. 7 STC 557 (Bom) Roopkala Industries 7. 45 STC 245 (Del) Sialkot Trading Company 8. 121 STC 294 (SC) Shri Naresh Chandra Ghose 9. 80 STC 167 (Mad) Bimetal Bearings Ltd. 10. 55 STC 354 (Mad) Indian Eylets Industries 11. 53 STC 429 (Mad) Kannika Sycle Stores 12. 87 STC 167 (Mad) Anikal Corporation 23. The major contention raised by the Special Government Pleader as per the three Hon'ble Supreme Court judgments reported in 147 STC 421, 47 STC 359 and 121 STC 294 and the three Madras High Court judgments reported in 80 STC 167, 55 STC 354 and 53 STC 429 were to the effect that there are number of factors which have to be taken into consideration for determining the classification of a product. For the purpose of classification the relevant factors, inter alia, are statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entr....
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.... can be easily distinguishable. The finding is extracted below: "The reason is that, as pointed out by Story, J., in 200 Chests of Tea (1824) 9 Wheaton (U.S.) 430, the legislature does "not suppose our merchants to be naturalists, or geologists, or botanists". But here the word "textiles" is not sought by the assessee to be given a scientific or technical meaning in preference to its popular meaning. It has only one meaning, namely, a woven fabric and that is the meaning which it bears in ordinary parlance. It is true that our minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard "dryer felts" as "textiles". But it must be remembered that the concept of "textiles" is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as "textiles". Take for example rayon and nylon fabrics which have now become very popular for making wearing apparel. When they first came to be made, they must have been intruders in....
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....s quoted by the Madras High Court reported in (1998) 109 STC 593 (Lawrence and Mayo India (Private) Ltd., V. State of Tamil Nadu). In this case it is relevant to extract the meaning of theodolite as given in The New Lexicon Webster's Dictionary of the English Language, 1991 Edition, at pate 1025 as below: "The-odo-lite (Oi-od-lait) n. an instrument used by surveyors to measure vertical and horizontan angles, consisting of a small telescope moving along a gradual scale. (origin unknown) Similarly the Bureau of Indian Standards issued specifications which is extracted in the judgment of the Madras High Court is as follows: "Foreword-This Indian Standard (First Revision) was adopted by the Bureau of Indian Standards, after the draft finalised by the Optical and Mathematical Instruments Sectional Committee had been approved by the Light Mechanical Engineering Division Counsil. Theodolite is an instrument for precise measurement of horizontal and vertical angles. The vernier theodolite is provided with graduated horizontal and vertical circles and two small vernier scales. The vernier scales are movable and remain in sliding contact with the graduated circles. The vernie....
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....definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted. In that ruling, it is further held that the clinical syringes manufactured and sold by the assessee during the year 1973-74 could not be considered as "glassware" falling within entry 39 of the First Schedule to the U.P.Sales Tax Act, 1948, would fall under "hospital equipment". Therefore, here also the user of the word is only for survey and theodolite being a survey instrument definitely it will come under the specified category and it exclude the general category. 28. The Special Government Pleader also relied upon the judgement of the Hon'ble Supreme Court reported in 121 STC 294 (State of Assam and Others V. Shri Naresh Chandra Ghose (Decd. by L.Rs.) wherein it has held that the Legislature has a wide discretion in selecting persons or objects it wants to tax. A statute cannot be challenged on the ground that it levies tax on one class of articles and not on others. He would further contend that merely because the exemptions were granted for electronic goods in some other industry that by itself could not give any right for the petitioner to seek ....
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....ate his case. This ruling will not apply to the facts of the case as held earlier the meaning is very clear and there is no ambiguity. 31. The other decision relied upon by the learned Senior Counsel appearing for the petitioner reported in 2008 14 VST 259 (Mauri Yeast India Pvt. Ltd., V. State of U.P. and another) wherein it is held that it is now a well-settled principle of law that when two views are possible, one which favours the assessee should be adopted. In that case, the main crux was when there were two interpretations possible the classification adverted to by the assessee had been accepted by the Revenue for more than 20 years. Therefore, the Hon'ble Supreme Court has held a different construction to an entry cannot be resorted to only because the rate of tax has been lowered. As the said classification had been accepted by the Revenue for a long time, the onus would be on it to show as to why a different interpretation thereof should be resorted to particularly when no change in the statutory provision has taken place. Therefore, in that particular case there was no question of distinction of products. It was not only the distinction in respect of classification....
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.... intrinsically survey instruments only and also given a finding that there is no ambiguity in the entries and the framers of law have classified these items in one group irrespective of the fact whether these items are operated by electronic or mechanical mode. The Tribunal has rightly held that a mere addition of memory card or software will not in any way alter the character of the goods which is intrinsically survey instruments only and therefore, the commodity would clearly fall under Part F 14 and assessed to tax at 16% and not at 3% as claimed by the petitioner under the head of electronic goods. Therefore, the findings given by the Tribunal is clear and correct. Therefore, the two cases in respect of the assement years 1993-1994 and 1994-1995 fails and the question of law is answered against the assessee. 34. The next argument which was mainly placed by the learned Senior Counsel appearing for the petitioner that inasmuch as there was two interpretation possible the petitioner having followed one interpretation it cannot be considered to be violation of any law and therefore, penalty imposed under Section 12 (3)(b) should not be levied at least the penalty should be exclu....