TaxTMI 
TaxTMI 
2010 (7) TMI 890
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....g all the aforesaid appeals, except Tax Appeal Nos. 2121 and 2122 of 2009, the following substantial questions of law had been framed by the court: (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in confirming the levy of purchase tax under section 15B of the Gujarat Sales Tax Act on the purchases from a new industry, which is granted sales tax exemption by a notification issued under section 49(2) of the Gujarat Sales Tax Act? (2) Whether, on the facts and in the circumstances of the case, the goods purchased by the appellant from a new industry having sales tax exemption vide notification issued under section 49 of the Gujarat Sales Tax Act are "taxable goods" as per section 2(33) of the Act and thereby liable to purchase tax under section 15B of the Gujarat Sales Tax Act? In Tax Appeal Nos. 2121 and 2122 of 2009 while admitting the appeal, the court had formulated the following two substantial questions of law: (A) Whether, on the facts and circumstances of the case, the honourable Tribunal has committed an error in not taking into consideration at all the detailed written submissions made by the appellan....
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....ls involve common questions of law, the same were taken up for hearing together and are disposed of by this common judgment. For the sake of convenience facts obtaining in Tax Appeal No. 1110 of 2009 are recorded, there being no dispute that the principal controversy is common in all the appeals. The appellant is a dealer duly registered under the provisions of the Gujarat Sales Tax Act, 1969 and the Central Sales Tax Act, 1956. During the relevant period, the appellant had made purchase of raw materials from new industries, which were enjoying the benefit of sales tax exemption by virtue of notification issued by the Government under section 49(2) of the Act. The appellant was assessed by the Assistant Commissioner of Sales Tax vide assessment order dated January 31, 2003 whereby purchase tax was imposed at 15 per cent on tax-free goods purchased from new industries as also on packaging materials. Interest was also sought to be levied on the dues arising out of the purchases made by the appellant from new industries enjoying the benefit of sales tax exemption. Being aggrieved, the appellant preferred an appeal before the Joint Commissioner of Sales Tax, who vide order dated May....
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....ion 15B all these four conditions are required to be satisfied. It is pointed out that in all these appeals, the appellants are dealers as envisaged under the provision, who have purchased raw or processing materials or consumable stores and used them in the manufacture of goods. However, the goods so purchased by them are not taxable goods, inasmuch as the same have been purchased from new industries which are exempt from payment of sales tax by virtue of notification under section 49(2) of the Act. Hence, the basic ingredient of section 15B not being satisfied, the appellants are not liable to pay purchase tax in respect of the raw or processing material or consumable stores used by them in the manufacture of goods. Attention is invited to the impugned order of the Tribunal to point out that the Tribunal has merely followed its earlier decision made in a group of 14 matters of Second Appeal No. 511 of 2003 and cognate matters. It is urged that the facts of those cases and the facts of the present case stand on a different footing inasmuch as in the facts of the present case the raw or processing materials or consumable stores used by the appellants in the manufacture of goods ....
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....section 15B on various grounds. It is urged that the decision in the case of Madhu Silica [1992] 85 STC 258 (Guj) is not a precedent insofar as the interpretation of the term "taxable goods" as defined under section 2(33) of the Act is concerned. It is further submitted that the Tribunal could not have placed reliance on the decision in the case of Cheminova India Ltd. v. Sales Tax Officer [2002] 126 STC 334 (Guj) inasmuch as the matter was decided by a Division Bench consisting of Honourable Mr. Justice M.S. Shah and Honourable Mr. Justice D.A. Mehta on the basis of both the judges of the Division Bench agreeing that the provisional assessment under section 41B was without jurisdiction, whereas Honourable Mr. Justice D.A. Mehta did not agree with the reasoning adopted by Honourable Mr. Justice M.S. Shah as recorded in paragraphs 8 to 16 of the judgment, hence there is clearly no judgment of the Gujarat High Court in the case of Cheminova India Ltd. [2002] 126 STC 334 (Guj) on this issue. The learned counsel, have referred to the aforesaid decisions extensively, and the same shall be dealt with at an appropriate stage hereinafter. Opposing the appeals, Mr. K.B. Trivedi, learned ....
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....rs who are exempted from payment of tax, are otherwise taxable goods, that is they are generally taxable and as such, the provisions of section 15B would be clearly attracted on the purchase of such goods. It is submitted that section 2(33) of the Act has to be read in the light of the decision of the Division Bench in the case of Madhu Silica Private Limited [1992] 85 STC 258 (Guj). Hence, the Tribunal has rightly held that the petitioners are liable to pay purchase tax under section 15B of the Act. Reliance is also placed upon the decision of the Supreme Court in the case of the State of Tamil Nadu v. M.K. Kandaswami [1975] 36 STC 191, wherein it was held that notwithstanding the goods being "taxable goods", there may be circumstances in a given case, by reason of which the particular sale or purchase does not attract tax under sections 3, 4 or 5. The court held that the provisions of section 7A of the Madras General Sales Tax Act, 1959 would be attracted if the purchases had been made by the dealers of "goods, the sale or purchase of which is generally liable to tax under the Act" but because of the circumstances aforesaid no tax was suffered in respect of the sale of these good....
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.... or specie, the rate of purchase tax on the turnover of purchase of such raw materials shall not exceed the aggregate of the rates of sales tax and general sales tax leviable on bullion or specie under entry 15 in Part A of Schedule II. 2(33) 'taxable goods' means goods other than those on the sale or purchase of which no tax is payable under section 5 or section 49 or a notification issued thereunder. 5.. Sales and purchases of certain goods free from all tax.-(1) Subject to the conditions or exceptions (if any) set out against each of the goods specified in column 3 of Schedule I, no tax shall be payable on the sales or purchases of any goods specified in that Schedule. (2) and (3) . . . 49.. Exemptions.-(1) Subject to the conditions or exceptions, if any, specified in relation to them, the following classes of sales or purchases shall be exempt from the payment of the whole of tax payable under the provisions of this Act, namely: (i) to (vii) . . . (2) Subject to such conditions as it may impose, the State Government may, if it considers it necessary so to do in the public interest, by notification in the Official Gazette, exempt any specified class of sale....
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....other provisions of the Act. The next question that arises for consideration is the construction of the term "taxable goods" as defined under section 2(33) of the Act. From the language employed in clause (33) of section 2 which defines "taxable goods" to mean goods other than those on the sale or purchase of which no tax is payable under section 5 or section 49 or a notification issued thereunder, it is apparent that the same is clear and unambiguous. It lays down that all goods other than the categories specified thereunder are "taxable goods". The excepted categories are (i) goods on the sale or purchase of which no tax is payable under section 5, and (ii) goods on the sale or purchase of which no tax is payable under section 49 or a notification issued thereunder. Hence, for the purpose of determining as to whether goods of any kind are "taxable goods", what is required to be seen is (i) whether they are goods the sale or purchase of which is free from all tax under section 5 of the Act as specified under Schedule I and therefore, exempt from payment of any tax, or (ii) whether the sale or purchase of such goods falls within the class or classes of sales or purchases specifi....
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....hem ineffective or otiose. (State of Rajasthan v. Gopi Kishan Sen [1993] Supp 1 SCC 522). Whereas in the facts of the present case there is no conflict between the provisions of section 15B and section 2(33). Hence, while construing the term "taxable goods" in section 15B of the Act, any interpretation which renders any part of section 2(33) ineffective or otiose should be avoided. Moreover, the fact that section 15B was not on the statute book when the decisions in the case of Nowroji N. Vakil [1979] 43 STC 238 (Guj) and Hindustan Brown Boveri Ltd. [1981] 47 STC 376 (SC) came to be delivered would not be a relevant factor for the purpose of interpreting the provisions of section 2(33) of the Act, because the said judgments were directly concerned with the meaning of the term "taxable goods". As regards the interpretation of the term "taxable goods" as defined under section 2(33), the first authoritative decision had been rendered by this High Court, in the case of Nowroji N. Vakil [1979] 43 STC 238 (Guj). In the said decision, a Division Bench of this court observed that the scheme of the Act involves four inter-related but distinct concepts which may, for the sake of conven....
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....fication in the official gazette, add to or enlarge, any entry in Schedule I or relax or omit any condition or exception specified therein; and thereupon the said Schedule shall be deemed to be amended accordingly. The foregoing discussion would show that all goods other than those specified in Schedule I are taxable goods. Ordinarily, therefore, the term 'taxable goods' should have been defined in the Act as meaning goods other than those on the sale or purchase of which no tax is payable under section 5. Such was the definition of the said term in section 2(33) of the Bombay Sales Tax Act, 1959, which was the law in force immediately prior to the enactment of the present Act in the area now comprised in the State of Gujarat. The definition of the term 'taxable goods' in clause (33) of section 2 of the present Act is, however, different. It reads as follows: '(33) "taxable goods" means goods other than those on the sale or purchase of which no tax is payable under section 5 or section 49 or a notification issued thereunder.' 11.. It would appear, therefore, that the words of exclusion in the definition of the term 'taxable goods' are now more extensive. The L....
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....d by the assessee. It is a settled rule of construction that where the statute's meaning is clear and explicit, words cannot be interpolated. In the first place, in such a case, they are not needed. If they should be interpolated, the statute would more than likely fail to express the legislative intent, as the thought intended to be conveyed might be altered by the addition of new words. They should not be interpolated even though the remedy of the statute would thereby be advanced, or a more desirable or just result would occur. Even where the meaning of the statute is clear and sensible, either with or without the omitted word, interpolation is improper, since the primary source of the legislative intent is in the language of the statute [see Crawford on Construction of Statutes (1940) edition, at page 269, cited with approval in Polestar Electronic (Pvt.) Ltd.'s case [1978] 41 STC 409 (SC). Besides, no hardship, injustice, absurdity or anomaly will arise if words, as suggested by the assessee, are not added or read into the exclusion clause. It has been pointed out earlier that under section 5 goods can be and are exempted generally as also conditionally and it is not a....
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....on 41 thereof which empowered the State Government subject to such conditions as it may impose to exempt by a notification published in the Official Gazette any specified class of sales or purchases from payment of the whole or any part of any tax payable thereunder if the State Government was satisfied that it was necessary so to do in the public interest. Still the definition of 'taxable goods' in that Act did not refer to sales exempted under section 41 thereof. But in the Act which repealed and replaced the Bombay Act the meaning of the expression 'taxable goods' has been narrowed down as section 2(33) of the Act reads: 'taxable goods' means goods other than those on the sale or purchase of which no tax is payable under section 5 (which corresponds to section 5 of the Bombay Act) and section 49 of the Act (which corresponds to section 41 of the Bombay Act) or a notification issued thereunder. By this definition, the dichotomy that is stated to exist between 'taxable goods' and 'taxable events' has been given a go-by. It may be that section 5 and Schedule I refer to goods only but section 49 deals with only taxable events which result in t....
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.... goods specified in column No. 3 of Schedule I are goods on which no tax shall be payable subject to the conditions or exceptions set out therein. When one goes to section 49 of the Act, the said provision talks of exemption. Under sub-section (1) of section 49 of the Act, it is stated that the class/classes of sales or purchases shall be exempt from the payment of the whole of the taxes payable under the provisions of the Act. Similarly, under sub-section (2) of section 49 of the Act, the State Government has been empowered to exempt any specified class of sales, etc. from payment of the whole or any part of the tax payable under the provisions of the Act, if it is necessary so to do in the public interest by issuing a notification. Thus, a conjoint reading of section 2(33), section 5 and section 49 of the Act stipulates that the emphasis is on sale or purchase of goods on which no tax is payable either under section 5 or section 49(1) or section 49(2) of the Act. Hence, the legislative intent is clear. Even if the goods are chargeable to tax under the Act, or the charge stands fastened by virtue of the provisions of the Act, if no tax is payable on fulfilment of the conditions....
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....d be taxable goods is concerned, the same is not relevant for the present purpose inasmuch as in the facts of the present case, it is the case of the appellants that since the goods used by them as raw or processing material or consumable stores for the manufacture of goods are not taxable goods, the second ingredient of section 15B is not satisfied and as such they are not liable to pay purchase tax under the said provision. Thus, going by the plain meaning of the above-referred provisions of the Act, it is apparent that the goods purchased by the appellants and used as raw or processing material or consumable stores in the manufacture of goods are not exigible to purchase tax under section 15B of the Act. As can be seen from the impugned order of the Tribunal, the Tribunal has placed reliance upon its earlier decision dated March 27, 2009 made in Second Appeal No. 511 of 2003 and other cognate matters against which Tax Appeal No. 1150 of 2009 and other appeals have been filed which have also been heard together. The case of the said appellants was that they were holding exemption certificates and were accordingly not required to pay tax in view of the notification issued under....
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....enerally taxable". That if this interpretation is read in section 15B of the Act, it will have to be held that even the last requirement of section 15B has also been complied with. In the impugned order the Tribunal has followed its earlier decision which has been referred to hereinabove and recorded thus: ". . . the term taxable goods would mean the 'goods which are generally taxable'. Here, the goods in question are generally taxable and, therefore, if the appellants have purchased or produced 'generally taxable goods', the appellants in the present cases would also be liable to pay purchase tax under section 15B of the Act." Since the decision in the case of Madhu Silica Private Limited [1992] 85 STC 258 (Guj), forms the basis of the decision of the Tribunal, it would be necessary to refer to the same in some detail. In the said case, the Division Bench of this court was called upon to decide as to whether the State Legislature had the legislative competence for enacting section 15B by formulating the following controversies underlying this question: (a) Whether section 15B in substance imposes a consignment tax; (b) Whether it imposed a tax in the natur....
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....taxable goods" as employed by section 15B of the Act would mean user of such raw material in the manufacturing process for manufacturing generally taxable goods under the Act and ultimately, in given circumstances, such manufactured goods may not attract tax under the charging provision and still would remain taxable goods. The court, therefore, did not find it possible to agree with the contention of the petitioners that charging event under section 15B would be the manufacture of taxable goods. The court, after considering the decision of this High Court in Nowroji N. Vakil [1979] 43 STC 238 as well as the decision of the Supreme Court in Hindustan Brown Boveri Ltd. [1981] 47 STC 376, found that the said decisions could not be of any avail to the petitioners therein. The court held in the facts of the said case that once raw materials were utilised in the manufacturing process for manufacturing taxable goods which are generally taxable under the Act, charge under the section gets attracted. Ultimately, if the manufactured goods are found not to bear tax, then the question at the stage of assessment may arise. But that by itself would not whittle down the charge or postpone it in ....
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....can levy it in such mode or manner as it thinks appropriate. The said decision does not refer to the concept of generally taxable goods. Insofar as the decision in the case of Cheminova India Ltd. [2002] 126 STC 334 (Guj is concerned, in the light of the disagreement recorded by one of the members of the Division Bench, the reasoning adopted by one of the learned Judges can at best be said to be an opinion of the said learned judge; it cannot be said to be a decision of the High Court. In the circumstances it is not necessary to refer to the said decision. Even otherwise, in light of what is stated hereinbefore the court does not agree with the opinion of one of the learned judges. The attempt by the Tribunal to refer to paragraph No. 19 of the said case and read something therein, which is not stated nor intended, is unfortunate and not warranted. In the case of State of Tamil Nadu v. M.K. Kandaswami [1975] 36 STC 191 (SC) on which reliance has been placed by the learned AdvocateGeneral, the court was called upon to interpret the provisions of section 7A of the Madras General Sales Tax Act, 1959 which provided for levy of tax on the turnover relating to purchase of any goods....
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....e that the concept of generally taxable goods and fastening of the charge have been discussed by the court in the judgment. However, when it comes to a specific challenge as to leviability, and liability to pay tax, i.e., purchase tax under section 15B of the Act, the court has to read the provision as it stands and interpret the same, if there is any debate, to achieve the object with which the provision has been brought on the statute book. A plain reading makes it clear that even if the goods purchased are generally taxable, or can be termed to be goods on which the charge is fastened, yet when the said provision has to be invoked and applied, a question has to be posed and answered: as to whether the goods purchased are taxable goods? For determining the same, the court has to look at the definition given in the statute. It is well-settled that a definition of a term in a law has to be read as it stands without either importing anything therein or removing any part of the definition. The only exception being where the context requires otherwise. In the instant case, even in the contextual setting, one need not travel beyond the plain meaning which flows from a plain reading ....
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....n preferred by one of the appellants challenging the judgment and order dated April 6, 2009 made by the Tribunal in Revision Application No. 84 of 2003 as well as the orders made by the appellate authority and the Sales Tax Officer along with show-cause notice. The Tribunal has not assigned any independent reasons but held that the petitioner (revision applicant) is liable to pay purchase tax under section 15B of the Act as the said issue has been dealt with in the second appeal filed by the petitioner. Insofar as the other challenges are concerned, in the revision application, the Tribunal has upheld the action of the respondent authorities on the footing that once it is held that the petitioner is liable to pay purchase tax under section 15B of the Act, the payment is required to be made in cash and no adjustment against the ceiling limit is permissible, penalty and interest are rightly levied and no interference was warranted. The learned counsel appearing for the respective parties have adopted the same contentions as raised in the appeals. Tax Appeal No. 1150 of 2009 and cognate appeals The case of the petitioner is also the case of the appellants in Tax Appeal No....