2016 (9) TMI 356

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.... submissions have been advanced center and revolve around a circular dated 20 July 1979 ^1979 Circular issued by the Commissioner Trade Tax U.P. which had purported to hold that roasted groundnuts would stand covered under the aforementioned entry. The dispute arises as a consequence of a subsequent circular dated 24 May 2004 ^2004 Circular which proceeded to annul the earlier circular. In terms of the 1979 Circular, the Commissioner, Trade Tax U.P. clarified that roasted groundnuts were liable to be treated as comprised in clause (vi) (i) of Section 14 of the 1956 Act. The entry under clause (vi) and with which we are concerned reads thus: - "(vi) Oilseeds, that is say. - (i) Groundnut or Peanut (Arachis hypogaea];" From the submission of the learned counsel for the revisionist, it transpires that based upon the aforesaid circular, the revisionist-assessee treated roasted groundnut manufactured by it as being covered by the aforesaid entry and therefore entitled to the benefits flowing from Section 14 of the 1956 Act. This position is stated to have continued till the 2004 circular came to be issued by the Commissioner, Trade Tax. The relevant part of the s....

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....ing dealer is entitled to pass on to a purchaser. In the transactions effected during the course of the two assessment years in question, the tax liability which was passed onto the purchaser was based upon the understanding that the 1979 circular applied. Accordingly it was submitted that no retrospective liability could have been imposed upon the revisionist. D. The issue of whether roasted groundnuts stood covered by the entry "groundnut" as employed in clause (vi) (i) of Section 14 viewed in the absence of circular of the 20 July 1979 was a contentious issue or at least one which was/is open to debate. He refers what the Supreme Court held in Milak Brothers Vs. Union of India [1991 Supp (1) SCC 71]. It was urged that Milak was considering the question as to whether groundnut which had undergone a roasting and salting process would loose its identity as groundnut. It was submitted that the Supreme Court had held that it was possible to envisage two different commercial commodities falling under the same entry of Section 14. In such a situation the Supreme Court held that there was no reason why the entry should be restricted to only one of them. He submitted that the su....

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....ription of the commodity and various commodities which are then classified as falling within the same genre are prefaced by the words "that is to say". It is trite to note that in Gopuram, three learned Judges of the Supreme Court have noticed and held that the usage of the phrase ''that is to say' indicates the intent of the legislature to make clear or fix the meaning of what is sought to be explained or defined. Their Lordships held that the phrase ''that is to say' indicates an exhaustive enumeration and therefore consequently the benefit of Section 14 must be limited to the goods expressly mentioned therein. Now it needs to be borne in mind that no judgment of this Court or for that matter the Supreme Court directly deals/dealt with the issue of whether roasted groundnut would be liable to be treated as falling within the ambit of the entry ''groundnut' as used in clause (vi) (i) of section 14. Milak, it becomes relevant to note, was a judgment rendered with reference to the Customs Tariff Act, 1975 and was not really dealing with section 14 of the 1956 Act. While the interpretation accorded to groundnut in the said judgment may be said t....

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....f two interpretations, one as claimed by the assessee and the other as put forth by the revenue". 19. No doubt the court has to interpret statutory provisions and notifications thereunder as they are with emphasis to the intention of the legislature. But when the Board made all others to understand a notification in a particular manner and when the latter have acted accordingly, is it open to the Revenue to turn against such persons on a premise contrary to such instructions? 21. Through a catena of decisions this Court has pronounced that Revenue cannot be permitted to take a stand contrary to the instructions issued by the Board. It is a different matter that an assessee can contest the validity or legality of a departmental instruction. But that right cannot be conceded to the department, more so when others have acted according to such instructions, [vide Collector of Central Excise. Bombay vs. Collector of Central Excise [1996(88) ELT 638], Ranadey Micronutrients vs. collector of Central Excise [1996(87) ELT 19], Poulose and Mathen vs. collector of central Excise [1997(90) ELT 264, British Machinery Supplies Co. vs. Union of India [1996(86) ELT 449]. Of cours....

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....na v. Usha Martin Industries (1997 7 SCC 47)]. In the case of Ranadey Micronutrients v. Collector of Central Excise (1996 (87) ELT 19), this Court held that the whole objective of such Circulars is to adopt a uniform practice and to inform the trade as to how a particular product will be treated for the purposes of excise duty. The Court also held that it does not lie in the mouth of the Revenue to repudiate a Circular issued by the Board on the basis that it is inconsistent with a statutory provision. (emphasis supplied). Consistency and discipline are, according to this Court, of far greater importance than the winning or losing of court proceedings. In the case of Collector of Central Excise, Bombay v. Jayant Dalal Pvt. Ltd. (1997 10 SCC 402), this Court has held that it is not open to the Revenue to advance an argument or even file an appeal against the correctness of the binding nature of the Circulars issued by the Board. Similar is the view taken by this Court in the case of Collector of Central Excise, Bombay v. Kores [India] Ltd. (1997 10 SCC 338). 6. As stated above, it is an admitted fact that by virtue of Circular No.4/85 dated 23.7.1986 as clarified by Circula....

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....ated to ensure that in cases where benefits of exemption notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where the Revenue/Department had already contended that the benefit of an exemption notification was not available, and the matter was sub judice before a court or a tribunal, the court or tribunal would also give effect to circulars of the Board in preference to a decision of the Constitution Bench of this Court. Where as a result of dispute the matter is sub judice, a court/tribunal is, after Dhiren Chemical case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in the manner suggested would mean that courts/tribunals have to ignore a judgment of this Court and follow circulars of the Board. That was not what was meant by para 9 of Dhiren Chemical case." "5. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriat....

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....continued to hold the field till 24 May 2004 when the second circular came to be issued. All transactions prior to 24 May 2004 were therefore liable to be treated in accordance with the provisions of the 1979 circular. That then takes us to the issue of whether the 2004 circular had the effect of impacting transactions which had already been subjected to tax prior thereto. To this the answer must obviously be in the negative. As noted above, the 1979 circular continued to hold the field for decades. The 2004 circular represented a considered and definitive shift in the stand and understanding of the department on the subject. It represented a paradigm change of position and thought. The said circular was neither explanatory in character nor was it an instrument to clear conflicting views and opinions. The letter dated 3 March 2001 addressed by the Assistant Commissioner (Law), Trade Tax, U.P, it becomes worthy of note, was merely a communication of the Assistant Commissioner (Law). It was not a circular issued by the Commissioner of Trade Tax in exercise of statutory powers. It did not have the effect of overriding or rescinding the 1979 circular. The 2004 circular can be rig....

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....ृपया इस कार्यालय के परिपत्र संख्या - विधि- 1- (1) ओ-2-(79- 80)-1041/मुख्यालय दि0 20-7-1979 का सन्दर्भ ग्रहण करें जिसके द्वारा कच्ची मूँगफली पर कर अदा किये जाने के पश्चात् उसको भूनकर पुनः बेचने पर करदेयता के सम्बन्ध में यह सूचित किया गया था कि केन्द्रीय बिà¤....

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....ªà¥à¤¤ करने हेतु प्रकरण शासन को पुनः सन्दर्भित किया गया था। शासन द्वारा न्याय विभाग से परामर्श के उपरान्त अपने पत्र संख्या-क0नि0-2-680/11-2004 - 9 (62)/2001 दि0 21-4-2004 से सूचित किया है :- "कि प्रकरण में न्याय विभाग का अभिमत प्राप्त किया गया। न्याय विभाग द्वारा माà....