TaxTMI 
TaxTMI 
2013 (3) TMI 789
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....ncluded in Item 57(V) of first Schedule of K.G.S.T. Act. Aggrieved by the same, the petitioners filed the Writ Petition seeking a declaration that exclusion of bone meal from organic manure under Entry 17 of the third Schedule to the K.G.S.T. Act and, the inclusion of it under Entry 57(V) of the first schedule as fertilizers under the group of inorganic manure is repugnant to Art. 14 of the Constitution of India. ii) to issue a writ of mandamus to the respondents to classify 'bone meal' under Entry 17 of the third schedule to the Act. iii) to issue writ of certiorari to quash Ext. P1 and P2 orders to the extent it denies exemption to the turnover of the bone meal". 2. The learned single Judge, after considering the contentions and relying on the precedents on this aspect, came to the conclusion that there is no arbitrariness in including bone meal in Entry 57(V) of first schedule of the K.G.S.T. Act and, it cannot be treated as organic manure as mentioned in Entry 17 of the third schedule and found that there is reasonable classification made by the legislature in including bone meal under fertilizer in first schedule and there is no arbitrariness and f....
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.... nature, then non inclusion of similar category in that entry is unreasonable and that benefit must be given to those articles as well. These aspects were not considered by the learned single Judge before coming to the conclusion that the petitioners are not entitled to get the exemption as prayed for, it is submitted. 6. On the other hand, learned Government Pleader argued that petitioners are not entitled to claim exemption as of right, as it is the domain of the legislature in deciding the question, as to which article has to be given exemption and the wisdom of legislature on that aspect cannot be questioned, unless it is arbitrary and without any reasons, and discriminatory. In this case, organic manure not included in the first schedule alone were given exemption in Entry 17 of Third Schedule of the Act and bone meal was included as fertilizer in Entry 57(V) of the first schedule of the Act. So, when legislature had excluded certain articles from exemption, then that cannot be claimed by the petitioners as of right. Further neem cake and crushed neem fruit are bye-products obtained by using neem leaves and from neem fruit which is a product directly obtained from plant. Wh....
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.... of Karnataka & Ors.), it has been held that introduction of entry imposing higher rate of tax on branded coconut oil than on other edible oils sold under brand name on par with other toilet articles was held to be discriminatory as the coconut oil so sold does not change the characteristics of edible oil. In the decision reported in 1981 (47) STC 30 (The State of Tamil Nadu v. Subbaraj and Co.), it has been held that sale locally of bone grists, bone-meal, fluff horns and hoof obtained in that process does not change the identity of the article completely and so long as the identity of the goods remained, the goods purchased and used in the manufacture of some other goods cannot said to have been consumed in the process of manufacture of other goods for the purpose of grouping them under the entry of higher tax, and that is not proper. This view has been upheld by the Hon'ble Supreme Court in the decision reported in 105 STC (324) (A.A. Sulaiman v. Deputy Commissioner of Sales Tax) and the same view has been reiterated in 1980 KLT 624 (SC) : AIR 1980 SC 1227 (Dy. Commissioner of Sales Tax, Ernakulam v. Pio Food Packers) : 1980 (46) STC 63 (SC) Deputy Commissioner of Sales Tax ....
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....R. K. Garg v. Union of India & Ors., R.K. Karanjia v. Union of India, Madhu Mehta & Anr., v. Union of India & Anr., P.K. Soi v. Union of India), it has been observed as follows:- Every legislation particularly in 'economic matters is essentially empiric and it is based on experimentation. There may be crudities, inequities and even possibilities of abuse but on that account alone it cannot be struck down as invalid. These can always be set right by the legislature by passing amendments. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions. Laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. Moreover, there is always a presumption in favour of the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. The legislature understands and correctly appreciates the needs of its own people, its laws are directed to problems made manifest by experience and its discrimination are based on adequate grounds. In adjudging....
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....y and shocking. It is also held in the same decision that court should make every effort to save the statute from becoming unconstitutional. A restricted or extended interpretation of the statute has to be given to save a statutory provision from the vice of unconstitutionality. Of available interpretations, court is to prefer the one which makes the statute constitutional. 12. In the decision reported in 1990(1) KLT 825 (SC) : AIR 1990 SC 913 (Kerala Hotel and Restaurant Association v. State of Kerala). It has been observed as follows: It is settled that classification founded on intelligible differentia is permitted, provided the classification made has a rational nexus with the object sought to be achieved. In other words: Those grouped together must possess a common characteristics justifying their inclusion in the group, but distinguishing from those excluded, and the performance of this exercise must bear a rational nexus with the reason for the exercise. The scope for classification permitted in a taxation is greater and unless the classification made can be termed to be palpably arbitrary, it must be left to the legislative wisdom to choose the yardstic....
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....he measure of taxation for quantification of tax. That was a case where the State of Andhra Pradesh by virtue of amendment made classification of cement sold in two Categories and imposed tax at different rate namely (1) where the sale price of cement includes the value of packing material and (2) if the cement is sold alone with separate sale of packing material for a separate price in different categories, and this was held to be valid and not violative of Art. 14 of the Constitution of India. In this case, the dictum laid down in the decision reported in (1989) 2 SCC 285 (Ayurveda Pharmacy v. State of Tamil Nadu), was also considered and distinguished. 16. In the decision reported in 2001 (1) KLT SN 62 (C. No. 73) SC : 2001 (121) STC 294 (State of Assam & Ors. v. Shri Naresh Chandra Ghose (SC)), the Constitutional validity of including Ayurvedic, Homeopathic and Unani medicines and spirituous medicinal preparations under any pharmacopoeia in different classification was questioned and it was held that the classification is valid. In the decision it has been held that an analysis of Entries 28 and 67 of Schedule-II of Assam Finance (Sale Tax) Act 1956, clearly shows that gener....
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....chemical fertilizers simplicitor and not a mixture of two or more chemical fertilizers, though, both fall under the category fertilizer. In that case, bone meal was brought under the category of chemical fertilizer, and in that case mixture of organic manure with any one of the other chemical fertilizers was held to be a chemical fertilizer mixture. So it is clear from this that the legislature was very careful in using the word fertilizer and organic manure in different meaning giving them different status for the purpose of taxation. The decision was rendered by relying on the decisions reported in 1992 (36) KLJ 478(Shaw Wallace & Company Ltd. v. State of Karnataka) and AIR 1976 SC 1437 (Shaw Wallace & Company Ltd. v. State of Tamil Nadu). 18. In the decision reported in 1975 (36) STC 72 (Coastal Food Packers, Cochin v. State of Kerala), it has been held that prawns even if sold in a sealed container ready for table will not loose its character as prawns and make it food stuff for the purpose of taxation at two different rates. In the same decision, it has been held that when a statute contains a general word and also a particular and specific word to describe a thing, the lat....
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....arries forward the objectives of the Statute protects, interest of parties and keep the remedy alive should be preferred. Looking into the text and context of the Statute, Court must take a pragmatic view and must keep in mind the purpose for which the Statute was enacted. (See 2013 (1) KLT SN 46 (C. No. 44) SC : 2013 (1) SCALE 7 (State of Gujarat & Another v. Hon'ble Mr. Justice R.A. Mehta (Retired)& Ors.)). While interpreting taxing statutes, it must be strictly interpreted, making the construction to give effect to the intention of the legislature. [See Catholic Syrian Bank Ltd. v. Commissioner of Income Tax (2012 (1) KLT SN 121 (C. No. 131) SC : (2012) 343 ITR 270 (SC)]. 22. With these principles in mind, the case in hand has to be considered. The question to be considered in this case is whether the legislature was justified in including bone meal, though by applying the grammatical meaning of organic manure, it may fall under that category, in the category of fertilizers, under Entry 57(V) of Schedule 1, and deny exemption under Entry 17 of third schedule is justifiable and whether it is arbitrary and against Art. 14 of the Constitution and liable to be declared as an ....