1
1
ORDER
Sanjay Bhandari Vs. State of Rajasthan
(1) S.B.CRIMINAL MISC.PETITION NO.289/2006
P.I.Industries Ltd. Vs. State of Rajasthan
(2) S.B.CRIMINAL MISC.PETITION NO.41/2008
UNDER SECTION 482 OF
THE CRIMINAL PROCEDURE CODE, 1973.
Date of Order: Feb.05, 2009
PRESENT
HON'BLE MR.JUSTICE DEO NARAYAN THANVI
Mr.Sandeep Mehta )
Mr.Suresh Kumbhat) for petitioners.
Mr.V.R.Mehta, Public Prosecutor.
REPORTABLE BY THE COURT:
1. Before entering into the merits of both
these Misc. Petitions filed against the order of
2
2
2. Since both these Misc. Petitions filed under
Section 482 of the Code relates to challenge to
the order of taking cognizance and issuing
process, therefore, they are being disposed-of
3
3
3. In Criminal Misc. Petition No.289/2006 filed
by Sanjay Bhandari, learned Judicial Magistrate,
Bhinder, Udaipur, took cognizance against him
for the offences u/ss.420 read with 120B IPC on
9.1.2006 on the basis of chargesheet filed by
the SHO, P.S., Bhinder, Distt.Udaipur on the
ground that the accused petitioner Sanjay
Bhandari obtained a hotel Rajmahal at Bhinder
from the complainant side on 9.11.2000 by way
of an agreement for a period of five years on
rent. In the name of this hotel business, the
accused petitioner purchased number of valuable
cars from foreign Companies but never used
those cars for the hotel and sold the same to
other persons, thereby he obtained tax relief on
one hand in the name of tourism business,
without being performed and on the other hand,
committed theft of custom duty. The rent of the
4
4
4. In Criminal Misc. Petition No.41/2008, a
complaint under Section 29(1) of the
Insecticides Act, 1968 was filed by the Assistant
Director of Agriculture (Extension) & Insecticides
Inspector, Hanumangarh Junction, on 17.3.2006
alleging therein that the insecticide product
“Imidachloprid 17.8% SL Batch No.2003-J-01
was misbranded. The sample of the aforesaid
insecticide was drawn and sent to the
Laboratory, which was found to be misbranded.
The learned Judicial Magistrate, Pilibanga, Distt.
Hanumangarh took cognizance on the basis of
this complaint as averred in para `H' of the
5
5
5. Learned counsel appearing on behalf of the
petitioners, while citing various pronouncements
of the Hon'ble Supreme Court on the scope &
ambit of Section 482 and 397 of the Code,
argued that there is no bar in filing direct
petition under Section 482 of the Code before
this Court despite there being alternative
remedy of filing revision petition under Section
397 CrPC, as according to them, even on merits
if the allegations are looked into, no case is
6
6sections(
2) and (3) of Section 397 of the Code,
the revision petition is barred which is against
the interlocutory order or further application by
the same person respectively. In support of their
contention, they have relied upon various
pronouncements, which are hereinafter referred.
7
7Before dealing with the ambit of both the
Sections i.e. S.397 & S.482 of the Code, it would
be worthwhile to reproduce them for the purpose
of their applicability.
7. Section 397 of the Code reads as under:
“397. Calling for records to exercise
powers of revision.-(1) The High Court or
any Sessions Judge may call for and
examine the record of any proceeding
before any inferior Criminal Court situate
within its or his local jurisdiction for the
purpose of satisfying itself or himself as to
the correctness, legality or propriety of any
finding, sentence or order, recorded or
passed, and as to the regularity of any
proceedings of such inferior Court, and may,
when calling for such record, direct that the
execution of any sentence or order be
suspended, and if the accused is in
confinement, that he be released on bail or
on his own bond pending the examination of
the record.
(2) The powers of revision conferred by subsection
(1) shall not be exercised in relation
to any interlocutory order passed in any
appeal, inquiry, trial or other proceeding.
(3) If an application under this section has
been made by any person either to the High
Court or to the Sessions Judge, no further
8
8
8. Sections 482 & 483 of the Code reads thus:
“482. Saving of inherent power of High
Court.-Nothing in this Code shall be
deemed to limit or affect the inherent
powers of the High Court to make such
orders as may be necessary to give effect to
any order under this Code, or to prevent
abuse of the process of any Court or
otherwise to secure the ends of justice.”
483. Duty of High Court to exercise
continuous superintendence over Courts
of Judicial Magistrates.-Every High
Court shall so exercise its superintendence
over the Courts of Judicial Magistrates
subordinate to it as to ensure that there is
an expeditious and proper disposal of cases
by such Magistrates.”
9. A bare reading of Section 397(1) of the
Code speaks that record of any proceeding of
any inferior court can be examined by the High
Court or the Sessions Judge with regard to its
correctness, legality or propriety of any finding,
9
9o
its regularity. Under sub-section (2), a bar has
been imposed for exercise of such power in
relation to interlocutory order passed in any
appeal, inquiry, trial or other proceeding and
sub-section (3) bars further revision by the
same person. Thus, on a cumulative reading of
these three sub-sections, it is clear that except
in interlocutory orders or second revision by the
same person, the correctness, legality and
propriety of the impugned sentences or orders
may be examined either by the High Court or by
the Sessions Judge, whereas under Section 482
of the Code, while exercising inherent powers,
the High Court may make such orders, as may
be necessary to give effect to any order under
this Code or to prevent abuse of the process of
any court or otherwise to secure the ends of
justice. Though, on broad reading of both the
Sections, it can be said that exercise of powers
10
under Sec.397 and Section 482 of the Code are
by and large similar in granting relief to the
aggrieved party, except that of interlocutory
order and of second revision by the same party.
If the order is of such a nature as contemplated
under sub-sections (2) and (3) of Section 397 of
the Code, then the only remedy available to the
aggrieved party is by way of a petition under
Section 482 of the Code within its four corners.
But, if these two Sections are looked into in the
light of the words used, Section 397 is confined
to the extent of examining the correctness,
legality or propriety of the order, whereas
inherent powers can be exercised to give effect
to any order given under this Code or to prevent
abuse of the process of any Court or to secure
the ends of justice.
10. It is noticed rather shocking that in many of
the cases, aggrieved parties are trying to
11
approach the High Court in similarly situated
cases either under Section 397 or under Section
482 of the Code as advised or both the remedies
simultaneously through one or other party of the
same case. For instance, this Court came with a
situation when in a same case of framing
charges on 22.8.06 against three accused
u/ss.420, 467, 468 read with 120B IPC, one of
the accused Niranjan Kumar preferred a Misc.
Petition u/s.482 of the Code & another accused
Avadh Bihari filed revision being S.B.Cr.Revision
No.1025/07 under Section 397 of the Code in
this Court, which, on being noticed, have been
tagged together. Likewise, in Cr.Misc.Petition
No.736/99, accused, who was a Pradhan of
Panchayat Samiti, Dungla, on one hand,
challenged FIR for its quashing u/s.482 of the
Code, which was stayed by the High Court and
on the other hand, challenged the order of
Judicial Magistrate, who took cognizance u/s.509
12
IPC on the same facts in this Court u/s.397 of
the Code by way of filing Cr.Revision
No.742/1999, resulting in its dismissal in the
light of Natwarlal vs. State reported in 2008(1)
CrLR (Raj) 617. During pendency of this petition,
the accused was acquitted and the Misc. Petition
was dismissed as having become infructuous at
the request of learned counsel for the petitioner.
Certain more examples may be noticed of the
like nature in this Court and other High Courts
as well. Whether the High Court has some check
to control this dual process, which can be
termed as riding on two horses by the parties to
the litigation or abuse of the process by the
Courts itself? Answer to this lies by declaring a
definite law based on logical conclusion to give
proper effect to the provisions of this Code as
embodied u/ss.397 and 482 of the Code. Certain
judgments of the Hon'ble Apex Court are of wide
importance to determine the ratio in this regard,
13
which will be discussed hereinafter.
11. Broadly speaking, Section 397 of the Code
operates when the order is final because there is
a bar in filing revision under Section 397(2) with
regard to interlocutory order or u/s.397(3) in
second revision. Against such interlocutory
orders or second revisions, if they cover under
any of the three contingencies, provided-for
under Section 482 of the Code and as referred-
to above, the aggrieved party can approach the
High Court under Section 482 of the Code. The
order is said to be final under this Code, when
either the criminal proceedings are terminated
or they are commenced. Chapter XVI of the Code
deals with the commencement of proceedings
and Chapter XVII onwards of the Code deals
with the charge. Proceedings are said to have
commenced when a complaint is not dismissed
under Section 203 of the Code and the process
14
is issued against the accused under Section 204
of the Code and the trial is commenced when the
charge is framed under Chapter XVII of the
Code. Section 203 of the Code is limited to the
extent that if there are no sufficient grounds for
proceeding, the magistrate shall dismiss the
complaint and after issue of the process or when
the accused is brought before the court through
police investigation, he is discharged, when the
charge is groundless either under Section 239 of
the Code or under Section 245 of the Code, from
evidence, no case is made out, if unrebutted,
would warrant his conviction or no sufficient
grounds are made out under Section 227 of the
Code. This commencement of proceeding or
putting a person to face trial and discharge of
the accused i.e. termination of proceedings of
trial is termed as final order. Rest are said to be
interlocutory orders. This view has been
reiterated by the Hon'ble Supreme Court in
15
Amarnath vs. State of Haryana reported in AIR
1977 SC 2185 in the following terms:
“...It is difficult to hold that the impugned
order summoning the appellants
straightaway was merely an interlocutory
order which could not be revised by the High
Court under sub-sections (1) and (2) of
Section 397 of the 1973 Code. The order of
the Judicial Magistrate summoning the
appellants in the circumstances of the
present case, particularly having regard to
what had preceded, was undoubtedly a
matter of moment, and a valuable right of
the appellants had been taken away by the
Magistrate in passing an order prima facie in
sheer mechanical fashion without applying
his mind. We are, therefore, satisfied that
the order impugned was one which was a
matter of moment and which did involve a
decision regarding the rights of the
appellants. If the appellants were not
summoned, then they could not have faced
the trial at all, but by compelling the
appellants to face a trial without proper
application of mind cannot be held to be an
interlocutory matter but one which decided
a serious question as to the rights of the
appellants to be put on trial.”
12. In the present petitions, both the
petitioners have challenged the order of taking
cognizance i.e. initiation of proceedings being a
16
matter of moment for putting them on trial,
which is not an interlocutory order but a final
order, by way of these petitions filed u/s.482
CrPC. In this regard, if the law is looked into,
the leading case on this subject is of the larger
Bench of the Hon'ble Supreme Court in Madhu
Limaye vs. State of Maharashtra reported in AIR
1978 SC 47. While discussing the scope of
Section 482 and 397(2) of the Code, the Hon'ble
Supreme Court laid down the following principles
with regard to exercise of inherent powers by
the High Court:
“8. xxx At the outset the following principles
may be noticed in relation to the exercise of
the inherent power of the High Court which
have been followed ordinarily and generally,
almost invariably, barring a few exceptions:
(1) That the power is not to be resorted to if
there is a specific provision in the Code for
the redress of the grievance of the
aggrieved party;
(2) That it should be exercised very
sparingly to prevent abuse of process of any
Court or otherwise to secure the ends of
17
justice;
(3) That it should not be exercised as
against the express bar of law engrafted in
any other provision of the Code.
13. In the said decision, the Hon'ble Supreme
Court has also gone into the scope of
interlocutory order and has held that the order
under challenge was not an interlocutory one so
as to attract the bar of sub-section(2) of Section
397 of the Code. In this case, appellant Shri
Madhu Limaye was put to trial for the offence
u/s.500 IPC before the Court of Sessions Judge,
Greater Bombay, in pursuance to the sanction
issued by the State Govt. under Sec.199 of the
Code for making defamatory press note against
the then Law Minister of Maharashtra Shri
A.R.Antulay. Learned Sessions Judge took
cognizance and process was issued upon the
said complaint. The Chief Secretary to the Govt.
of Maharashtra was to be examined as a witness
18
to prove the sanction but the appellant Shri
Madhu Limaye filed an application before the
learned Sessions Judge to challenge the legality
of the trial. The learned Sessions Judge rejected
the application and framed charge u/s.500 IPC.
The appellant thereafter challenged the order by
way of revision in the High Court u/s.397 of the
Code. The High Court dismissed the revision
without entering into the merits of the case by
holding that the order being interlocutory in
nature, it was not maintainable in view of the
provisions contained in sub-sec.(2) of Section
397 of the Code. Against this, the appeal was
preferred. While discussing the scope of
interlocutory order, the Hon'ble Supreme Court
observed in para 13 as under:
“...On the one hand, the legislature kept
intact the revisional power of the High Court
and, on the other, it put a bar on the
exercise of that power in relation to any
interlocutory order. In such a situation, it
appears to us that the real intention of the
19
legislature was not to equate the expressing
“interlocutory order” as invariably being
converse of the words “final order”. There
may be an order passed during the course of
a proceeding which may not be final in the
sense noticed in Kuppuswami's case (AIR
1949 FC 1) (supra), but, yet it may not be
an interlocutory order – pure or simple.
Some kinds of order may fall in between the
two. By a rule of harmonious construction,
we think that the bar in sub-s.(2) fo S.397
is not meant to be attracted to such kinds of
intermediate orders. They may not be final
orders for the purposes of Art.134 of the
Constitution, yet it would not be correct to
characterise them as merely interlocutory
orders within the meaning of S.397(2). It is
neither advisable, nor possible to make a
catalogue of orders to demonstrate which
kinds of orders would be merely, purely or
simply interlocutory and which kinds of
orders would be final, and then to prepare
an exhaustive list of those types of orders
which will fall in between the two. The first
two kinds are well known and can be culled
out from many decided cases. We may,
however, indicate that the type of order
with which we are concerned in this case,
even though it may not be final in one
sense, is surely not interlocutory so as to
attract the bar of sub-sec.(2) of S.397. In
our opinion, it must be taken to be an order
of the type falling in the middle course.”
14. In para 17 of the said judgment, the Hon'ble
Supreme Court lastly observed as under:
20
“Before we conclude we may point out an
obvious, almost insurmountable, difficulty in
the way of applying literally the test laid
down in Kuppuswami Rao's case (AIR 1949
FC 1) and in holding that an order of the
kind under consideration being not a final
order must necessarily be an interlocutory
one. If a complaint is dismissed under S.203
or under S.204(4) or the Court holds the
proceeding to be void or discharges the
accused, a revision to the High Court at the
instance of the complainant or the
prosecutor would be competent, otherwise it
will make S.398 of the new Code otiose.
Does it stand to reason, then, that an
accused will have no remedy to move the
High Court in revision or invoke its inherent
power for the quashing of the criminal
proceeding initiated upon a complaint or
otherwise and which is fit to be quashed on
the face of it? The legislature left the power
to order further inquiry intact in S.398. Is it
not then in consonance with the sense of
justice to leave intact the remedy of the
accused to move the High Court for setting
aside the order adversely made against him
in similar circumstances and to quash the
proceeding? The answer must be given in
favour of the just and reasonable view
expressed by us above.”
Accordingly, the Hon'ble Supreme Court
allowed the appeal and remanded the case back
to the High Court for disposal on merits in the
light of the above judgment.
21
15. Apart from laying down the three principles
as referred-to above with regard to exercise of
inherent powers u/s.482 of the Code, the
Hon'ble Supreme Court also relied upon its
earlier judgment in R.P.Kapur v. The State of
Punjab reported in AIR 1960 SC 866, wherein
the Hon'ble Gajendragadkar J., as he then was,
laid down three categories of cases, wherein
inherent powers u/s.561A of the old Code
corresponding to Section 482 of the Code, can
be exercised. Firstly, where the institution or
commencement of the criminal proceeding is
against the legal bar; secondly from the bare
reading of the FIR or the complaint at the face
value, no offence is made out; and thirdly, there
is no legal evidence in support of the case but
while exercising the powers u/s.561A, the High
Court would not embark upon an enquiry as to
whether the evidence in question is reliable or
not. Even if the order is not final by way of
22
termination of proceedings and the continuance
of proceedings in a criminal court manifestly
shows that there is a legal bar against the
institution or continuance of the criminal
proceeding or the court exercised jurisdiction,
which was not vested in it, the High Court would
be justified in quashing the proceedings.
16. Thus, from the above judgment of Madhu
Limaye's case (supra), it can be gathered that
the order of taking cognizance and framing
charge cannot be termed as an interlocutory
order and the revision is maintainable against
this order and when there is a specific provision
for redress of the grievance of an aggrieved
party, the inherent powers u/s.482 CrPC cannot
be exercised.
17. In the other rulings of regular Benches cited
by learned counsel for the petitioner namely (1)
23
State of Haryana v. Bhajanlal reported in AIR
1992 SC 604; (2) M/s Pepsi Foods Ltd. v. Special
Judicial Magistrate reported in 1998 Cr.L.R.(SC)
18; (3) K. Ramakrishna Vs. State of Bihar,
reported in 2000 (4) Crimes 113 (SC), (4)
S.W.Palanitkar v. State of Bihar reported in
2001 Cr.L.R. (SC) 751; (5) N.K.Sharma v.
Abhimanyu reported in (2006) 2 SCC (Cri) 135;
and (6) Bholu Ram v. State of Punjab reported
in (2008) 3 SCC (Cri) 710, wherein the scope
and ambit of only Section 482 of the Code, has
been discussed as is provided for in the Section
itself, without there being any reference to
Section 397 of the Code as has been discussed
in the Larger Bench's decision of the Hon'ble
Supreme Court in Madhu Limaye's case (supra).
18. In Adalat Prasad Vs. Rooplal Jindal & Ors.,
reported in 2004 Cr.L.R. (SC) 800, the Larger
Bench of the Hon'ble Supreme Court while
24
confirming the order of the High Court held that
recalling summons issued by the Magistrate
under Section 204 of the Code will be a review
of its earlier order, which is not warranted under
the Code as the process is issued under Section
204 of the Code when complaint is not dismissed
under Section 203 of the Code. Opposite earlier
view taken by the three Judges Larger Bench in
K. K. Mathew Vs. State of Kerala & Anr.,
reported in (1992) 1 SCC 217 was held not to
be a correct law by holding that in the absence
of any review power or inherent power with the
subordinate courts, the remedies lie in invoking
Section 482 of the Code. Issue relating to scope
of Section 397 of the Code was also not involved
in this cited case as well.
19. On the applicability of Section 482 of the
Code despite there being alternative remedy
under Section 397 of the Code, leaned counsel
25
for the petitioner has cited the latest decision of
Dhariwal Tobaco Products Ltd. v. State of
Maharashtra decided by the Hon'ble Supreme
Court on 17.12.08 in Criminal Appeal No.2055 of
2007 (Arising out of SLP (Cri.) No.2272 of
2007). This was a case under the Prevention of
Food Adulteration Rules, 1955, wherein a
criminal complaint against a Company was filed,
which was dealing in the manufacturing of the
`Gutkha' having multiple Units. The learned
Magistrate took cognizance and issued summons
against which they filed a petition in the High
Court u/s.482 of the Code, which was dismissed
against which the appeal was filed in the Hon'ble
Supreme Court, wherein, at Para 10 it has been
held as under:
“10. Inherent power of the High Court is not
conferred by statute but has merely been
saved thereunder. It is, thus, difficult to
conceive that the jurisdiction of the High
Court would be held to be barred only
because the revisional jurisdiction could
26
also be availed of. (See Krishnan and Anr.
v. Krishnaveni and Anr. MANU/SC/0223/
1997). In fact in Adalat Prasad v. Rooplal
Jindal and Ors. MANU/SC/0688/2004 to
which reference has been made by the
learned Single Judge of the Bombay High
Court in V.K. Jain and Ors. (supra) this
Court has clearly opined that when a
process is issued, the provisions of Section
482 of the Code can be resorted to.”
20. In the said decision of Dhariwal's case
(supra), though the scope of Section 482 of the
Code has been discussed in the light of Art.227
of the Constitution but it has been observed
while relying upon the decision of the Hon'ble
Supreme Court in C.B.I. v. Ravi Shankar
Srivastava, MANU/SC/8405/2006 that inherent
powers under this Section, though wide, has to
be exercised sparingly, carefully and with
caution and it is to be exercised ex debito
justitiae to do real and substantial justice for
the administration of which alone the courts
exist. The ratio of the said case is that such
powers can be exercised, when there is an abuse
27
of the process of law of any court or to secure
the ends of justice. While allowing the appeal,
the case was remitted back to the High Court for
fresh decision on merits. In the said case also,
the earlier judgment of the larger Bench of the
Hon'ble Supreme Court in Madhu Limaye's case
(supra) has not been referred-to.
21. Thus, taking guidelines on the law laid down
by the larger Bench in Madhu Limaye's case
(supra) on the basis of the doctrine of star
decisis, which is a strong rule of precedent, I am
fortified with the view that when the petitioners,
who are aggrieved by the order of taking
cognizance, have a specific provision under the
Code for redressal of their grievances by way of
filing revision under Section 397 of the Code,
they cannot invoke the inherent powers of this
Court under Section 482 CrPC because the order
of taking cognizance is final one, not being an
28
interlocutory order. The revision can very well
be maintained before the learned Sessions Judge
as held by this Court in Natwarlal vs. State
reported in 2008(1) CrLR (Raj) 617.
22. This Court could have exercised the power
under Section 482 of the Code, had there been a
case from the perusal of the complaint that the
action of taking cognizance is without
jurisdiction or barred by law, which has resulted
in abuse of the process of law or is necessary to
secure the ends of justice, specially when
affected party for one or the other reason could
not resort to the remedy available u/s.397 of the
Code. The legality or correctness of the order in
appreciating evidence for the purpose of taking
cognizance and charge is purely a subject matter
of examination under Section 397 of the Code.
23. Likewise, the duty of superintendence under
29
Section 483 of the Code is confined only to the
extent of expeditious and proper disposal of
cases. Duty cast upon the High Court under this
Section is alike of an administrative nature,
which can be read with the inherent powers
under Section 482 of the Code, being a saving
provision where there is no other power to
interfere.
24. From the facts as stated above and the
statements recorded by the police during
investigation in Sanjay Bhandari's petition,
petitioner took the hotel by way of agreement on
rental basis but he had neither run the hotel nor
licence fee was deposited and on the contrary,
he purchased valuable cars from the foreign
Company in the name of tourism and thereby
alleged to have committed an act of cheating.
These allegations cannot be termed as purely of
civil nature, but is an offence u/s.420 IPC.
30
25. In Misc. Petition filed by P.I.Industries Ltd.,
petitioner was charged for having misbranded
the insecticide product. Objections with regard
to not sending of second sample or consent etc.
could have been raised even during the course
of trial or by way of filing revision before the
learned Sessions Judge.
26. From the face value of both the complaints,
neither the magistrate while taking cognizance,
has abused the process of law nor the cases are
of such nature, which bars his jurisdiction or
which comes under the category of civil nature
so as to attract the provisions of Section 482
CrPC. The appropriate remedy available to the
petitioners is to approach the revisional court
under Section 397 of the Code, if they so desire
and in that event, the period consumed in the
petition shall not come in the way for the
purpose of limitation.
31
27. Consequently, both these Misc. Petitions are
dismissed with the above observations.
(DEO NARAYAN THANVI), J.
RANKAWAT JK, PS
Friday, April 24, 2009
Whether alternative relief of revision bars the exercise of power under Section 482
1
1
ORDER
Sanjay Bhandari Vs. State of Rajasthan
(1) S.B.CRIMINAL MISC.PETITION NO.289/2006
P.I.Industries Ltd. Vs. State of Rajasthan
(2) S.B.CRIMINAL MISC.PETITION NO.41/2008
UNDER SECTION 482 OF
THE CRIMINAL PROCEDURE CODE, 1973.
Date of Order: Feb.05, 2009
PRESENT
HON'BLE MR.JUSTICE DEO NARAYAN THANVI
Mr.Sandeep Mehta )
Mr.Suresh Kumbhat) for petitioners.
Mr.V.R.Mehta, Public Prosecutor.
REPORTABLE BY THE COURT:
1. Before entering into the merits of both
these Misc. Petitions filed against the order of
2
2
2. Since both these Misc. Petitions filed under
Section 482 of the Code relates to challenge to
the order of taking cognizance and issuing
process, therefore, they are being disposed-of
3
3
3. In Criminal Misc. Petition No.289/2006 filed
by Sanjay Bhandari, learned Judicial Magistrate,
Bhinder, Udaipur, took cognizance against him
for the offences u/ss.420 read with 120B IPC on
9.1.2006 on the basis of chargesheet filed by
the SHO, P.S., Bhinder, Distt.Udaipur on the
ground that the accused petitioner Sanjay
Bhandari obtained a hotel Rajmahal at Bhinder
from the complainant side on 9.11.2000 by way
of an agreement for a period of five years on
rent. In the name of this hotel business, the
accused petitioner purchased number of valuable
cars from foreign Companies but never used
those cars for the hotel and sold the same to
other persons, thereby he obtained tax relief on
one hand in the name of tourism business,
without being performed and on the other hand,
committed theft of custom duty. The rent of the
4
4
4. In Criminal Misc. Petition No.41/2008, a
complaint under Section 29(1) of the
Insecticides Act, 1968 was filed by the Assistant
Director of Agriculture (Extension) & Insecticides
Inspector, Hanumangarh Junction, on 17.3.2006
alleging therein that the insecticide product
“Imidachloprid 17.8% SL Batch No.2003-J-01
was misbranded. The sample of the aforesaid
insecticide was drawn and sent to the
Laboratory, which was found to be misbranded.
The learned Judicial Magistrate, Pilibanga, Distt.
Hanumangarh took cognizance on the basis of
this complaint as averred in para `H' of the
5
5
5. Learned counsel appearing on behalf of the
petitioners, while citing various pronouncements
of the Hon'ble Supreme Court on the scope &
ambit of Section 482 and 397 of the Code,
argued that there is no bar in filing direct
petition under Section 482 of the Code before
this Court despite there being alternative
remedy of filing revision petition under Section
397 CrPC, as according to them, even on merits
if the allegations are looked into, no case is
6
6sections(
2) and (3) of Section 397 of the Code,
the revision petition is barred which is against
the interlocutory order or further application by
the same person respectively. In support of their
contention, they have relied upon various
pronouncements, which are hereinafter referred.
7
7Before dealing with the ambit of both the
Sections i.e. S.397 & S.482 of the Code, it would
be worthwhile to reproduce them for the purpose
of their applicability.
7. Section 397 of the Code reads as under:
“397. Calling for records to exercise
powers of revision.-(1) The High Court or
any Sessions Judge may call for and
examine the record of any proceeding
before any inferior Criminal Court situate
within its or his local jurisdiction for the
purpose of satisfying itself or himself as to
the correctness, legality or propriety of any
finding, sentence or order, recorded or
passed, and as to the regularity of any
proceedings of such inferior Court, and may,
when calling for such record, direct that the
execution of any sentence or order be
suspended, and if the accused is in
confinement, that he be released on bail or
on his own bond pending the examination of
the record.
(2) The powers of revision conferred by subsection
(1) shall not be exercised in relation
to any interlocutory order passed in any
appeal, inquiry, trial or other proceeding.
(3) If an application under this section has
been made by any person either to the High
Court or to the Sessions Judge, no further
8
8
8. Sections 482 & 483 of the Code reads thus:
“482. Saving of inherent power of High
Court.-Nothing in this Code shall be
deemed to limit or affect the inherent
powers of the High Court to make such
orders as may be necessary to give effect to
any order under this Code, or to prevent
abuse of the process of any Court or
otherwise to secure the ends of justice.”
483. Duty of High Court to exercise
continuous superintendence over Courts
of Judicial Magistrates.-Every High
Court shall so exercise its superintendence
over the Courts of Judicial Magistrates
subordinate to it as to ensure that there is
an expeditious and proper disposal of cases
by such Magistrates.”
9. A bare reading of Section 397(1) of the
Code speaks that record of any proceeding of
any inferior court can be examined by the High
Court or the Sessions Judge with regard to its
correctness, legality or propriety of any finding,
9
9o
its regularity. Under sub-section (2), a bar has
been imposed for exercise of such power in
relation to interlocutory order passed in any
appeal, inquiry, trial or other proceeding and
sub-section (3) bars further revision by the
same person. Thus, on a cumulative reading of
these three sub-sections, it is clear that except
in interlocutory orders or second revision by the
same person, the correctness, legality and
propriety of the impugned sentences or orders
may be examined either by the High Court or by
the Sessions Judge, whereas under Section 482
of the Code, while exercising inherent powers,
the High Court may make such orders, as may
be necessary to give effect to any order under
this Code or to prevent abuse of the process of
any court or otherwise to secure the ends of
justice. Though, on broad reading of both the
Sections, it can be said that exercise of powers
10
under Sec.397 and Section 482 of the Code are
by and large similar in granting relief to the
aggrieved party, except that of interlocutory
order and of second revision by the same party.
If the order is of such a nature as contemplated
under sub-sections (2) and (3) of Section 397 of
the Code, then the only remedy available to the
aggrieved party is by way of a petition under
Section 482 of the Code within its four corners.
But, if these two Sections are looked into in the
light of the words used, Section 397 is confined
to the extent of examining the correctness,
legality or propriety of the order, whereas
inherent powers can be exercised to give effect
to any order given under this Code or to prevent
abuse of the process of any Court or to secure
the ends of justice.
10. It is noticed rather shocking that in many of
the cases, aggrieved parties are trying to
11
approach the High Court in similarly situated
cases either under Section 397 or under Section
482 of the Code as advised or both the remedies
simultaneously through one or other party of the
same case. For instance, this Court came with a
situation when in a same case of framing
charges on 22.8.06 against three accused
u/ss.420, 467, 468 read with 120B IPC, one of
the accused Niranjan Kumar preferred a Misc.
Petition u/s.482 of the Code & another accused
Avadh Bihari filed revision being S.B.Cr.Revision
No.1025/07 under Section 397 of the Code in
this Court, which, on being noticed, have been
tagged together. Likewise, in Cr.Misc.Petition
No.736/99, accused, who was a Pradhan of
Panchayat Samiti, Dungla, on one hand,
challenged FIR for its quashing u/s.482 of the
Code, which was stayed by the High Court and
on the other hand, challenged the order of
Judicial Magistrate, who took cognizance u/s.509
12
IPC on the same facts in this Court u/s.397 of
the Code by way of filing Cr.Revision
No.742/1999, resulting in its dismissal in the
light of Natwarlal vs. State reported in 2008(1)
CrLR (Raj) 617. During pendency of this petition,
the accused was acquitted and the Misc. Petition
was dismissed as having become infructuous at
the request of learned counsel for the petitioner.
Certain more examples may be noticed of the
like nature in this Court and other High Courts
as well. Whether the High Court has some check
to control this dual process, which can be
termed as riding on two horses by the parties to
the litigation or abuse of the process by the
Courts itself? Answer to this lies by declaring a
definite law based on logical conclusion to give
proper effect to the provisions of this Code as
embodied u/ss.397 and 482 of the Code. Certain
judgments of the Hon'ble Apex Court are of wide
importance to determine the ratio in this regard,
13
which will be discussed hereinafter.
11. Broadly speaking, Section 397 of the Code
operates when the order is final because there is
a bar in filing revision under Section 397(2) with
regard to interlocutory order or u/s.397(3) in
second revision. Against such interlocutory
orders or second revisions, if they cover under
any of the three contingencies, provided-for
under Section 482 of the Code and as referred-
to above, the aggrieved party can approach the
High Court under Section 482 of the Code. The
order is said to be final under this Code, when
either the criminal proceedings are terminated
or they are commenced. Chapter XVI of the Code
deals with the commencement of proceedings
and Chapter XVII onwards of the Code deals
with the charge. Proceedings are said to have
commenced when a complaint is not dismissed
under Section 203 of the Code and the process
14
is issued against the accused under Section 204
of the Code and the trial is commenced when the
charge is framed under Chapter XVII of the
Code. Section 203 of the Code is limited to the
extent that if there are no sufficient grounds for
proceeding, the magistrate shall dismiss the
complaint and after issue of the process or when
the accused is brought before the court through
police investigation, he is discharged, when the
charge is groundless either under Section 239 of
the Code or under Section 245 of the Code, from
evidence, no case is made out, if unrebutted,
would warrant his conviction or no sufficient
grounds are made out under Section 227 of the
Code. This commencement of proceeding or
putting a person to face trial and discharge of
the accused i.e. termination of proceedings of
trial is termed as final order. Rest are said to be
interlocutory orders. This view has been
reiterated by the Hon'ble Supreme Court in
15
Amarnath vs. State of Haryana reported in AIR
1977 SC 2185 in the following terms:
“...It is difficult to hold that the impugned
order summoning the appellants
straightaway was merely an interlocutory
order which could not be revised by the High
Court under sub-sections (1) and (2) of
Section 397 of the 1973 Code. The order of
the Judicial Magistrate summoning the
appellants in the circumstances of the
present case, particularly having regard to
what had preceded, was undoubtedly a
matter of moment, and a valuable right of
the appellants had been taken away by the
Magistrate in passing an order prima facie in
sheer mechanical fashion without applying
his mind. We are, therefore, satisfied that
the order impugned was one which was a
matter of moment and which did involve a
decision regarding the rights of the
appellants. If the appellants were not
summoned, then they could not have faced
the trial at all, but by compelling the
appellants to face a trial without proper
application of mind cannot be held to be an
interlocutory matter but one which decided
a serious question as to the rights of the
appellants to be put on trial.”
12. In the present petitions, both the
petitioners have challenged the order of taking
cognizance i.e. initiation of proceedings being a
16
matter of moment for putting them on trial,
which is not an interlocutory order but a final
order, by way of these petitions filed u/s.482
CrPC. In this regard, if the law is looked into,
the leading case on this subject is of the larger
Bench of the Hon'ble Supreme Court in Madhu
Limaye vs. State of Maharashtra reported in AIR
1978 SC 47. While discussing the scope of
Section 482 and 397(2) of the Code, the Hon'ble
Supreme Court laid down the following principles
with regard to exercise of inherent powers by
the High Court:
“8. xxx At the outset the following principles
may be noticed in relation to the exercise of
the inherent power of the High Court which
have been followed ordinarily and generally,
almost invariably, barring a few exceptions:
(1) That the power is not to be resorted to if
there is a specific provision in the Code for
the redress of the grievance of the
aggrieved party;
(2) That it should be exercised very
sparingly to prevent abuse of process of any
Court or otherwise to secure the ends of
17
justice;
(3) That it should not be exercised as
against the express bar of law engrafted in
any other provision of the Code.
13. In the said decision, the Hon'ble Supreme
Court has also gone into the scope of
interlocutory order and has held that the order
under challenge was not an interlocutory one so
as to attract the bar of sub-section(2) of Section
397 of the Code. In this case, appellant Shri
Madhu Limaye was put to trial for the offence
u/s.500 IPC before the Court of Sessions Judge,
Greater Bombay, in pursuance to the sanction
issued by the State Govt. under Sec.199 of the
Code for making defamatory press note against
the then Law Minister of Maharashtra Shri
A.R.Antulay. Learned Sessions Judge took
cognizance and process was issued upon the
said complaint. The Chief Secretary to the Govt.
of Maharashtra was to be examined as a witness
18
to prove the sanction but the appellant Shri
Madhu Limaye filed an application before the
learned Sessions Judge to challenge the legality
of the trial. The learned Sessions Judge rejected
the application and framed charge u/s.500 IPC.
The appellant thereafter challenged the order by
way of revision in the High Court u/s.397 of the
Code. The High Court dismissed the revision
without entering into the merits of the case by
holding that the order being interlocutory in
nature, it was not maintainable in view of the
provisions contained in sub-sec.(2) of Section
397 of the Code. Against this, the appeal was
preferred. While discussing the scope of
interlocutory order, the Hon'ble Supreme Court
observed in para 13 as under:
“...On the one hand, the legislature kept
intact the revisional power of the High Court
and, on the other, it put a bar on the
exercise of that power in relation to any
interlocutory order. In such a situation, it
appears to us that the real intention of the
19
legislature was not to equate the expressing
“interlocutory order” as invariably being
converse of the words “final order”. There
may be an order passed during the course of
a proceeding which may not be final in the
sense noticed in Kuppuswami's case (AIR
1949 FC 1) (supra), but, yet it may not be
an interlocutory order – pure or simple.
Some kinds of order may fall in between the
two. By a rule of harmonious construction,
we think that the bar in sub-s.(2) fo S.397
is not meant to be attracted to such kinds of
intermediate orders. They may not be final
orders for the purposes of Art.134 of the
Constitution, yet it would not be correct to
characterise them as merely interlocutory
orders within the meaning of S.397(2). It is
neither advisable, nor possible to make a
catalogue of orders to demonstrate which
kinds of orders would be merely, purely or
simply interlocutory and which kinds of
orders would be final, and then to prepare
an exhaustive list of those types of orders
which will fall in between the two. The first
two kinds are well known and can be culled
out from many decided cases. We may,
however, indicate that the type of order
with which we are concerned in this case,
even though it may not be final in one
sense, is surely not interlocutory so as to
attract the bar of sub-sec.(2) of S.397. In
our opinion, it must be taken to be an order
of the type falling in the middle course.”
14. In para 17 of the said judgment, the Hon'ble
Supreme Court lastly observed as under:
20
“Before we conclude we may point out an
obvious, almost insurmountable, difficulty in
the way of applying literally the test laid
down in Kuppuswami Rao's case (AIR 1949
FC 1) and in holding that an order of the
kind under consideration being not a final
order must necessarily be an interlocutory
one. If a complaint is dismissed under S.203
or under S.204(4) or the Court holds the
proceeding to be void or discharges the
accused, a revision to the High Court at the
instance of the complainant or the
prosecutor would be competent, otherwise it
will make S.398 of the new Code otiose.
Does it stand to reason, then, that an
accused will have no remedy to move the
High Court in revision or invoke its inherent
power for the quashing of the criminal
proceeding initiated upon a complaint or
otherwise and which is fit to be quashed on
the face of it? The legislature left the power
to order further inquiry intact in S.398. Is it
not then in consonance with the sense of
justice to leave intact the remedy of the
accused to move the High Court for setting
aside the order adversely made against him
in similar circumstances and to quash the
proceeding? The answer must be given in
favour of the just and reasonable view
expressed by us above.”
Accordingly, the Hon'ble Supreme Court
allowed the appeal and remanded the case back
to the High Court for disposal on merits in the
light of the above judgment.
21
15. Apart from laying down the three principles
as referred-to above with regard to exercise of
inherent powers u/s.482 of the Code, the
Hon'ble Supreme Court also relied upon its
earlier judgment in R.P.Kapur v. The State of
Punjab reported in AIR 1960 SC 866, wherein
the Hon'ble Gajendragadkar J., as he then was,
laid down three categories of cases, wherein
inherent powers u/s.561A of the old Code
corresponding to Section 482 of the Code, can
be exercised. Firstly, where the institution or
commencement of the criminal proceeding is
against the legal bar; secondly from the bare
reading of the FIR or the complaint at the face
value, no offence is made out; and thirdly, there
is no legal evidence in support of the case but
while exercising the powers u/s.561A, the High
Court would not embark upon an enquiry as to
whether the evidence in question is reliable or
not. Even if the order is not final by way of
22
termination of proceedings and the continuance
of proceedings in a criminal court manifestly
shows that there is a legal bar against the
institution or continuance of the criminal
proceeding or the court exercised jurisdiction,
which was not vested in it, the High Court would
be justified in quashing the proceedings.
16. Thus, from the above judgment of Madhu
Limaye's case (supra), it can be gathered that
the order of taking cognizance and framing
charge cannot be termed as an interlocutory
order and the revision is maintainable against
this order and when there is a specific provision
for redress of the grievance of an aggrieved
party, the inherent powers u/s.482 CrPC cannot
be exercised.
17. In the other rulings of regular Benches cited
by learned counsel for the petitioner namely (1)
23
State of Haryana v. Bhajanlal reported in AIR
1992 SC 604; (2) M/s Pepsi Foods Ltd. v. Special
Judicial Magistrate reported in 1998 Cr.L.R.(SC)
18; (3) K. Ramakrishna Vs. State of Bihar,
reported in 2000 (4) Crimes 113 (SC), (4)
S.W.Palanitkar v. State of Bihar reported in
2001 Cr.L.R. (SC) 751; (5) N.K.Sharma v.
Abhimanyu reported in (2006) 2 SCC (Cri) 135;
and (6) Bholu Ram v. State of Punjab reported
in (2008) 3 SCC (Cri) 710, wherein the scope
and ambit of only Section 482 of the Code, has
been discussed as is provided for in the Section
itself, without there being any reference to
Section 397 of the Code as has been discussed
in the Larger Bench's decision of the Hon'ble
Supreme Court in Madhu Limaye's case (supra).
18. In Adalat Prasad Vs. Rooplal Jindal & Ors.,
reported in 2004 Cr.L.R. (SC) 800, the Larger
Bench of the Hon'ble Supreme Court while
24
confirming the order of the High Court held that
recalling summons issued by the Magistrate
under Section 204 of the Code will be a review
of its earlier order, which is not warranted under
the Code as the process is issued under Section
204 of the Code when complaint is not dismissed
under Section 203 of the Code. Opposite earlier
view taken by the three Judges Larger Bench in
K. K. Mathew Vs. State of Kerala & Anr.,
reported in (1992) 1 SCC 217 was held not to
be a correct law by holding that in the absence
of any review power or inherent power with the
subordinate courts, the remedies lie in invoking
Section 482 of the Code. Issue relating to scope
of Section 397 of the Code was also not involved
in this cited case as well.
19. On the applicability of Section 482 of the
Code despite there being alternative remedy
under Section 397 of the Code, leaned counsel
25
for the petitioner has cited the latest decision of
Dhariwal Tobaco Products Ltd. v. State of
Maharashtra decided by the Hon'ble Supreme
Court on 17.12.08 in Criminal Appeal No.2055 of
2007 (Arising out of SLP (Cri.) No.2272 of
2007). This was a case under the Prevention of
Food Adulteration Rules, 1955, wherein a
criminal complaint against a Company was filed,
which was dealing in the manufacturing of the
`Gutkha' having multiple Units. The learned
Magistrate took cognizance and issued summons
against which they filed a petition in the High
Court u/s.482 of the Code, which was dismissed
against which the appeal was filed in the Hon'ble
Supreme Court, wherein, at Para 10 it has been
held as under:
“10. Inherent power of the High Court is not
conferred by statute but has merely been
saved thereunder. It is, thus, difficult to
conceive that the jurisdiction of the High
Court would be held to be barred only
because the revisional jurisdiction could
26
also be availed of. (See Krishnan and Anr.
v. Krishnaveni and Anr. MANU/SC/0223/
1997). In fact in Adalat Prasad v. Rooplal
Jindal and Ors. MANU/SC/0688/2004 to
which reference has been made by the
learned Single Judge of the Bombay High
Court in V.K. Jain and Ors. (supra) this
Court has clearly opined that when a
process is issued, the provisions of Section
482 of the Code can be resorted to.”
20. In the said decision of Dhariwal's case
(supra), though the scope of Section 482 of the
Code has been discussed in the light of Art.227
of the Constitution but it has been observed
while relying upon the decision of the Hon'ble
Supreme Court in C.B.I. v. Ravi Shankar
Srivastava, MANU/SC/8405/2006 that inherent
powers under this Section, though wide, has to
be exercised sparingly, carefully and with
caution and it is to be exercised ex debito
justitiae to do real and substantial justice for
the administration of which alone the courts
exist. The ratio of the said case is that such
powers can be exercised, when there is an abuse
27
of the process of law of any court or to secure
the ends of justice. While allowing the appeal,
the case was remitted back to the High Court for
fresh decision on merits. In the said case also,
the earlier judgment of the larger Bench of the
Hon'ble Supreme Court in Madhu Limaye's case
(supra) has not been referred-to.
21. Thus, taking guidelines on the law laid down
by the larger Bench in Madhu Limaye's case
(supra) on the basis of the doctrine of star
decisis, which is a strong rule of precedent, I am
fortified with the view that when the petitioners,
who are aggrieved by the order of taking
cognizance, have a specific provision under the
Code for redressal of their grievances by way of
filing revision under Section 397 of the Code,
they cannot invoke the inherent powers of this
Court under Section 482 CrPC because the order
of taking cognizance is final one, not being an
28
interlocutory order. The revision can very well
be maintained before the learned Sessions Judge
as held by this Court in Natwarlal vs. State
reported in 2008(1) CrLR (Raj) 617.
22. This Court could have exercised the power
under Section 482 of the Code, had there been a
case from the perusal of the complaint that the
action of taking cognizance is without
jurisdiction or barred by law, which has resulted
in abuse of the process of law or is necessary to
secure the ends of justice, specially when
affected party for one or the other reason could
not resort to the remedy available u/s.397 of the
Code. The legality or correctness of the order in
appreciating evidence for the purpose of taking
cognizance and charge is purely a subject matter
of examination under Section 397 of the Code.
23. Likewise, the duty of superintendence under
29
Section 483 of the Code is confined only to the
extent of expeditious and proper disposal of
cases. Duty cast upon the High Court under this
Section is alike of an administrative nature,
which can be read with the inherent powers
under Section 482 of the Code, being a saving
provision where there is no other power to
interfere.
24. From the facts as stated above and the
statements recorded by the police during
investigation in Sanjay Bhandari's petition,
petitioner took the hotel by way of agreement on
rental basis but he had neither run the hotel nor
licence fee was deposited and on the contrary,
he purchased valuable cars from the foreign
Company in the name of tourism and thereby
alleged to have committed an act of cheating.
These allegations cannot be termed as purely of
civil nature, but is an offence u/s.420 IPC.
30
25. In Misc. Petition filed by P.I.Industries Ltd.,
petitioner was charged for having misbranded
the insecticide product. Objections with regard
to not sending of second sample or consent etc.
could have been raised even during the course
of trial or by way of filing revision before the
learned Sessions Judge.
26. From the face value of both the complaints,
neither the magistrate while taking cognizance,
has abused the process of law nor the cases are
of such nature, which bars his jurisdiction or
which comes under the category of civil nature
so as to attract the provisions of Section 482
CrPC. The appropriate remedy available to the
petitioners is to approach the revisional court
under Section 397 of the Code, if they so desire
and in that event, the period consumed in the
petition shall not come in the way for the
purpose of limitation.
31
27. Consequently, both these Misc. Petitions are
dismissed with the above observations.
(DEO NARAYAN THANVI), J.
RANKAWAT JK, PS
1
ORDER
Sanjay Bhandari Vs. State of Rajasthan
(1) S.B.CRIMINAL MISC.PETITION NO.289/2006
P.I.Industries Ltd. Vs. State of Rajasthan
(2) S.B.CRIMINAL MISC.PETITION NO.41/2008
UNDER SECTION 482 OF
THE CRIMINAL PROCEDURE CODE, 1973.
Date of Order: Feb.05, 2009
PRESENT
HON'BLE MR.JUSTICE DEO NARAYAN THANVI
Mr.Sandeep Mehta )
Mr.Suresh Kumbhat) for petitioners.
Mr.V.R.Mehta, Public Prosecutor.
REPORTABLE BY THE COURT:
1. Before entering into the merits of both
these Misc. Petitions filed against the order of
2
2
2. Since both these Misc. Petitions filed under
Section 482 of the Code relates to challenge to
the order of taking cognizance and issuing
process, therefore, they are being disposed-of
3
3
3. In Criminal Misc. Petition No.289/2006 filed
by Sanjay Bhandari, learned Judicial Magistrate,
Bhinder, Udaipur, took cognizance against him
for the offences u/ss.420 read with 120B IPC on
9.1.2006 on the basis of chargesheet filed by
the SHO, P.S., Bhinder, Distt.Udaipur on the
ground that the accused petitioner Sanjay
Bhandari obtained a hotel Rajmahal at Bhinder
from the complainant side on 9.11.2000 by way
of an agreement for a period of five years on
rent. In the name of this hotel business, the
accused petitioner purchased number of valuable
cars from foreign Companies but never used
those cars for the hotel and sold the same to
other persons, thereby he obtained tax relief on
one hand in the name of tourism business,
without being performed and on the other hand,
committed theft of custom duty. The rent of the
4
4
4. In Criminal Misc. Petition No.41/2008, a
complaint under Section 29(1) of the
Insecticides Act, 1968 was filed by the Assistant
Director of Agriculture (Extension) & Insecticides
Inspector, Hanumangarh Junction, on 17.3.2006
alleging therein that the insecticide product
“Imidachloprid 17.8% SL Batch No.2003-J-01
was misbranded. The sample of the aforesaid
insecticide was drawn and sent to the
Laboratory, which was found to be misbranded.
The learned Judicial Magistrate, Pilibanga, Distt.
Hanumangarh took cognizance on the basis of
this complaint as averred in para `H' of the
5
5
5. Learned counsel appearing on behalf of the
petitioners, while citing various pronouncements
of the Hon'ble Supreme Court on the scope &
ambit of Section 482 and 397 of the Code,
argued that there is no bar in filing direct
petition under Section 482 of the Code before
this Court despite there being alternative
remedy of filing revision petition under Section
397 CrPC, as according to them, even on merits
if the allegations are looked into, no case is
6
6sections(
2) and (3) of Section 397 of the Code,
the revision petition is barred which is against
the interlocutory order or further application by
the same person respectively. In support of their
contention, they have relied upon various
pronouncements, which are hereinafter referred.
7
7Before dealing with the ambit of both the
Sections i.e. S.397 & S.482 of the Code, it would
be worthwhile to reproduce them for the purpose
of their applicability.
7. Section 397 of the Code reads as under:
“397. Calling for records to exercise
powers of revision.-(1) The High Court or
any Sessions Judge may call for and
examine the record of any proceeding
before any inferior Criminal Court situate
within its or his local jurisdiction for the
purpose of satisfying itself or himself as to
the correctness, legality or propriety of any
finding, sentence or order, recorded or
passed, and as to the regularity of any
proceedings of such inferior Court, and may,
when calling for such record, direct that the
execution of any sentence or order be
suspended, and if the accused is in
confinement, that he be released on bail or
on his own bond pending the examination of
the record.
(2) The powers of revision conferred by subsection
(1) shall not be exercised in relation
to any interlocutory order passed in any
appeal, inquiry, trial or other proceeding.
(3) If an application under this section has
been made by any person either to the High
Court or to the Sessions Judge, no further
8
8
8. Sections 482 & 483 of the Code reads thus:
“482. Saving of inherent power of High
Court.-Nothing in this Code shall be
deemed to limit or affect the inherent
powers of the High Court to make such
orders as may be necessary to give effect to
any order under this Code, or to prevent
abuse of the process of any Court or
otherwise to secure the ends of justice.”
483. Duty of High Court to exercise
continuous superintendence over Courts
of Judicial Magistrates.-Every High
Court shall so exercise its superintendence
over the Courts of Judicial Magistrates
subordinate to it as to ensure that there is
an expeditious and proper disposal of cases
by such Magistrates.”
9. A bare reading of Section 397(1) of the
Code speaks that record of any proceeding of
any inferior court can be examined by the High
Court or the Sessions Judge with regard to its
correctness, legality or propriety of any finding,
9
9o
its regularity. Under sub-section (2), a bar has
been imposed for exercise of such power in
relation to interlocutory order passed in any
appeal, inquiry, trial or other proceeding and
sub-section (3) bars further revision by the
same person. Thus, on a cumulative reading of
these three sub-sections, it is clear that except
in interlocutory orders or second revision by the
same person, the correctness, legality and
propriety of the impugned sentences or orders
may be examined either by the High Court or by
the Sessions Judge, whereas under Section 482
of the Code, while exercising inherent powers,
the High Court may make such orders, as may
be necessary to give effect to any order under
this Code or to prevent abuse of the process of
any court or otherwise to secure the ends of
justice. Though, on broad reading of both the
Sections, it can be said that exercise of powers
10
under Sec.397 and Section 482 of the Code are
by and large similar in granting relief to the
aggrieved party, except that of interlocutory
order and of second revision by the same party.
If the order is of such a nature as contemplated
under sub-sections (2) and (3) of Section 397 of
the Code, then the only remedy available to the
aggrieved party is by way of a petition under
Section 482 of the Code within its four corners.
But, if these two Sections are looked into in the
light of the words used, Section 397 is confined
to the extent of examining the correctness,
legality or propriety of the order, whereas
inherent powers can be exercised to give effect
to any order given under this Code or to prevent
abuse of the process of any Court or to secure
the ends of justice.
10. It is noticed rather shocking that in many of
the cases, aggrieved parties are trying to
11
approach the High Court in similarly situated
cases either under Section 397 or under Section
482 of the Code as advised or both the remedies
simultaneously through one or other party of the
same case. For instance, this Court came with a
situation when in a same case of framing
charges on 22.8.06 against three accused
u/ss.420, 467, 468 read with 120B IPC, one of
the accused Niranjan Kumar preferred a Misc.
Petition u/s.482 of the Code & another accused
Avadh Bihari filed revision being S.B.Cr.Revision
No.1025/07 under Section 397 of the Code in
this Court, which, on being noticed, have been
tagged together. Likewise, in Cr.Misc.Petition
No.736/99, accused, who was a Pradhan of
Panchayat Samiti, Dungla, on one hand,
challenged FIR for its quashing u/s.482 of the
Code, which was stayed by the High Court and
on the other hand, challenged the order of
Judicial Magistrate, who took cognizance u/s.509
12
IPC on the same facts in this Court u/s.397 of
the Code by way of filing Cr.Revision
No.742/1999, resulting in its dismissal in the
light of Natwarlal vs. State reported in 2008(1)
CrLR (Raj) 617. During pendency of this petition,
the accused was acquitted and the Misc. Petition
was dismissed as having become infructuous at
the request of learned counsel for the petitioner.
Certain more examples may be noticed of the
like nature in this Court and other High Courts
as well. Whether the High Court has some check
to control this dual process, which can be
termed as riding on two horses by the parties to
the litigation or abuse of the process by the
Courts itself? Answer to this lies by declaring a
definite law based on logical conclusion to give
proper effect to the provisions of this Code as
embodied u/ss.397 and 482 of the Code. Certain
judgments of the Hon'ble Apex Court are of wide
importance to determine the ratio in this regard,
13
which will be discussed hereinafter.
11. Broadly speaking, Section 397 of the Code
operates when the order is final because there is
a bar in filing revision under Section 397(2) with
regard to interlocutory order or u/s.397(3) in
second revision. Against such interlocutory
orders or second revisions, if they cover under
any of the three contingencies, provided-for
under Section 482 of the Code and as referred-
to above, the aggrieved party can approach the
High Court under Section 482 of the Code. The
order is said to be final under this Code, when
either the criminal proceedings are terminated
or they are commenced. Chapter XVI of the Code
deals with the commencement of proceedings
and Chapter XVII onwards of the Code deals
with the charge. Proceedings are said to have
commenced when a complaint is not dismissed
under Section 203 of the Code and the process
14
is issued against the accused under Section 204
of the Code and the trial is commenced when the
charge is framed under Chapter XVII of the
Code. Section 203 of the Code is limited to the
extent that if there are no sufficient grounds for
proceeding, the magistrate shall dismiss the
complaint and after issue of the process or when
the accused is brought before the court through
police investigation, he is discharged, when the
charge is groundless either under Section 239 of
the Code or under Section 245 of the Code, from
evidence, no case is made out, if unrebutted,
would warrant his conviction or no sufficient
grounds are made out under Section 227 of the
Code. This commencement of proceeding or
putting a person to face trial and discharge of
the accused i.e. termination of proceedings of
trial is termed as final order. Rest are said to be
interlocutory orders. This view has been
reiterated by the Hon'ble Supreme Court in
15
Amarnath vs. State of Haryana reported in AIR
1977 SC 2185 in the following terms:
“...It is difficult to hold that the impugned
order summoning the appellants
straightaway was merely an interlocutory
order which could not be revised by the High
Court under sub-sections (1) and (2) of
Section 397 of the 1973 Code. The order of
the Judicial Magistrate summoning the
appellants in the circumstances of the
present case, particularly having regard to
what had preceded, was undoubtedly a
matter of moment, and a valuable right of
the appellants had been taken away by the
Magistrate in passing an order prima facie in
sheer mechanical fashion without applying
his mind. We are, therefore, satisfied that
the order impugned was one which was a
matter of moment and which did involve a
decision regarding the rights of the
appellants. If the appellants were not
summoned, then they could not have faced
the trial at all, but by compelling the
appellants to face a trial without proper
application of mind cannot be held to be an
interlocutory matter but one which decided
a serious question as to the rights of the
appellants to be put on trial.”
12. In the present petitions, both the
petitioners have challenged the order of taking
cognizance i.e. initiation of proceedings being a
16
matter of moment for putting them on trial,
which is not an interlocutory order but a final
order, by way of these petitions filed u/s.482
CrPC. In this regard, if the law is looked into,
the leading case on this subject is of the larger
Bench of the Hon'ble Supreme Court in Madhu
Limaye vs. State of Maharashtra reported in AIR
1978 SC 47. While discussing the scope of
Section 482 and 397(2) of the Code, the Hon'ble
Supreme Court laid down the following principles
with regard to exercise of inherent powers by
the High Court:
“8. xxx At the outset the following principles
may be noticed in relation to the exercise of
the inherent power of the High Court which
have been followed ordinarily and generally,
almost invariably, barring a few exceptions:
(1) That the power is not to be resorted to if
there is a specific provision in the Code for
the redress of the grievance of the
aggrieved party;
(2) That it should be exercised very
sparingly to prevent abuse of process of any
Court or otherwise to secure the ends of
17
justice;
(3) That it should not be exercised as
against the express bar of law engrafted in
any other provision of the Code.
13. In the said decision, the Hon'ble Supreme
Court has also gone into the scope of
interlocutory order and has held that the order
under challenge was not an interlocutory one so
as to attract the bar of sub-section(2) of Section
397 of the Code. In this case, appellant Shri
Madhu Limaye was put to trial for the offence
u/s.500 IPC before the Court of Sessions Judge,
Greater Bombay, in pursuance to the sanction
issued by the State Govt. under Sec.199 of the
Code for making defamatory press note against
the then Law Minister of Maharashtra Shri
A.R.Antulay. Learned Sessions Judge took
cognizance and process was issued upon the
said complaint. The Chief Secretary to the Govt.
of Maharashtra was to be examined as a witness
18
to prove the sanction but the appellant Shri
Madhu Limaye filed an application before the
learned Sessions Judge to challenge the legality
of the trial. The learned Sessions Judge rejected
the application and framed charge u/s.500 IPC.
The appellant thereafter challenged the order by
way of revision in the High Court u/s.397 of the
Code. The High Court dismissed the revision
without entering into the merits of the case by
holding that the order being interlocutory in
nature, it was not maintainable in view of the
provisions contained in sub-sec.(2) of Section
397 of the Code. Against this, the appeal was
preferred. While discussing the scope of
interlocutory order, the Hon'ble Supreme Court
observed in para 13 as under:
“...On the one hand, the legislature kept
intact the revisional power of the High Court
and, on the other, it put a bar on the
exercise of that power in relation to any
interlocutory order. In such a situation, it
appears to us that the real intention of the
19
legislature was not to equate the expressing
“interlocutory order” as invariably being
converse of the words “final order”. There
may be an order passed during the course of
a proceeding which may not be final in the
sense noticed in Kuppuswami's case (AIR
1949 FC 1) (supra), but, yet it may not be
an interlocutory order – pure or simple.
Some kinds of order may fall in between the
two. By a rule of harmonious construction,
we think that the bar in sub-s.(2) fo S.397
is not meant to be attracted to such kinds of
intermediate orders. They may not be final
orders for the purposes of Art.134 of the
Constitution, yet it would not be correct to
characterise them as merely interlocutory
orders within the meaning of S.397(2). It is
neither advisable, nor possible to make a
catalogue of orders to demonstrate which
kinds of orders would be merely, purely or
simply interlocutory and which kinds of
orders would be final, and then to prepare
an exhaustive list of those types of orders
which will fall in between the two. The first
two kinds are well known and can be culled
out from many decided cases. We may,
however, indicate that the type of order
with which we are concerned in this case,
even though it may not be final in one
sense, is surely not interlocutory so as to
attract the bar of sub-sec.(2) of S.397. In
our opinion, it must be taken to be an order
of the type falling in the middle course.”
14. In para 17 of the said judgment, the Hon'ble
Supreme Court lastly observed as under:
20
“Before we conclude we may point out an
obvious, almost insurmountable, difficulty in
the way of applying literally the test laid
down in Kuppuswami Rao's case (AIR 1949
FC 1) and in holding that an order of the
kind under consideration being not a final
order must necessarily be an interlocutory
one. If a complaint is dismissed under S.203
or under S.204(4) or the Court holds the
proceeding to be void or discharges the
accused, a revision to the High Court at the
instance of the complainant or the
prosecutor would be competent, otherwise it
will make S.398 of the new Code otiose.
Does it stand to reason, then, that an
accused will have no remedy to move the
High Court in revision or invoke its inherent
power for the quashing of the criminal
proceeding initiated upon a complaint or
otherwise and which is fit to be quashed on
the face of it? The legislature left the power
to order further inquiry intact in S.398. Is it
not then in consonance with the sense of
justice to leave intact the remedy of the
accused to move the High Court for setting
aside the order adversely made against him
in similar circumstances and to quash the
proceeding? The answer must be given in
favour of the just and reasonable view
expressed by us above.”
Accordingly, the Hon'ble Supreme Court
allowed the appeal and remanded the case back
to the High Court for disposal on merits in the
light of the above judgment.
21
15. Apart from laying down the three principles
as referred-to above with regard to exercise of
inherent powers u/s.482 of the Code, the
Hon'ble Supreme Court also relied upon its
earlier judgment in R.P.Kapur v. The State of
Punjab reported in AIR 1960 SC 866, wherein
the Hon'ble Gajendragadkar J., as he then was,
laid down three categories of cases, wherein
inherent powers u/s.561A of the old Code
corresponding to Section 482 of the Code, can
be exercised. Firstly, where the institution or
commencement of the criminal proceeding is
against the legal bar; secondly from the bare
reading of the FIR or the complaint at the face
value, no offence is made out; and thirdly, there
is no legal evidence in support of the case but
while exercising the powers u/s.561A, the High
Court would not embark upon an enquiry as to
whether the evidence in question is reliable or
not. Even if the order is not final by way of
22
termination of proceedings and the continuance
of proceedings in a criminal court manifestly
shows that there is a legal bar against the
institution or continuance of the criminal
proceeding or the court exercised jurisdiction,
which was not vested in it, the High Court would
be justified in quashing the proceedings.
16. Thus, from the above judgment of Madhu
Limaye's case (supra), it can be gathered that
the order of taking cognizance and framing
charge cannot be termed as an interlocutory
order and the revision is maintainable against
this order and when there is a specific provision
for redress of the grievance of an aggrieved
party, the inherent powers u/s.482 CrPC cannot
be exercised.
17. In the other rulings of regular Benches cited
by learned counsel for the petitioner namely (1)
23
State of Haryana v. Bhajanlal reported in AIR
1992 SC 604; (2) M/s Pepsi Foods Ltd. v. Special
Judicial Magistrate reported in 1998 Cr.L.R.(SC)
18; (3) K. Ramakrishna Vs. State of Bihar,
reported in 2000 (4) Crimes 113 (SC), (4)
S.W.Palanitkar v. State of Bihar reported in
2001 Cr.L.R. (SC) 751; (5) N.K.Sharma v.
Abhimanyu reported in (2006) 2 SCC (Cri) 135;
and (6) Bholu Ram v. State of Punjab reported
in (2008) 3 SCC (Cri) 710, wherein the scope
and ambit of only Section 482 of the Code, has
been discussed as is provided for in the Section
itself, without there being any reference to
Section 397 of the Code as has been discussed
in the Larger Bench's decision of the Hon'ble
Supreme Court in Madhu Limaye's case (supra).
18. In Adalat Prasad Vs. Rooplal Jindal & Ors.,
reported in 2004 Cr.L.R. (SC) 800, the Larger
Bench of the Hon'ble Supreme Court while
24
confirming the order of the High Court held that
recalling summons issued by the Magistrate
under Section 204 of the Code will be a review
of its earlier order, which is not warranted under
the Code as the process is issued under Section
204 of the Code when complaint is not dismissed
under Section 203 of the Code. Opposite earlier
view taken by the three Judges Larger Bench in
K. K. Mathew Vs. State of Kerala & Anr.,
reported in (1992) 1 SCC 217 was held not to
be a correct law by holding that in the absence
of any review power or inherent power with the
subordinate courts, the remedies lie in invoking
Section 482 of the Code. Issue relating to scope
of Section 397 of the Code was also not involved
in this cited case as well.
19. On the applicability of Section 482 of the
Code despite there being alternative remedy
under Section 397 of the Code, leaned counsel
25
for the petitioner has cited the latest decision of
Dhariwal Tobaco Products Ltd. v. State of
Maharashtra decided by the Hon'ble Supreme
Court on 17.12.08 in Criminal Appeal No.2055 of
2007 (Arising out of SLP (Cri.) No.2272 of
2007). This was a case under the Prevention of
Food Adulteration Rules, 1955, wherein a
criminal complaint against a Company was filed,
which was dealing in the manufacturing of the
`Gutkha' having multiple Units. The learned
Magistrate took cognizance and issued summons
against which they filed a petition in the High
Court u/s.482 of the Code, which was dismissed
against which the appeal was filed in the Hon'ble
Supreme Court, wherein, at Para 10 it has been
held as under:
“10. Inherent power of the High Court is not
conferred by statute but has merely been
saved thereunder. It is, thus, difficult to
conceive that the jurisdiction of the High
Court would be held to be barred only
because the revisional jurisdiction could
26
also be availed of. (See Krishnan and Anr.
v. Krishnaveni and Anr. MANU/SC/0223/
1997). In fact in Adalat Prasad v. Rooplal
Jindal and Ors. MANU/SC/0688/2004 to
which reference has been made by the
learned Single Judge of the Bombay High
Court in V.K. Jain and Ors. (supra) this
Court has clearly opined that when a
process is issued, the provisions of Section
482 of the Code can be resorted to.”
20. In the said decision of Dhariwal's case
(supra), though the scope of Section 482 of the
Code has been discussed in the light of Art.227
of the Constitution but it has been observed
while relying upon the decision of the Hon'ble
Supreme Court in C.B.I. v. Ravi Shankar
Srivastava, MANU/SC/8405/2006 that inherent
powers under this Section, though wide, has to
be exercised sparingly, carefully and with
caution and it is to be exercised ex debito
justitiae to do real and substantial justice for
the administration of which alone the courts
exist. The ratio of the said case is that such
powers can be exercised, when there is an abuse
27
of the process of law of any court or to secure
the ends of justice. While allowing the appeal,
the case was remitted back to the High Court for
fresh decision on merits. In the said case also,
the earlier judgment of the larger Bench of the
Hon'ble Supreme Court in Madhu Limaye's case
(supra) has not been referred-to.
21. Thus, taking guidelines on the law laid down
by the larger Bench in Madhu Limaye's case
(supra) on the basis of the doctrine of star
decisis, which is a strong rule of precedent, I am
fortified with the view that when the petitioners,
who are aggrieved by the order of taking
cognizance, have a specific provision under the
Code for redressal of their grievances by way of
filing revision under Section 397 of the Code,
they cannot invoke the inherent powers of this
Court under Section 482 CrPC because the order
of taking cognizance is final one, not being an
28
interlocutory order. The revision can very well
be maintained before the learned Sessions Judge
as held by this Court in Natwarlal vs. State
reported in 2008(1) CrLR (Raj) 617.
22. This Court could have exercised the power
under Section 482 of the Code, had there been a
case from the perusal of the complaint that the
action of taking cognizance is without
jurisdiction or barred by law, which has resulted
in abuse of the process of law or is necessary to
secure the ends of justice, specially when
affected party for one or the other reason could
not resort to the remedy available u/s.397 of the
Code. The legality or correctness of the order in
appreciating evidence for the purpose of taking
cognizance and charge is purely a subject matter
of examination under Section 397 of the Code.
23. Likewise, the duty of superintendence under
29
Section 483 of the Code is confined only to the
extent of expeditious and proper disposal of
cases. Duty cast upon the High Court under this
Section is alike of an administrative nature,
which can be read with the inherent powers
under Section 482 of the Code, being a saving
provision where there is no other power to
interfere.
24. From the facts as stated above and the
statements recorded by the police during
investigation in Sanjay Bhandari's petition,
petitioner took the hotel by way of agreement on
rental basis but he had neither run the hotel nor
licence fee was deposited and on the contrary,
he purchased valuable cars from the foreign
Company in the name of tourism and thereby
alleged to have committed an act of cheating.
These allegations cannot be termed as purely of
civil nature, but is an offence u/s.420 IPC.
30
25. In Misc. Petition filed by P.I.Industries Ltd.,
petitioner was charged for having misbranded
the insecticide product. Objections with regard
to not sending of second sample or consent etc.
could have been raised even during the course
of trial or by way of filing revision before the
learned Sessions Judge.
26. From the face value of both the complaints,
neither the magistrate while taking cognizance,
has abused the process of law nor the cases are
of such nature, which bars his jurisdiction or
which comes under the category of civil nature
so as to attract the provisions of Section 482
CrPC. The appropriate remedy available to the
petitioners is to approach the revisional court
under Section 397 of the Code, if they so desire
and in that event, the period consumed in the
petition shall not come in the way for the
purpose of limitation.
31
27. Consequently, both these Misc. Petitions are
dismissed with the above observations.
(DEO NARAYAN THANVI), J.
RANKAWAT JK, PS
Monday, April 20, 2009
JK Lakshmi Cement Versus Commercial Taxes Officer
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
1/40
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
J UD G M E N T
Lakshmi Cement vs. Commercial Taxes
(A Division of J.K.Corp. Officer, Spl.Circle, Pali.
Ltd. (Now renamed as J.K.
Lakshmi Cemnt Ltd.),
Jaykaypuram, Distt. Sirohi.
S.B.CIVIL SALES TAX REVISION PETITION NO.613/2005
DATE OF JUDGMENT : 17S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
1/40
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
J UD G M E N T
Lakshmi Cement vs. Commercial Taxes
(A Division of J.K.Corp. Officer, Spl.Circle, Pali.
Ltd. (Now renamed as J.K.
Lakshmi Cemnt Ltd.),
Jaykaypuram, Distt. Sirohi.
S.B.CIVIL SALES TAX REVISION PETITION NO.613/2005
DATE OF JUDGMENT : 17 April, 2009
P R E S E N T
HON'BLE DR.JUSTICE VINEET KOTHARI
Mr.Dinesh Mehta and
Mr.Ramit Mehta, for the petitioner assessee.
Mr.Rishabh Sancheti for
Mr.Vinit Mathur for the Revenue.
REPORTABLE
BY THE COURT:
1. The Assessee, a cement manufacturer within the State of
Rajasthan has filed this revision petition under Section 86 of the
Rajasthan Sales Tax Act, 1994 being aggrieved by the judgment of
the Tax Board dated 23/9/2005 allowing the revenue's appeal and
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
2/40
holding that the assessee was not entitled to avail the partial
exemption from sales tax under the Notification dated 6/5/1986 for
the asssessment year 2001-02 because it had made some inter-state
sales during the said year in question and had availed concessional
rate of tax @ 6% under the later Notification dtaed 21/1/2000 which
contained a condition No.3 that if the assessee avails such
concessional rate of tax under the Notification dated 21/1/2000, he
would not avail the benefit of partial exemption from sales tax under
the Notification dated 6/5/86.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
2/40
holding that the assessee was not entitled to avail the partial
exemption from sales tax under the Notification dated 6/5/1986 for
the asssessment year 2001-02 because it had made some inter-state
sales during the said year in question and had availed concessional
rate of tax @ 6% under the later Notification dtaed 21/1/2000 which
contained a condition No.3 that if the assessee avails such
concessional rate of tax under the Notification dated 21/1/2000, he
would not avail the benefit of partial exemption from sales tax under
the Notification dated 6/5/86.
The assessing authority had imposed additional tax on the
respondent assessee for the aforesaid period by the assessment order
dated 26/8/2003 in view of the circular issued by the Commissioner
of Commercial Taxes Department on 16/4/2001 which was issued by
the Commissioner explaining the Notification dated 21/1/2000. The
first appellate authority – Deputy Commissioner (Appeals) however
allowed the first appeal filed by the assessee on 3/1/2004 and held
that the assessee would be entitled to avail such partial exemption in
respect of inter-state sales made on which concessional rate of 6%
was not availed by him under the Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
3. The Revenue took the matter further before the Tax Board and
the appeal of the Revenue was allowed by the learned Tax Board on
23/9/2005 and aggrieved of the same, assessee has come before this
Court in the present revision petition.
4. I have heard learned counsels on both the sides at length and
perused the relevant Notifications, impugned orders and judgments
cited at the bar.
5. The case in hand involves interpretation of the Notification
dated 6/5/86 and 21/1/2000 which are reproduced hereunder in
extenso for ready reference:“
NOTIFICATION DATED 6/5/1986
S.No.625 : F.4 (72) FD Gr.IV/81-18 Dated
6/5/1986
S.O.23.-In exercise of the powers conferred by
S.8(5), CST Act, 1956, the State Govt. in supersession
of the FD Notfn No.F.4 (72) FD Gr./IV/81-36 dated
3.12.1985(S.No.584), hereby directs that, with
immediate effect, any dealer, having his place of
business and manufacturing goods in the State of
Rajasthan, may claim partial exemption from the tax
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
payable in respect of the sales by him of such goods in
the course of inter-State trade or commerce by way of
reduction at the rate of 50% of the tax so payable on
increased sales upto 50% and at the rate of 75% of the
tax so payable on increased sales made over and above
the aforesaid 50%, in the manner and subject to the
conditions as follows:
(1) Such reduction of tax shall be allowed to a
dealer only after and in respect of the increase which is
effected in the percentage of the quantum of goods sold
in the course of inter-State trade or commerce out of the
total quantum of goods sold within the State and in the
course of inter-State trade or commerce and dispatched
to Head Office, Branch Office, Depot or agent outside
the State for sale outside the State, during any
accounting year as against such percentage during the
accounting year 1984-85;
(2) in the case of a dealer who commenced the
manufacture of goods in the State of Rajasthan on or
after 1.1.1985, the average of the aforesaid percentages
in respect of the other manufacturers in the State in the
relevant industry during the accounting year 1984-85,
calculated and determined by the assessing authority
with the approval of the Commissioner, shall be
deemed to be the percentage in respect of such dealer
for the accounting year 1984-85;
(3) This increase effected in the percentage, as
referred to in clause (1) above in respect of the sales in
the course of inter-State trade or commerce, to be
considered shall be limited to the extent of the decrease
in the percentage in respect of the despatch of goods to
Head Office, Branch Office, Depot or agent outside the
State for sale outside the State, during the relevant
accounting year as against such percentage during the
accounting year 1984-85; and
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
(4) No claim for such reduction of tax shall be
allowed in respect of levy-cement.
NOTIFICATION DATED 21/1/2000
S.No.1301 : F.4 (1) FD/Tax Div/99-266 dated
21.1.2000
S.O. -In exercise of the powers conferred by S.8
(5), CST Act, 1956, the State Govt. hereby directs that
the tax payable under sub-sections (1) and (2) of the
said section, by any dealer having his place of business
in the State, in respect of sale of cement made by him
from any such place of business in the State, in the
course of inter-State trade or commerce, shall be
calculated at the rate of 6% on the following
conditions, namely:1.
That the dealer shall record the correct
name with full and complete address of the purchaser in
the bill or cash memorandum for such inter-State sale to
be issued by him;
2. That the burden of proof that the
transaction was in the nature of inter-State sale shall be
on the dealer; and
3. That the dealer making inter-state sales
under this notfn shall not be eligible to claim benefits
provided by notfn No.F.4(72)FD/Gr.IV/81-18 dated
6.5.86 as amended from time to time (S.No.625)”
6. Mr. Dinesh Mehta and Mr. Ramit Mehta, learned counsels
appearing for the petitioner assessee submitted that akin to the
Notification dated 21/1/2000 earlier also the State Government has
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
6/40
issued a Notification on 7/3/1994 following which the Commissioner
had issued a Circular dated 15/4/1994 explaining the said Notification
dated 7/3/1994 and which explanation given by the Head of the
Department namely the Commissioner, Commercial Taxes
Department, was correct interpretation of the Notification and the
assessee was continued to be given the benefit of partial exemption
under the Notification dated 6/5/1986, notwithstanding the
notification dated 7/3/1994 which contained same condition no.3 as
contained in the Notification datd 21/1/2000 and the assessment was
made in the case of assessee upto the year 2000-2001 and, therefore,
for the assessment year 2001-02 involved in the present revision
petition, the Revenue cannot take a different stand that assessee is not
entitled to similar benefit of partial exemption in respect of inter-state
sales made by it other than those covered by the Notification dated
21/1/2000. They submitted that since the Notification dated 6/5/1986
granted partial exemption in the form of reduction of tax payable
under the Central Sales Tax Act depending upon the increase of interstate
sales made by the assessee during the particular year compared
with the base year 1984-85 and such exemption was given under the
Notification dated 6/5/1986, to encourage the assessee having place
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
7/40
of manufacture within the State of Rajasthan to make inter-state sales
taxable under the Central Sales Tax Act as against the branch
transfers or depot transfers on which no CST was payable, the State
gave this partial exemption depending upon such shift from branch
transfers to inter-state sales by the assessee and the quantum thereof,
therefore, this partial exemption could not be curtailed by a later
Notification providing for a concessional rate of tax under the CST
Act subject to condition like the condition no.3 in the Notification
dated 7/3/1994 or Notification dated 21/1/2000 and at least those
inter-state sales on which tax @ 6% was not charged by the assessee
under the said Notification dated 21/1/2000, the increase in the interstate
sales in comparison to the base year 1984-85 should be allowed
to be computed under the Notification dated 6/5/1986 and the benefit
of partial exemption should be given accordingly.
7. Learned counsel for the assessee further submitted that the
assessee is claiming benefit of partial exemption only in respect of
such inter-state sales made by it which are not covered by the
Notification dated 21/1/2000 and, therefore, the benefit of partial
exemption cannot be hit or prohibited totally in view of condition
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
8/40
no.3 in the Notification dated 21/1/2000. In other words, Mr.Mehta
submitted that condition no.3 of the Notification dated 21/1/2000
operated only for inter-state sales made under the said Notification
availing the benefit of concessional rate of tax of 6% and the said
condition could not enlarge or expand the said Notification dated
21/1/2000 and prohibit the assessee from availing the partial
exemption, under the Notification dated 6/5/1986 altogether.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
8/40
no.3 in the Notification dated 21/1/2000. In other words, Mr.Mehta
submitted that condition no.3 of the Notification dated 21/1/2000
operated only for inter-state sales made under the said Notification
availing the benefit of concessional rate of tax of 6% and the said
condition could not enlarge or expand the said Notification dated
21/1/2000 and prohibit the assessee from availing the partial
exemption, under the Notification dated 6/5/1986 altogether.
In order to appreciate the controversy, it is also considered
appropriate to reproduce the previous Notification dated 7/3/1994 and
ensuing circular issued by the Commissioner on 15/4/1994 also for
ready reference.
“NOTIFICATION DATED 7/3/1994
S.No.928 : F.4(8) FD Gr.IV/94-70 dated
7.3.1994
S.No.200.-In exercise of the powers conferred
by S.8 (5), CST Act, 1956 and in supersession of this
deptt notfn No.F.4 (72) FD Gr.IV/82-34 dated
27.6.1990 (S.No.806), the State Govt. hereby directs
that the tax payable under sub-sections (1) and (2) of
the said section, by any dealer having his place of
business in the State, in respect of the sales of cement
made by him from any such place of business in the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
course of inter-State trade or commerce shall be
calculated at the rate of 4 per cent without furnishing
of declaration in form “C” or certificate in form “D”
on the following conditions, namely;
(i) that the dealer shall record the name and
full and complete address of the purchaser in the bill
or cash memorandum for such inter-State sale to be
issued by him;
(ii) that the burden to prove that the
transaction was in the nature of inter-State sale, shall
be on the dealer; and
(iii) that the dealer making inter-State sales
under this notification shall not be eligible to claim
benefit provided for by the notfn No.F.4 (72)
FD/Gr.IV/81-18, dated 6.5.1986 as amended from
time to time (S.No.625).
This notification shall come into force from
1.4.1994 and shall remain in force upto 31.3.1997.”
CIRCULAR DATED 15/4/1994
“.... ..... .
.2/94/-95
.
..
. ...
..
.. . .. ...
.
..
.".
. : 15 ..., 1994
. : ..16 (...) ../../94-95/108 %
... ..
., .
... ..... ..
. .
. .
... ..
... .
.../..
. .
... .. ..*.
.+
.....
.
...
. .
.
..*...
..
.. 4(8) ...../.
-.-4/9470,
.".
%%4
. 07.03.1994 .
.+ .. 1 ..., 1994 .31 .
., 1995 .
..5. .6 ...
4.. ... .. .%.8+ ...6 .. .6 ". .
..
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
"." .5 .<.
.
.. "." .5 ..
-.. .". ...
..4 4% .6 ..
.@. .. ..*.-..
.% .*. ...
4.. ... ...% .
.
...
. ..-..
..<.*. ..*.-..
..
...4(72)
...../.%%%
.-4/81-10, .".
. 06.05.1985 .
.
....* ..
..
"
.
"
.
...% .
.
. ..+ .<.
.
.. ....* .5 ... ..
.
.@ .. ..5. .6 .<.
...
.
..% 44
... .. .6 .. ...
.. ...6 ". ..-..
.-...4(72) ...../..-4/01-10, .".
.
.<.* ..*...
..
06.05.1986 .
.
....* ..
% .% .
"% .
. .I.,%.%... ...
.<.
... ./..%4%
.6 .. ...
.. ...6 .. .. .
".
.
..+ .I.%.
..+/(
...% ..%.)-
.
.,
.
... .. ...
.,
.
..
., ..
..
..
.".
.: 15.04.1994
. : ..16(...) ../../94-95/102
...... :(
1)... ..?
.
., ..
..
(2)..
.%.
.
., .
..
., ...(20 ..I .5)
(3)...., .
..
. ..*
. ..
(20 ..I .5)
(4). .%...... ...: ......4 JKCW/JP/24 .". 29 .
.4
%54% "., 94.
..+/(
.......
..)
..... ..(..),
.
... .. ...
.,
.
..
., ..
.."
9. The circular dated 15/4/1994 quoted above was withdrawn by
the Commissioner, Commercial Taxes Department on 16/4/2001 after
the Notification dated 21/1/2000 was promulgated. The said circular
of Commissioner, Commercial Taxes Department issued on
16/4/2001 is also reproduced hereunder for ready reference:
“Kar-Niti Prapatra No.2001/1
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
GOVERNMENT OF RAJASTHAN
COMMERCIAL TAXES DEPARTMENT
No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001
All Dy. Commissioners
All Assistant Commissioners
All Commercial Taxes Officers.
All Assistant Commercial Taxes Officers.
C I R CU L A R
A question has been raised as to the applicability of
Finance Department notification No.F.4(72)FD/Br.IV/81-18
dated 06.05.1986 vis-a-vis notification No.F/(8)
FD/Gr.IV/94-70 dated 07.03.1994 and similar subsequent
notification dated 12.03.1997 and the existing notification
dated 21.01.2000. The issue has been examined and it is
clarified that a dealer can avail the benefit of either of these
two notifications in any financial year. For instance, if he opts
for benefit under notification dated 06.05.1986 for the
financial year 2000-2001, he would not be entitled to claim
simultaneous benefit in the same year under the notification
providing for reduce rate of tax on cement in course of interstate
trade or commerce without any supportive Form C or D.
Consequently, if the benefit of notification dated 06.05.1986 is
being availed in any financial year, the dealer shall be
debarred from claiming any benefit under notification dated
6.5.1986 for the same assessment year.
Keeping in view the above status, the Circular No.F.16
(Budget)Tax/CCT/94-95/108 dated 15.04.1994 is hereby
withdrawn and the dealers will be entitled to claim benefit of
either of the two notifications in any financial year. Action
may be taken accordingly.
Sd/(
P.K.Deb)
Commissioner
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
12/40
Commercial Taxes, Rajasthan, Jaipur”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
12/40
Commercial Taxes, Rajasthan, Jaipur”
Learned counsel for the petitioner assessee also submitted that
similar Notification besides cement industry as quoted above were
also issued on different occasions for other commodities also subject
to the same condition no.3 and few such Notifications are S.No.1335
F.4(1)FD/Tax Div/2000-303 dated 30.3.2000, as corrected on
24.4.2000, S.No.1436 F.4(12)FD/Tax Div/2001-28 dated 29/3/2001
& S.No. 1563 F.4(3)FD/Tax Div/2002-175 dated 22/3/2002, as
corrected by corrigendum effective from 22.3.2002.
Since, however, no controversy is raised before this Court by
any of the dealer of those commodities and the condition in those
Notifications are also similar to the Notification already reproduced
herein above, there is no need to reproduce these Notifications also.
11. Learned counsel for the petitioner assessee also brought to the
notice Court that for the preceding year 2000-2001 the petitioner had
filed a writ petition in this Court challenging the notice for
rectification given by the assessing authority in pursuance of the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
Circular dated 16/4/2001 issued by the Commissioner and that writ
petition no.6192/2003 came to be disposed of by the learned Single
Judge of this Court in the following manner. The said order is quoted
below:
“Heard the learned counsel for the parties.
After hearing the arguments from the counsel for
the petitioner, departmental representative Mr.
Harphool, Dy.Commissioner (Commercial Taxes) was
called by the Government Advocate for his assistance.
After hearing the arguments of the parties, it clearly
bears out that Annexure-5 was withdrawn on 16.04.01.
Prior to this date, the assessee was entitled to the
benefits which the assessee is claiming as was conferred
by the clarification dated 15.04.94. Thus, the notice
dated 19.08.03 pertaining to the assessment year 200001
for rectification does not appear to be justified.
Instead of making interference in writ jurisdiction, the
petitioner is directed to appear before the authority
issuing notice as aforesaid and will put forward his case
set up by him. The authority will consider the
notification in right perspective.
While deciding the case, it will also clarify its
position as to why the notification which could only be
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
14/40
prospective and effective after 16.04.01, a rectification
notice was issued him for the assessment year 2000-01.
The clarification will be sent to this Court.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
14/40
prospective and effective after 16.04.01, a rectification
notice was issued him for the assessment year 2000-01.
The clarification will be sent to this Court.
Sd/(
B.Prasad), J.”
In pursuance of the said order, the assessing authority had
dropped the rectification proceedings vide order dated 24/11/2003
and accordingly the said writ petition came to be finally disposed of
with the additional order passed by the same learned Single Judge on
13/5/2004 in the following terms:
“13/5/04
Hon'ble Mr.B.Prasad, J.
Mr.R.Mehta, for pet.
Mr.B.S.Bhati, for Resp.
Perused the explanation.
Explanation is accepted.
No further order is required to be passed.
The matter is disposed of finally.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
12. Learned counsel for the assessee, therefore, submitted that the
Tax Board has erred in holding that the petitioner assessee was not
entitled to avail the benefit of partial exemption under the
Notification dated 6/5/86 and, therefore, the revision petition
deserves to be allowed for the assessment year 2001-02 also.
13. Per contra, Mr. Rishabh Sancheti for Mr.Vinit Kumar Mathur
for the Revenue vehemently submitted that on a plain construction of
condition no.3 of the Notification dated 21/1/2000, quoted above, it
was clear that the petitioner assessee was not entitled to avail any
benefit under the Notification dated 6/5/86 in view of clear
stipulation made in condition no.3 of the Notification dated
21/1/2000 and it not open to the assessee to segregate the inter-state
sales made by him in two parts, one covered by Notification dated
21/1/2000 and other not so covered.
14. He further submitted that it is well settled that the provisions of
taxing statutes, particularly exemption notifications have to be strictly
construed as per well settled legal position in this regard and the plain
language of the Notification, without attributing any redundancy, has
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
16/40
to be literally construed and there is no scope for any intendment. He
submitted that though Notification dated 6/5/1986 continued to
operate during the year in question i.e. 2001-02 also but since the
assessee had admittedly made inter-state sales and availed the
concessional rate of tax @ 6% which otherwise in the absence of
furnishing prescribed declaration form in Form `C' as required under
Section 8(1) (2) of the CST Act was not available, the assessee was
bound to be deprived of the benefit of partial exemption under the
Notification dated 6/5/86 and the assessee cannot contend that those
inter-state sales in respect of which he has not availed 6% rate of tax
under the Notification dated 21/1/2000 should still be eligible for
partial exemption from tax under the Notification dated 6.5.86.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
16/40
to be literally construed and there is no scope for any intendment. He
submitted that though Notification dated 6/5/1986 continued to
operate during the year in question i.e. 2001-02 also but since the
assessee had admittedly made inter-state sales and availed the
concessional rate of tax @ 6% which otherwise in the absence of
furnishing prescribed declaration form in Form `C' as required under
Section 8(1) (2) of the CST Act was not available, the assessee was
bound to be deprived of the benefit of partial exemption under the
Notification dated 6/5/86 and the assessee cannot contend that those
inter-state sales in respect of which he has not availed 6% rate of tax
under the Notification dated 21/1/2000 should still be eligible for
partial exemption from tax under the Notification dated 6.5.86.
Mr. Sancheti very emphatically explained the condition no.3
and submitted that if what the assessee contended was right, the
words, “the dealer making” in the condition no.3 of the Notification
dated 21/1/2000 would be rendered otiose and redundant because
then only it could be construed to mean that on the inter-state sales
under this Notification (namely Notification dated 21/1/2000) the
assessee shall not be eligible to claim benefits provided by
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
Notification dated 6/5/1986. To explain, the said condition no.3 is
reiterated below by the aforesaid three words marked in bold.
“3. That the dealer making inter-state sales
under this notfn shall not be eligible to claim benefits
provided by notfn No.F.4(72)FD/Gr.IV/81-18 dated
6.5.86 as amended from time to time (S.No.625)”
16. Mr. Sancheti relied upon the decision of Hon'ble Surpeme
Court in the case of State of Jharkhand & Ors. vs. Ambay Cements
& Anr. -(2005) 1 SCC 368, Commissioner of Central Excise,
Chandigarh-I vs. Mahaan Dairies – 2004 (166) E.L.T. 23 (S.C.) in
support of his contention that the exemption provision in a taxing
Statute has to be construed strictly and not liberally and the Court
cannot grant exemption under the Industrial Policy ignoring the
eligibility condition prescribed therein in the exemption Notification.
17. Having heard the learned counsels and after giving my
thoughtful consideration to the rival contentions raised at the bar, this
Court is of the opinion that the present revision petition of the
petitioner-assessee deserves to be dismissed and the assessee cannot
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
18/40
be held entitled to the benefit of partial exemption under the
Notification dated 6.5.86 for the assessment year year 2001-02 in
question. The reasons are as follows.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
18/40
be held entitled to the benefit of partial exemption under the
Notification dated 6.5.86 for the assessment year year 2001-02 in
question. The reasons are as follows.
It is well, nay, settled that the eligibility criteria for availing
exemption under the taxing statutes have to be strictly construed and
the plain language of the Notification has to be given its literal
meaning as per the golden principle of interpretation that plain
language should be construed literally without any intendment or
interpretation. It is equally well settled that there is no equity or
intendment about tax.
19. It would be worthwhile to refer to a recent Supreme Court
decision in the case of Tata Cummins Ltd. vs. State of Jharkhand
& Ors. -2006(16) Tax up-date 199 in which Hon'ble Supreme Court
dealt with the clause 28 of the Industrial Policy of the State of Bihar
which stipulated that the new industrial units as well as existing units
which are not availing of any of the facilities deferment or tax free
purchases or sales under any notification announced earlier, shall be
allowed to opt for set-off of Jharkhand sales tax paid on the purchases
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
of raw material within the State. The assessee who were availing the
benefit of deferment scheme on the effective date given in the said
clause 28 approached the Court and claimed that the said benefit of
deferment under a separate scheme operated in a different field and
that could not prevent the assessee from availing the benefit of set-off
of Jharkhand sales tax on the purchases of raw material in terms of
clause 28 of the Industrial Policy. Negativing the said claim, the Apex
Court held as under:
“The Industrial Policy mentions the Commercial
Tax Reforms in Clause 28 on the said Policy. Clause
28.1 reads as under :
"28.1 New Industrial Units as well as existing units
which are not availing any facility of Tax-deferment or
Tax free purchases of tax free sales under any
notification announced earlier, shall be allowed to opt
for set off, of Jharkhand Sales Tax paid on the purchases
of raw materials within the State of Jharkhand only
against Sales Tax payable either JST or CST on the sale,
excluding stock transfer or consignment sale outside the
state, of finished products made out from such raw
materials subject to limitation of six months or the same
financial year from the date of purchase of such raw
materials."
The question in this case is whether the appellant
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
is entitled to the benefit of Clause 28.1.
Admittedly, the appellant had been granted the
benefit of Sales Tax-deferment for a period of eight
years from 1995 to 31.12.2003 under the Old Bihar
Industrial Policy, 1995 read with Notification S.O.
No.478 and 479 both dated
22.12.1995.
Thus, it is an admitted case that on the effective
date i.e. 15.11.2000 the appellant was actually availing
the facility of Tax-deferment under the Notification
announced earlier. Hence in our opinion on a plain
reading of Clause 28.1 of the Industrial Policy, which
was introduced on 15.11.2000 in the State of Jharkhand,
the appellant is not entitled to the benefit under Clause
28.1.
Learned counsel for the appellant contends that if
we hold that Units which were actually availing the
facility of Tax-deferment on 15.11.2000, will not be
given the benefit under the Clause 28.1, the
consequence will be that hardly any unit will get the
benefit of Clause 28.1 because almost all the units of
State of Jharkhand were enjoying the Sales Tax-
deferment on 15.11.2000. Hence he submitted that such
an interpretation should be avoided.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
We are afraid we cannot accept this plea. It is
well settled that when the plain and grammatical
meaning of the provisions in an Act or Notification are
clear then the literal rule of interpretation has to be
applied. In the present case, in our opinion, Clause 28.1
is clear. The word used there are "not availing any
facility of Tax-deferment". Thus the present continuous
tense has been used in Clause 28.1. In our opinion,
Clause 28.1 means that the benefit therein will be
available only if the facility of Tax-deferment is not
actually being availed of on the date of the Notification
of the Industrial Policy, which is 15.11.2000. It is well
settled when the meaning of a provision is clear, we
cannot depart from the literal rule of construction.”
20. Dealing with the similar kind of controversy arising under the
Rajasthan Sales Tax Incentive Scheme, 1987 and subsequent Sales
Tax New Incentive Scheme for Industries, 1989 the Hon'ble Supreme
Court in the case of M/s Vividh Marbles Pvt. Ltd. vs. Commercial
Tax Officer – 2007 (17) Tax up-date 307 held as under:
“It is not in dispute that the State formulated two
Schemes; one in the year 1987 and another in 1989.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
The said Schemes provided for different nature of
incentives. Although 1989 Scheme was framed during
pendency of 1987 Scheme, as noticed hereinbefore, the
same was given a retrospective operation in terms
whereof the entrepreneurs were given a choice to opt
either for 1987 Scheme or 1989 Scheme. Appellant
was aware thereabout. It opted for 1989 Scheme. The
sanction of eligibility provided that a formal eligibility
certificate as per law would be granted to the
appellant. The investment for capital, however, was
determined at Rs.66.49 lacs. The said sanction did not
amount to a grant of a certificate. The eligibility
certificate, as indicated hereinbefore, was granted only
on 07.12.1996, in terms whereof clearly 1989 Scheme
was applied. It was so explicitly stated in the
eligibility certificate also. It may be true that the
Assessing Authority committed a mistake in referring
to the 1987 Scheme in its order of assessment, but
thereby the appellant cannot be permitted to derive any
benefit to which it was not entitled under the law.
Appellant indisputably was eligible for grant of
exemption in terms of both the Schemes. It had opted
for the latter Scheme. While doing so, it must have
taken into consideration the benefits under both the
Schemes separately. Having opted for the 1989
Scheme, in our opinion, now the appellant cannot be
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
23/40
permitted to turn round and contend that it should have
been granted the benefit of 1987 Scheme, only because
at a later stage it found the same to be more
beneficial.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
23/40
permitted to turn round and contend that it should have
been granted the benefit of 1987 Scheme, only because
at a later stage it found the same to be more
beneficial.”
In State of Rajasthan v/s. J.K.Udaipur Udyog Ltd. & Anr. (
2004) 137 STC 438, the Hon'ble Supreme Court again dealing with
the case arising under the Rajasthan Sales Tax/Central Sales Tax
Exemption Scheme for Industries, 1998 held that the concession or
exemption given by the Government is a defeasible right of the
industry and if by a later notification, the State reduced the
exemption, the assessee had no right to claim that the State should not
recover from the dealer the tax which the dealer has lost opportunity
to recover from its customer. The Court further held that what is
granted can be withdrawn unless the Government is precluded
from doing so on the ground of estoppel, which principle is itself
subject to considerations of equity and public interest. Para no.25 and
26 of the said judgment are opportune in this regard and, therefore,
they are quoted below:
“25 An exemption is by definition a freedom from an
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
obligation which the exemptee is otherwise liable to
discharge. It is a privilege granting an advantage not
available to others. An exemption granted under a
statutory provision in a fiscal statute has been held to be
a concession granted by the State Government so that
the beneficiaries of such concession are not required to
pay the tax or duty they are otherwise liable to pay
under such statute. The recipient of a concession has no
legally enforceable right against the Government to
grant a concession except to enjoy the benefits of the
concession during the period of its grant. This right to
enjoy is a defeasible one in the sense that it may be
taken away in exercise of the very power under which
the exemption was granted. [See: Shri Bakul Oil
Industries & Anr. V.State of Gujarat; 1987 (1) SCC 31;
Kasinka Trading v. Union of India (1995)1 SCC 274;
Shrijee Sales Corpn. v. Union of India (1997) 3 SCC
398].
26. In this case the scheme being notified under the
power in the State Government to grant exemptions both
under Section 15 of the RST and Section 8(5) of the CST
in the public interest, the State Government was
competent to modify or revoke the grant for the same
reason. Thus what is granted can be withdrawn unless
the Government is precluded from doing so on the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
25/40
ground of promissory estoppel, which principle is itself
subject to considerations of equity and public interest.
[See: Sales Tax Officer v. Shree Durga Oil Mills (1998)
1 SCC 572]. The vesting of a defeasible right is
therefore, a contradiction in terms. There being no
indefeasible right to the continued grant of an exemption
(absent the exception of promissory estoppel), the
question of the respondent companies having an
indefeasible right to any facet of such exemption such as
the rate, period etc. does not arise.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
25/40
ground of promissory estoppel, which principle is itself
subject to considerations of equity and public interest.
[See: Sales Tax Officer v. Shree Durga Oil Mills (1998)
1 SCC 572]. The vesting of a defeasible right is
therefore, a contradiction in terms. There being no
indefeasible right to the continued grant of an exemption
(absent the exception of promissory estoppel), the
question of the respondent companies having an
indefeasible right to any facet of such exemption such as
the rate, period etc. does not arise.”
In another judgment in MRF Ltd. Kottayam vs.
Asstt.Commissioner (Assessment) Sales Tax and Ors. -(2006) 8
SCC 702 relied upon by the learned counsel for assessee-petitioner,
another Division Bench of the Supreme Court dealt with the similar
controversy. The statutory notification amending the earlier
exemption notification adversely effecting the rights already accrued
was challenged by the assessee on the principle of promissory
estoppel. From the facts obtaining before the Supreme Court it would
appear that original notification granting exemption for expansion in
manufacture of certain products including rubber based goods was
promulgated and relying thereon the assessee manufacturer
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
26/40
commenced commercial production after investing huge amount and
it also obtained eligibility certificate from the competent authority.
The assessee under the said scheme was entitled to exemption for a
fixed period of seven years in respect of rubber based goods
manufactured by it. During the currency of the period of exemption
the State Government issued another notification excluding the
formation of compound rubber from the definition of `manufacture'
for the purpose of the original exemption notification. Such
subsequent notification was challenged by the assessee on the ground
that it was hit by the principle of promissory estoppel as well as by
doctrine of legitimate expectation and the assessee could not be
prematurely deprived of the exemption under the original notification.
Upholding the contention of the assessee, the Court held in para no.
43 as under:
“Under Section 10(1) of the Kerala General
Sales Tax Act, 1063, the State Government has the
power to make an exemption or reduction in rate either
prospectively or retrospectively in respect of nay tax
payable under that Act. However, the power of the
Government under Section 10(3) by notification in the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
gazette to cancel or vary any notification issued under
Section 10(3) cannot be exercised retrospectively. That
was the view taken by a Single Judge of the Kerala
High Court, which was later approved by a Division
Bench. The appeal preferred by the State of Kerala in
Dy.Commr.(Law) case, (2000) 9 SCC 286 was
dismissed and the judgment of the High Court has
therefore become final. Accordingly, it was held that
Section 10(3) does not confer the power to withdraw
an exemption with retrospective effect. The effect
thereof is that the amendment Notification SRO
No.38/98 has to be read so as not to take away or
disturb any manufacture's pre-existing accrued right of
exemption for a period of 7 years. If SRO No.38/98 is
construed as now contended by the respondent, then
the inevitable consequence would be that SRO
No.38/98 would itself be rendered ultra vires Section
10(3) of the Act, and therefore, illegal, bad in law and
null and void.”
However, no such plea of promissory estoppel has been raised
in the present case against issuance of the later Notification dated
21/1/2000 and rightly so, therefore, this case law does not apply in
the facts of the present case.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
23. In State of Jharkhand vs. Ambay Cement -(2005) 1 SCC 368
cited by the learned counsel for the Revenue also, the Hon'ble
Supreme Court held that in order to avail exemption the unit had to
fulfill eligibility criteria and the requirement to obtain permission
from the Industries Department of the State Government before
31/8/2000 was a condition precedent for such units to be eligible to
exemption and in the absence of the unit having obtained that
permission, the High Court exercising its jurisdiction under Article
226 of the Constitution of India could not direct grant of exemption to
the writ petitioner-industrial unit, overlooking the mandatory
statutory conditions prescribed therefor, particularly in the absence of
any challenge to the validity of such condition. In para no.24, 25 and
26 of the said judgment, the Court held as under:
“24. In our view, an exception or an exempting
provision in a taxing statute should be construed strictly
and it is not open to the Court to ignore the conditions
prescribed in the Industrial Policy and the exemption
Notifications.
25. In our view, the failure to comply with the
requirements renders the writ petition filed by the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
respondent liable to be dismissed. While mandatory rule
must be strictly observed, substantial compliance might
suffice in the case of a directory rule.
26. Whenever the statute prescribes that a particular
act is to be done in a particular manner and also lays
down that failure to comply with the said requirement
leads to severe consequences, such requirement would
be mandatory. It is the cardinal rule of the interpretation
that where a statute provides that a particular thing
should be done, it should be done in the manner
prescribed and not in any other way. It is also settled
rule of interpretation that where a statute is penal in
character, it must be strictly construed and followed.
Since the requirement, in the instant case, of obtaining
prior permission is mandatory, therefore, noncompliance
of the same must result in canceling the
concession made in favour of the grantee-the respondent
herein.”
24. In G.P.Ceramics Pvt. Ltd. vs. Commissioner, Trade Tax,
Uttar Pradesh – (2009) 2 SCC 90 the Apex Court has reiterated in
para no.29 of the judgment that it is now a well established principle
of law that various eligibility criteria laid down in an exemption
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
30/40
notification are required to be construed strictly, once it is found that
the applicant satisfies the same, the exemption notification should be
construed liberally.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
30/40
notification are required to be construed strictly, once it is found that
the applicant satisfies the same, the exemption notification should be
construed liberally.
From the conspectus of the above legal authorities, it is clear
that the condition no.3 of the Notification dated 21/1/2000 has to be
given its plain and clear meaning and cannot be restricted only to the
specific transaction of sale covered by the said Notification dated
21/1/2000 itself, irrespective of circulars issued by the Commissioner
which in any case could not override, nor they can expand the scope
of statutory notifications. The said condition no.3 in its own term is
very clear. Once the assessee avails the benefit of concessional rate of
tax under the Notification dated 21/1/2000, condition no.3 would
apply in its full force and logically. The said condition no.3 in clear
terms stipulates that dealer making inter-state sale under this
notification shall not be eligible to claim benefits (emphasize plurality
benefits) provided by the Notification dated 6/5/86 as amended from
time to time is very clear and it cannot be said that even though the
assessee had availed benefit of concessional rate of 6% under the
Notification dated 21/1/2000, it should still be further eligible for
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
31/40
partial exemption from CST payable in respect of other inter-state
sales made by him during the same year under Notification dated
6/5/86.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
31/40
partial exemption from CST payable in respect of other inter-state
sales made by him during the same year under Notification dated
6/5/86.
26. One cannot lose sight of the fact that both the Notifications
dated 6/5/86 and 21/1/2000 provide for exemption or concession to
the assessee, a manufacturer of cement. While the Notification dated
6/5/86 does not specify any dealer or type of manufacturer, the later
Notification dated 21/1/2000 applies to manufacturers of cement. As
noted above, for other commodities manufacturers, other similar
notifications were also issued by the State Government. Therefore,
the State Government cautiously wanted not to apply or allow the
benefit of Notification dated 6/5/86 to those manufacturers or
specified dealers for which subsequent notifications like the one in
hand dated 22.1.2000 was issued, if they make sales and avail benefit
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
of concessional rate of tax under these notifications issued under
Section 8(5) of the CST Act. Therefore, dissecting this condition and
still allowing the benefit of partial exemption under the Notification
dated 6/5/86 would be doing violence to the condition no.3 which
was never intended by the State Government. It is for the assessee to
opt either for availing benefit of concessional rate of tax under the
Notification dated 21/1/2000 or not to do so altogether. Once, he
does so and opts for the same, the applicability of the notification
dated 6/5/86 is excluded altogether and not in piece meal. Therefore,
it cannot be contended by the assessee that in respect of other inter-
State sales, still partial exemption may be allowed in terms of
Notification dated 6/5/86, applicability of which stands excluded.
Doctrine of exclusion and eclipse would apply in such cases rather
than doctrine of liberal construction.
27. The contention of learned counsel for the assessee that since
the Circular dated 15/4/1994 which was withdrawn later on on
16/4/2001 clarified that such benefit of Notification dated 6/5/86
would be applicable in respect of inter-state sales, if such sales were
made against declaration in Form `C' or `D' but not when such inter
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
33/40
state sales are made without furnishing of declaration in form `C' or
`D' as specified in Notification dated 7/3/1994 and all assessments of
assessee were completed accordingly and on this ground for the
assessment year 2001-02 also similar benefit may be extended to the
assessee does not impress this Court. The principles of res judicata
do not apply in tax matters and all assessment years are independent
and moreso, the controversy for assessment year 2001-02 is after new
Notification dated 21/1/2000 and Circular dated 16/4/2001came into
being, which materially altered the situation which obtained while
previous Notification dated 7/3/1994 and Circular dated 15/4/1994
prevailed.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
33/40
state sales are made without furnishing of declaration in form `C' or
`D' as specified in Notification dated 7/3/1994 and all assessments of
assessee were completed accordingly and on this ground for the
assessment year 2001-02 also similar benefit may be extended to the
assessee does not impress this Court. The principles of res judicata
do not apply in tax matters and all assessment years are independent
and moreso, the controversy for assessment year 2001-02 is after new
Notification dated 21/1/2000 and Circular dated 16/4/2001came into
being, which materially altered the situation which obtained while
previous Notification dated 7/3/1994 and Circular dated 15/4/1994
prevailed.
The contention of the learned counsel for the petitionerassessee
that the Notification dated 6/5/86 contained a scheme of
exemption applicable to all kinds of dealers whereas the Notification
dated 21/1/2000 is transaction specific and, therefore, condition no.3
applicable to a transaction specific Notification cannot undo the
benefit available to a dealer under a scheme notified under Section 8
(5) of the Act is also devoid of merit. Section 8 (5) of the CST Act
which is reproduced hereunder does not empower the State
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
34/40
Government to grant any exemption to any class of dealer or a dealer
as such and the power to grant exemption given to the State
Government under the Central legislation namely CST Act, 1956 is
restricted to be transaction specific only, namely inter-State sale i.e.
the taxable event covered under CST Act. Therefore, it is wrong to
contend that Notification dated 6/5/86 exempted a class of dealer or
manufacturer. Partial exemption granted is also relating to taxable
event in the form of taxable inter-state sales only and the rebate or
remission or partial exemption granted under the Notification dated
6/5/86 cannot and does not travel beyond the scope of Section 8(5) of
the CST Act and, therefore, the question is only whether the
subsequent Notification dated 21/1/2000 deprives the benefit of
partial exemption under the Notification dated 6/5/86 or not, which it
does, in the opinion of this Court, in view of condition no.3 of the
later Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
34/40
Government to grant any exemption to any class of dealer or a dealer
as such and the power to grant exemption given to the State
Government under the Central legislation namely CST Act, 1956 is
restricted to be transaction specific only, namely inter-State sale i.e.
the taxable event covered under CST Act. Therefore, it is wrong to
contend that Notification dated 6/5/86 exempted a class of dealer or
manufacturer. Partial exemption granted is also relating to taxable
event in the form of taxable inter-state sales only and the rebate or
remission or partial exemption granted under the Notification dated
6/5/86 cannot and does not travel beyond the scope of Section 8(5) of
the CST Act and, therefore, the question is only whether the
subsequent Notification dated 21/1/2000 deprives the benefit of
partial exemption under the Notification dated 6/5/86 or not, which it
does, in the opinion of this Court, in view of condition no.3 of the
later Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
direct,
(a) that no tax under this Act shall be payable
by any dealer having his place of business in the State
in respect of the sales by him, in the course of inter-
State trade or commerce, from any such place of
business of any such goods or classes of goods as may
be specified in the notification, or that the tax on such
sales shall be calculated at such lower rates than those
specified in sub-section (1) or sub-section (2) as may be
mentioned in the notification;
(b)..........”
29. The principles of res judicata or estoppel do not apply in taxing
statutes. There is hardly any need to re-emphasize these principles.
There is no estoppel against statute. It is also well settled that the
Circulars issued by the Commissioner do not have any statutory force
and they can neither restrict or expand the scope of statutory
Notification. The confusion on account of different interpretations
given in the Circulars dated 15/4/1994 & 16/4/2001, cannot enure to
the benefit of assessee, in view of clear terms of condition no.3 in the
Notification dated 21/1/2000 at least after 16/4/2001, when previous
Circular dated 15/4/1994 was withdrawn. As a matter of fact, the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
36/40
Hon'ble Supreme Court as well as this Court have consistently
deprecated the practice on the part of Commissioner, Commercial
Taxes Department to issue these kind of Circulars which directly
impede or interfere with the quasi-judicial discretion of the assessing
authority and force them to take a particular view of the law or
statutory notification. It would be opportune to refer to the judgment
of this court in the case of CTO Vs. M/s Bombay Machinery Store –
2007 (19 ) Tax up-date 315. This court in para no.12 quashed such
circulars issued by the Commissioner in respect of period prescribed
for constructive delivery for the purpose of Section 6(2) of the CST
Act and it was held as under;
“12. Therefore, the proposition of law by the
learned Commissioner in the impugned circulars that
“as per legal position, `transit' gets over as soon as a
reasonable time elapses for the consignee to elect
whether he would take the goods away or leave them in
the transporters premises, because at the conclusion of
reasonable time there is deemed to be a constructive
delivery of goods from the transporter to the
consignee”, cannot be said to be a correct legal
position. The subsequent Circular dated 15.04.1998
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
purportedly issued to ameliorate the situation for
dealers created by previous circular dated 16.09.1997,
merely ended up extending the time limit of days to 30
days by propounding a particular view of constructive
delivery. Commissioner giving a particular
interpretation of law purported binding on all the
assessing authorities is doubtful. There is no specific
provision in the Sales Tax Act, either under the RST
Act or under the CST Act, empowering the
Commissioner to issue such circulars, as against such
powers conferred under Section 19 of the Income Tax
Act on the Central Board of Direct Taxes. Even Section
119 of the Income Tax Act, which empowers the way
of its proviso restricts and provides that no such order,
instruction or direction shall be issued so as to require
any Income Tax authority to make a particular
assessment or dispose of a particular case in a
particular manner and such orders or instructions shall
also not interfere with the discretion of the
Commissioner(Appeals) in exercise of its appellate
functions. Therefore, this court cannot countenance the
issuance of such circulars by the Commissioner of
Sales Tax, which unduly fetter with the quasi-judicial
discretion of the assessing authorities, who are
expected in law to give their findings of fact and
interpret the statutory law in their own quasi-judicial
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
discretion in accordance with the law as interpreted by
the Supreme Court or jurisdictional High Court. The
circulars issued by the Commissioner in the aforesaid
manner like done vide Circulars dated 16.09.1997 and
15.04.1998 are likely to hamper and throttle such
quasi-judicial discretion which vests with the assessing
authorities. Therefore, the aforesaid circulars issued by
the Commissioner aforesaid on 15.04.1999
(S.No.1132A) and 16.09.1997 (S.No.1115B) are in
conflict with the Division Bench decision of this Court
in Guljag Industries Ltd's case (supra) and even
otherwise they are found to be without any authority or
law. Consequently, both these circulars are found to be
ultra vires and are hereby quashed.
13. In view of aforesaid, since there was no basis for
the learned Commissioner to stipulate the time frame of
10 days or 30 days and, thereafter to require the
assessing authority to invoke the concept of
constructive delivery so as to deny the exemption of
CST on subsequent sales made by transfer of
documents of title to the goods made under Section 6
(2) of Act, though requisite conditions of Section 6(2)
of the Act are fulfilled by the dealer and such circulars
have already been held to be ultra vires and have been
quashed and in absence of any other material justifying
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
39/40
the denial of exemption under Section 6(2) of the Act
to the assessee, the impugned order of the Tax Board
allowing such exemption to the assesee is not required
to be interfered with in the present revision petitions
filed by the Revenue.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
39/40
the denial of exemption under Section 6(2) of the Act
to the assessee, the impugned order of the Tax Board
allowing such exemption to the assesee is not required
to be interfered with in the present revision petitions
filed by the Revenue.”
Therefore, even though the assessee's assessments might have
been completed in accordance with the Circular dated 15/4/1994
issued by the Commissioner and even the assessment of preceding
year 2000-01 in terms of the order passed by this Court in earlier writ
petition filed by the assessee as quoted above, the same does not
furnish a valid ground to allow petitioner-assessee to avail benefit of
partial exemption contrary to the condition no.3 of the Notification
dated 21/1/2000 for the assessment year 2001-2002, involved in the
present case.
31. Thus, this Court is of the considered opinion that the Tax Board
was perfectly justified in holding the assessee to be not entitled to
partial exemption under the Notification dated 6/5/86 for the
assessment year 2001-02 in question and the revision petition filed by
the petitioner-assessee is sans merit and is liable to be dismissed. The
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
40/40
same is accordingly dismissed with no order as to costs.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
40/40
same is accordingly dismissed with no order as to costs.
item no.5
baweja/
Judgment dt:17/4/2009
1/40
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
J UD G M E N T
Lakshmi Cement vs. Commercial Taxes
(A Division of J.K.Corp. Officer, Spl.Circle, Pali.
Ltd. (Now renamed as J.K.
Lakshmi Cemnt Ltd.),
Jaykaypuram, Distt. Sirohi.
S.B.CIVIL SALES TAX REVISION PETITION NO.613/2005
DATE OF JUDGMENT : 17S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
1/40
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
J UD G M E N T
Lakshmi Cement vs. Commercial Taxes
(A Division of J.K.Corp. Officer, Spl.Circle, Pali.
Ltd. (Now renamed as J.K.
Lakshmi Cemnt Ltd.),
Jaykaypuram, Distt. Sirohi.
S.B.CIVIL SALES TAX REVISION PETITION NO.613/2005
DATE OF JUDGMENT : 17 April, 2009
P R E S E N T
HON'BLE DR.JUSTICE VINEET KOTHARI
Mr.Dinesh Mehta and
Mr.Ramit Mehta, for the petitioner assessee.
Mr.Rishabh Sancheti for
Mr.Vinit Mathur for the Revenue.
REPORTABLE
BY THE COURT:
1. The Assessee, a cement manufacturer within the State of
Rajasthan has filed this revision petition under Section 86 of the
Rajasthan Sales Tax Act, 1994 being aggrieved by the judgment of
the Tax Board dated 23/9/2005 allowing the revenue's appeal and
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
2/40
holding that the assessee was not entitled to avail the partial
exemption from sales tax under the Notification dated 6/5/1986 for
the asssessment year 2001-02 because it had made some inter-state
sales during the said year in question and had availed concessional
rate of tax @ 6% under the later Notification dtaed 21/1/2000 which
contained a condition No.3 that if the assessee avails such
concessional rate of tax under the Notification dated 21/1/2000, he
would not avail the benefit of partial exemption from sales tax under
the Notification dated 6/5/86.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
2/40
holding that the assessee was not entitled to avail the partial
exemption from sales tax under the Notification dated 6/5/1986 for
the asssessment year 2001-02 because it had made some inter-state
sales during the said year in question and had availed concessional
rate of tax @ 6% under the later Notification dtaed 21/1/2000 which
contained a condition No.3 that if the assessee avails such
concessional rate of tax under the Notification dated 21/1/2000, he
would not avail the benefit of partial exemption from sales tax under
the Notification dated 6/5/86.
The assessing authority had imposed additional tax on the
respondent assessee for the aforesaid period by the assessment order
dated 26/8/2003 in view of the circular issued by the Commissioner
of Commercial Taxes Department on 16/4/2001 which was issued by
the Commissioner explaining the Notification dated 21/1/2000. The
first appellate authority – Deputy Commissioner (Appeals) however
allowed the first appeal filed by the assessee on 3/1/2004 and held
that the assessee would be entitled to avail such partial exemption in
respect of inter-state sales made on which concessional rate of 6%
was not availed by him under the Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
3. The Revenue took the matter further before the Tax Board and
the appeal of the Revenue was allowed by the learned Tax Board on
23/9/2005 and aggrieved of the same, assessee has come before this
Court in the present revision petition.
4. I have heard learned counsels on both the sides at length and
perused the relevant Notifications, impugned orders and judgments
cited at the bar.
5. The case in hand involves interpretation of the Notification
dated 6/5/86 and 21/1/2000 which are reproduced hereunder in
extenso for ready reference:“
NOTIFICATION DATED 6/5/1986
S.No.625 : F.4 (72) FD Gr.IV/81-18 Dated
6/5/1986
S.O.23.-In exercise of the powers conferred by
S.8(5), CST Act, 1956, the State Govt. in supersession
of the FD Notfn No.F.4 (72) FD Gr./IV/81-36 dated
3.12.1985(S.No.584), hereby directs that, with
immediate effect, any dealer, having his place of
business and manufacturing goods in the State of
Rajasthan, may claim partial exemption from the tax
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
payable in respect of the sales by him of such goods in
the course of inter-State trade or commerce by way of
reduction at the rate of 50% of the tax so payable on
increased sales upto 50% and at the rate of 75% of the
tax so payable on increased sales made over and above
the aforesaid 50%, in the manner and subject to the
conditions as follows:
(1) Such reduction of tax shall be allowed to a
dealer only after and in respect of the increase which is
effected in the percentage of the quantum of goods sold
in the course of inter-State trade or commerce out of the
total quantum of goods sold within the State and in the
course of inter-State trade or commerce and dispatched
to Head Office, Branch Office, Depot or agent outside
the State for sale outside the State, during any
accounting year as against such percentage during the
accounting year 1984-85;
(2) in the case of a dealer who commenced the
manufacture of goods in the State of Rajasthan on or
after 1.1.1985, the average of the aforesaid percentages
in respect of the other manufacturers in the State in the
relevant industry during the accounting year 1984-85,
calculated and determined by the assessing authority
with the approval of the Commissioner, shall be
deemed to be the percentage in respect of such dealer
for the accounting year 1984-85;
(3) This increase effected in the percentage, as
referred to in clause (1) above in respect of the sales in
the course of inter-State trade or commerce, to be
considered shall be limited to the extent of the decrease
in the percentage in respect of the despatch of goods to
Head Office, Branch Office, Depot or agent outside the
State for sale outside the State, during the relevant
accounting year as against such percentage during the
accounting year 1984-85; and
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
(4) No claim for such reduction of tax shall be
allowed in respect of levy-cement.
NOTIFICATION DATED 21/1/2000
S.No.1301 : F.4 (1) FD/Tax Div/99-266 dated
21.1.2000
S.O. -In exercise of the powers conferred by S.8
(5), CST Act, 1956, the State Govt. hereby directs that
the tax payable under sub-sections (1) and (2) of the
said section, by any dealer having his place of business
in the State, in respect of sale of cement made by him
from any such place of business in the State, in the
course of inter-State trade or commerce, shall be
calculated at the rate of 6% on the following
conditions, namely:1.
That the dealer shall record the correct
name with full and complete address of the purchaser in
the bill or cash memorandum for such inter-State sale to
be issued by him;
2. That the burden of proof that the
transaction was in the nature of inter-State sale shall be
on the dealer; and
3. That the dealer making inter-state sales
under this notfn shall not be eligible to claim benefits
provided by notfn No.F.4(72)FD/Gr.IV/81-18 dated
6.5.86 as amended from time to time (S.No.625)”
6. Mr. Dinesh Mehta and Mr. Ramit Mehta, learned counsels
appearing for the petitioner assessee submitted that akin to the
Notification dated 21/1/2000 earlier also the State Government has
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
6/40
issued a Notification on 7/3/1994 following which the Commissioner
had issued a Circular dated 15/4/1994 explaining the said Notification
dated 7/3/1994 and which explanation given by the Head of the
Department namely the Commissioner, Commercial Taxes
Department, was correct interpretation of the Notification and the
assessee was continued to be given the benefit of partial exemption
under the Notification dated 6/5/1986, notwithstanding the
notification dated 7/3/1994 which contained same condition no.3 as
contained in the Notification datd 21/1/2000 and the assessment was
made in the case of assessee upto the year 2000-2001 and, therefore,
for the assessment year 2001-02 involved in the present revision
petition, the Revenue cannot take a different stand that assessee is not
entitled to similar benefit of partial exemption in respect of inter-state
sales made by it other than those covered by the Notification dated
21/1/2000. They submitted that since the Notification dated 6/5/1986
granted partial exemption in the form of reduction of tax payable
under the Central Sales Tax Act depending upon the increase of interstate
sales made by the assessee during the particular year compared
with the base year 1984-85 and such exemption was given under the
Notification dated 6/5/1986, to encourage the assessee having place
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
7/40
of manufacture within the State of Rajasthan to make inter-state sales
taxable under the Central Sales Tax Act as against the branch
transfers or depot transfers on which no CST was payable, the State
gave this partial exemption depending upon such shift from branch
transfers to inter-state sales by the assessee and the quantum thereof,
therefore, this partial exemption could not be curtailed by a later
Notification providing for a concessional rate of tax under the CST
Act subject to condition like the condition no.3 in the Notification
dated 7/3/1994 or Notification dated 21/1/2000 and at least those
inter-state sales on which tax @ 6% was not charged by the assessee
under the said Notification dated 21/1/2000, the increase in the interstate
sales in comparison to the base year 1984-85 should be allowed
to be computed under the Notification dated 6/5/1986 and the benefit
of partial exemption should be given accordingly.
7. Learned counsel for the assessee further submitted that the
assessee is claiming benefit of partial exemption only in respect of
such inter-state sales made by it which are not covered by the
Notification dated 21/1/2000 and, therefore, the benefit of partial
exemption cannot be hit or prohibited totally in view of condition
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
8/40
no.3 in the Notification dated 21/1/2000. In other words, Mr.Mehta
submitted that condition no.3 of the Notification dated 21/1/2000
operated only for inter-state sales made under the said Notification
availing the benefit of concessional rate of tax of 6% and the said
condition could not enlarge or expand the said Notification dated
21/1/2000 and prohibit the assessee from availing the partial
exemption, under the Notification dated 6/5/1986 altogether.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
8/40
no.3 in the Notification dated 21/1/2000. In other words, Mr.Mehta
submitted that condition no.3 of the Notification dated 21/1/2000
operated only for inter-state sales made under the said Notification
availing the benefit of concessional rate of tax of 6% and the said
condition could not enlarge or expand the said Notification dated
21/1/2000 and prohibit the assessee from availing the partial
exemption, under the Notification dated 6/5/1986 altogether.
In order to appreciate the controversy, it is also considered
appropriate to reproduce the previous Notification dated 7/3/1994 and
ensuing circular issued by the Commissioner on 15/4/1994 also for
ready reference.
“NOTIFICATION DATED 7/3/1994
S.No.928 : F.4(8) FD Gr.IV/94-70 dated
7.3.1994
S.No.200.-In exercise of the powers conferred
by S.8 (5), CST Act, 1956 and in supersession of this
deptt notfn No.F.4 (72) FD Gr.IV/82-34 dated
27.6.1990 (S.No.806), the State Govt. hereby directs
that the tax payable under sub-sections (1) and (2) of
the said section, by any dealer having his place of
business in the State, in respect of the sales of cement
made by him from any such place of business in the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
course of inter-State trade or commerce shall be
calculated at the rate of 4 per cent without furnishing
of declaration in form “C” or certificate in form “D”
on the following conditions, namely;
(i) that the dealer shall record the name and
full and complete address of the purchaser in the bill
or cash memorandum for such inter-State sale to be
issued by him;
(ii) that the burden to prove that the
transaction was in the nature of inter-State sale, shall
be on the dealer; and
(iii) that the dealer making inter-State sales
under this notification shall not be eligible to claim
benefit provided for by the notfn No.F.4 (72)
FD/Gr.IV/81-18, dated 6.5.1986 as amended from
time to time (S.No.625).
This notification shall come into force from
1.4.1994 and shall remain in force upto 31.3.1997.”
CIRCULAR DATED 15/4/1994
“.... ..... .
.2/94/-95
.
..
. ...
..
.. . .. ...
.
..
.".
. : 15 ..., 1994
. : ..16 (...) ../../94-95/108 %
... ..
., .
... ..... ..
. .
. .
... ..
... .
.../..
. .
... .. ..*.
.+
.....
.
...
. .
.
..*...
..
.. 4(8) ...../.
-.-4/9470,
.".
%%4
. 07.03.1994 .
.+ .. 1 ..., 1994 .31 .
., 1995 .
..5. .6 ...
4.. ... .. .%.8+ ...6 .. .6 ". .
..
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
"." .5 .<.
.
.. "." .5 ..
-.. .". ...
..4 4% .6 ..
.@. .. ..*.-..
.% .*. ...
4.. ... ...% .
.
...
. ..-..
..<.*. ..*.-..
..
...4(72)
...../.%%%
.-4/81-10, .".
. 06.05.1985 .
.
....* ..
..
"
.
"
.
...% .
.
. ..+ .<.
.
.. ....* .5 ... ..
.
.@ .. ..5. .6 .<.
...
.
..% 44
... .. .6 .. ...
.. ...6 ". ..-..
.-...4(72) ...../..-4/01-10, .".
.
.<.* ..*...
..
06.05.1986 .
.
....* ..
% .% .
"% .
. .I.,%.%... ...
.<.
... ./..%4%
.6 .. ...
.. ...6 .. .. .
".
.
..+ .I.%.
..+/(
...% ..%.)-
.
.,
.
... .. ...
.,
.
..
., ..
..
..
.".
.: 15.04.1994
. : ..16(...) ../../94-95/102
...... :(
1)... ..?
.
., ..
..
(2)..
.%.
.
., .
..
., ...(20 ..I .5)
(3)...., .
..
. ..*
. ..
(20 ..I .5)
(4). .%...... ...: ......4 JKCW/JP/24 .". 29 .
.4
%54% "., 94.
..+/(
.......
..)
..... ..(..),
.
... .. ...
.,
.
..
., ..
.."
9. The circular dated 15/4/1994 quoted above was withdrawn by
the Commissioner, Commercial Taxes Department on 16/4/2001 after
the Notification dated 21/1/2000 was promulgated. The said circular
of Commissioner, Commercial Taxes Department issued on
16/4/2001 is also reproduced hereunder for ready reference:
“Kar-Niti Prapatra No.2001/1
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
GOVERNMENT OF RAJASTHAN
COMMERCIAL TAXES DEPARTMENT
No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001
All Dy. Commissioners
All Assistant Commissioners
All Commercial Taxes Officers.
All Assistant Commercial Taxes Officers.
C I R CU L A R
A question has been raised as to the applicability of
Finance Department notification No.F.4(72)FD/Br.IV/81-18
dated 06.05.1986 vis-a-vis notification No.F/(8)
FD/Gr.IV/94-70 dated 07.03.1994 and similar subsequent
notification dated 12.03.1997 and the existing notification
dated 21.01.2000. The issue has been examined and it is
clarified that a dealer can avail the benefit of either of these
two notifications in any financial year. For instance, if he opts
for benefit under notification dated 06.05.1986 for the
financial year 2000-2001, he would not be entitled to claim
simultaneous benefit in the same year under the notification
providing for reduce rate of tax on cement in course of interstate
trade or commerce without any supportive Form C or D.
Consequently, if the benefit of notification dated 06.05.1986 is
being availed in any financial year, the dealer shall be
debarred from claiming any benefit under notification dated
6.5.1986 for the same assessment year.
Keeping in view the above status, the Circular No.F.16
(Budget)Tax/CCT/94-95/108 dated 15.04.1994 is hereby
withdrawn and the dealers will be entitled to claim benefit of
either of the two notifications in any financial year. Action
may be taken accordingly.
Sd/(
P.K.Deb)
Commissioner
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
12/40
Commercial Taxes, Rajasthan, Jaipur”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
12/40
Commercial Taxes, Rajasthan, Jaipur”
Learned counsel for the petitioner assessee also submitted that
similar Notification besides cement industry as quoted above were
also issued on different occasions for other commodities also subject
to the same condition no.3 and few such Notifications are S.No.1335
F.4(1)FD/Tax Div/2000-303 dated 30.3.2000, as corrected on
24.4.2000, S.No.1436 F.4(12)FD/Tax Div/2001-28 dated 29/3/2001
& S.No. 1563 F.4(3)FD/Tax Div/2002-175 dated 22/3/2002, as
corrected by corrigendum effective from 22.3.2002.
Since, however, no controversy is raised before this Court by
any of the dealer of those commodities and the condition in those
Notifications are also similar to the Notification already reproduced
herein above, there is no need to reproduce these Notifications also.
11. Learned counsel for the petitioner assessee also brought to the
notice Court that for the preceding year 2000-2001 the petitioner had
filed a writ petition in this Court challenging the notice for
rectification given by the assessing authority in pursuance of the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
Circular dated 16/4/2001 issued by the Commissioner and that writ
petition no.6192/2003 came to be disposed of by the learned Single
Judge of this Court in the following manner. The said order is quoted
below:
“Heard the learned counsel for the parties.
After hearing the arguments from the counsel for
the petitioner, departmental representative Mr.
Harphool, Dy.Commissioner (Commercial Taxes) was
called by the Government Advocate for his assistance.
After hearing the arguments of the parties, it clearly
bears out that Annexure-5 was withdrawn on 16.04.01.
Prior to this date, the assessee was entitled to the
benefits which the assessee is claiming as was conferred
by the clarification dated 15.04.94. Thus, the notice
dated 19.08.03 pertaining to the assessment year 200001
for rectification does not appear to be justified.
Instead of making interference in writ jurisdiction, the
petitioner is directed to appear before the authority
issuing notice as aforesaid and will put forward his case
set up by him. The authority will consider the
notification in right perspective.
While deciding the case, it will also clarify its
position as to why the notification which could only be
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
14/40
prospective and effective after 16.04.01, a rectification
notice was issued him for the assessment year 2000-01.
The clarification will be sent to this Court.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
14/40
prospective and effective after 16.04.01, a rectification
notice was issued him for the assessment year 2000-01.
The clarification will be sent to this Court.
Sd/(
B.Prasad), J.”
In pursuance of the said order, the assessing authority had
dropped the rectification proceedings vide order dated 24/11/2003
and accordingly the said writ petition came to be finally disposed of
with the additional order passed by the same learned Single Judge on
13/5/2004 in the following terms:
“13/5/04
Hon'ble Mr.B.Prasad, J.
Mr.R.Mehta, for pet.
Mr.B.S.Bhati, for Resp.
Perused the explanation.
Explanation is accepted.
No further order is required to be passed.
The matter is disposed of finally.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
12. Learned counsel for the assessee, therefore, submitted that the
Tax Board has erred in holding that the petitioner assessee was not
entitled to avail the benefit of partial exemption under the
Notification dated 6/5/86 and, therefore, the revision petition
deserves to be allowed for the assessment year 2001-02 also.
13. Per contra, Mr. Rishabh Sancheti for Mr.Vinit Kumar Mathur
for the Revenue vehemently submitted that on a plain construction of
condition no.3 of the Notification dated 21/1/2000, quoted above, it
was clear that the petitioner assessee was not entitled to avail any
benefit under the Notification dated 6/5/86 in view of clear
stipulation made in condition no.3 of the Notification dated
21/1/2000 and it not open to the assessee to segregate the inter-state
sales made by him in two parts, one covered by Notification dated
21/1/2000 and other not so covered.
14. He further submitted that it is well settled that the provisions of
taxing statutes, particularly exemption notifications have to be strictly
construed as per well settled legal position in this regard and the plain
language of the Notification, without attributing any redundancy, has
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
16/40
to be literally construed and there is no scope for any intendment. He
submitted that though Notification dated 6/5/1986 continued to
operate during the year in question i.e. 2001-02 also but since the
assessee had admittedly made inter-state sales and availed the
concessional rate of tax @ 6% which otherwise in the absence of
furnishing prescribed declaration form in Form `C' as required under
Section 8(1) (2) of the CST Act was not available, the assessee was
bound to be deprived of the benefit of partial exemption under the
Notification dated 6/5/86 and the assessee cannot contend that those
inter-state sales in respect of which he has not availed 6% rate of tax
under the Notification dated 21/1/2000 should still be eligible for
partial exemption from tax under the Notification dated 6.5.86.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
16/40
to be literally construed and there is no scope for any intendment. He
submitted that though Notification dated 6/5/1986 continued to
operate during the year in question i.e. 2001-02 also but since the
assessee had admittedly made inter-state sales and availed the
concessional rate of tax @ 6% which otherwise in the absence of
furnishing prescribed declaration form in Form `C' as required under
Section 8(1) (2) of the CST Act was not available, the assessee was
bound to be deprived of the benefit of partial exemption under the
Notification dated 6/5/86 and the assessee cannot contend that those
inter-state sales in respect of which he has not availed 6% rate of tax
under the Notification dated 21/1/2000 should still be eligible for
partial exemption from tax under the Notification dated 6.5.86.
Mr. Sancheti very emphatically explained the condition no.3
and submitted that if what the assessee contended was right, the
words, “the dealer making” in the condition no.3 of the Notification
dated 21/1/2000 would be rendered otiose and redundant because
then only it could be construed to mean that on the inter-state sales
under this Notification (namely Notification dated 21/1/2000) the
assessee shall not be eligible to claim benefits provided by
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
Notification dated 6/5/1986. To explain, the said condition no.3 is
reiterated below by the aforesaid three words marked in bold.
“3. That the dealer making inter-state sales
under this notfn shall not be eligible to claim benefits
provided by notfn No.F.4(72)FD/Gr.IV/81-18 dated
6.5.86 as amended from time to time (S.No.625)”
16. Mr. Sancheti relied upon the decision of Hon'ble Surpeme
Court in the case of State of Jharkhand & Ors. vs. Ambay Cements
& Anr. -(2005) 1 SCC 368, Commissioner of Central Excise,
Chandigarh-I vs. Mahaan Dairies – 2004 (166) E.L.T. 23 (S.C.) in
support of his contention that the exemption provision in a taxing
Statute has to be construed strictly and not liberally and the Court
cannot grant exemption under the Industrial Policy ignoring the
eligibility condition prescribed therein in the exemption Notification.
17. Having heard the learned counsels and after giving my
thoughtful consideration to the rival contentions raised at the bar, this
Court is of the opinion that the present revision petition of the
petitioner-assessee deserves to be dismissed and the assessee cannot
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
18/40
be held entitled to the benefit of partial exemption under the
Notification dated 6.5.86 for the assessment year year 2001-02 in
question. The reasons are as follows.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
18/40
be held entitled to the benefit of partial exemption under the
Notification dated 6.5.86 for the assessment year year 2001-02 in
question. The reasons are as follows.
It is well, nay, settled that the eligibility criteria for availing
exemption under the taxing statutes have to be strictly construed and
the plain language of the Notification has to be given its literal
meaning as per the golden principle of interpretation that plain
language should be construed literally without any intendment or
interpretation. It is equally well settled that there is no equity or
intendment about tax.
19. It would be worthwhile to refer to a recent Supreme Court
decision in the case of Tata Cummins Ltd. vs. State of Jharkhand
& Ors. -2006(16) Tax up-date 199 in which Hon'ble Supreme Court
dealt with the clause 28 of the Industrial Policy of the State of Bihar
which stipulated that the new industrial units as well as existing units
which are not availing of any of the facilities deferment or tax free
purchases or sales under any notification announced earlier, shall be
allowed to opt for set-off of Jharkhand sales tax paid on the purchases
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
of raw material within the State. The assessee who were availing the
benefit of deferment scheme on the effective date given in the said
clause 28 approached the Court and claimed that the said benefit of
deferment under a separate scheme operated in a different field and
that could not prevent the assessee from availing the benefit of set-off
of Jharkhand sales tax on the purchases of raw material in terms of
clause 28 of the Industrial Policy. Negativing the said claim, the Apex
Court held as under:
“The Industrial Policy mentions the Commercial
Tax Reforms in Clause 28 on the said Policy. Clause
28.1 reads as under :
"28.1 New Industrial Units as well as existing units
which are not availing any facility of Tax-deferment or
Tax free purchases of tax free sales under any
notification announced earlier, shall be allowed to opt
for set off, of Jharkhand Sales Tax paid on the purchases
of raw materials within the State of Jharkhand only
against Sales Tax payable either JST or CST on the sale,
excluding stock transfer or consignment sale outside the
state, of finished products made out from such raw
materials subject to limitation of six months or the same
financial year from the date of purchase of such raw
materials."
The question in this case is whether the appellant
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
is entitled to the benefit of Clause 28.1.
Admittedly, the appellant had been granted the
benefit of Sales Tax-deferment for a period of eight
years from 1995 to 31.12.2003 under the Old Bihar
Industrial Policy, 1995 read with Notification S.O.
No.478 and 479 both dated
22.12.1995.
Thus, it is an admitted case that on the effective
date i.e. 15.11.2000 the appellant was actually availing
the facility of Tax-deferment under the Notification
announced earlier. Hence in our opinion on a plain
reading of Clause 28.1 of the Industrial Policy, which
was introduced on 15.11.2000 in the State of Jharkhand,
the appellant is not entitled to the benefit under Clause
28.1.
Learned counsel for the appellant contends that if
we hold that Units which were actually availing the
facility of Tax-deferment on 15.11.2000, will not be
given the benefit under the Clause 28.1, the
consequence will be that hardly any unit will get the
benefit of Clause 28.1 because almost all the units of
State of Jharkhand were enjoying the Sales Tax-
deferment on 15.11.2000. Hence he submitted that such
an interpretation should be avoided.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
We are afraid we cannot accept this plea. It is
well settled that when the plain and grammatical
meaning of the provisions in an Act or Notification are
clear then the literal rule of interpretation has to be
applied. In the present case, in our opinion, Clause 28.1
is clear. The word used there are "not availing any
facility of Tax-deferment". Thus the present continuous
tense has been used in Clause 28.1. In our opinion,
Clause 28.1 means that the benefit therein will be
available only if the facility of Tax-deferment is not
actually being availed of on the date of the Notification
of the Industrial Policy, which is 15.11.2000. It is well
settled when the meaning of a provision is clear, we
cannot depart from the literal rule of construction.”
20. Dealing with the similar kind of controversy arising under the
Rajasthan Sales Tax Incentive Scheme, 1987 and subsequent Sales
Tax New Incentive Scheme for Industries, 1989 the Hon'ble Supreme
Court in the case of M/s Vividh Marbles Pvt. Ltd. vs. Commercial
Tax Officer – 2007 (17) Tax up-date 307 held as under:
“It is not in dispute that the State formulated two
Schemes; one in the year 1987 and another in 1989.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
The said Schemes provided for different nature of
incentives. Although 1989 Scheme was framed during
pendency of 1987 Scheme, as noticed hereinbefore, the
same was given a retrospective operation in terms
whereof the entrepreneurs were given a choice to opt
either for 1987 Scheme or 1989 Scheme. Appellant
was aware thereabout. It opted for 1989 Scheme. The
sanction of eligibility provided that a formal eligibility
certificate as per law would be granted to the
appellant. The investment for capital, however, was
determined at Rs.66.49 lacs. The said sanction did not
amount to a grant of a certificate. The eligibility
certificate, as indicated hereinbefore, was granted only
on 07.12.1996, in terms whereof clearly 1989 Scheme
was applied. It was so explicitly stated in the
eligibility certificate also. It may be true that the
Assessing Authority committed a mistake in referring
to the 1987 Scheme in its order of assessment, but
thereby the appellant cannot be permitted to derive any
benefit to which it was not entitled under the law.
Appellant indisputably was eligible for grant of
exemption in terms of both the Schemes. It had opted
for the latter Scheme. While doing so, it must have
taken into consideration the benefits under both the
Schemes separately. Having opted for the 1989
Scheme, in our opinion, now the appellant cannot be
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
23/40
permitted to turn round and contend that it should have
been granted the benefit of 1987 Scheme, only because
at a later stage it found the same to be more
beneficial.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
23/40
permitted to turn round and contend that it should have
been granted the benefit of 1987 Scheme, only because
at a later stage it found the same to be more
beneficial.”
In State of Rajasthan v/s. J.K.Udaipur Udyog Ltd. & Anr. (
2004) 137 STC 438, the Hon'ble Supreme Court again dealing with
the case arising under the Rajasthan Sales Tax/Central Sales Tax
Exemption Scheme for Industries, 1998 held that the concession or
exemption given by the Government is a defeasible right of the
industry and if by a later notification, the State reduced the
exemption, the assessee had no right to claim that the State should not
recover from the dealer the tax which the dealer has lost opportunity
to recover from its customer. The Court further held that what is
granted can be withdrawn unless the Government is precluded
from doing so on the ground of estoppel, which principle is itself
subject to considerations of equity and public interest. Para no.25 and
26 of the said judgment are opportune in this regard and, therefore,
they are quoted below:
“25 An exemption is by definition a freedom from an
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
obligation which the exemptee is otherwise liable to
discharge. It is a privilege granting an advantage not
available to others. An exemption granted under a
statutory provision in a fiscal statute has been held to be
a concession granted by the State Government so that
the beneficiaries of such concession are not required to
pay the tax or duty they are otherwise liable to pay
under such statute. The recipient of a concession has no
legally enforceable right against the Government to
grant a concession except to enjoy the benefits of the
concession during the period of its grant. This right to
enjoy is a defeasible one in the sense that it may be
taken away in exercise of the very power under which
the exemption was granted. [See: Shri Bakul Oil
Industries & Anr. V.State of Gujarat; 1987 (1) SCC 31;
Kasinka Trading v. Union of India (1995)1 SCC 274;
Shrijee Sales Corpn. v. Union of India (1997) 3 SCC
398].
26. In this case the scheme being notified under the
power in the State Government to grant exemptions both
under Section 15 of the RST and Section 8(5) of the CST
in the public interest, the State Government was
competent to modify or revoke the grant for the same
reason. Thus what is granted can be withdrawn unless
the Government is precluded from doing so on the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
25/40
ground of promissory estoppel, which principle is itself
subject to considerations of equity and public interest.
[See: Sales Tax Officer v. Shree Durga Oil Mills (1998)
1 SCC 572]. The vesting of a defeasible right is
therefore, a contradiction in terms. There being no
indefeasible right to the continued grant of an exemption
(absent the exception of promissory estoppel), the
question of the respondent companies having an
indefeasible right to any facet of such exemption such as
the rate, period etc. does not arise.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
25/40
ground of promissory estoppel, which principle is itself
subject to considerations of equity and public interest.
[See: Sales Tax Officer v. Shree Durga Oil Mills (1998)
1 SCC 572]. The vesting of a defeasible right is
therefore, a contradiction in terms. There being no
indefeasible right to the continued grant of an exemption
(absent the exception of promissory estoppel), the
question of the respondent companies having an
indefeasible right to any facet of such exemption such as
the rate, period etc. does not arise.”
In another judgment in MRF Ltd. Kottayam vs.
Asstt.Commissioner (Assessment) Sales Tax and Ors. -(2006) 8
SCC 702 relied upon by the learned counsel for assessee-petitioner,
another Division Bench of the Supreme Court dealt with the similar
controversy. The statutory notification amending the earlier
exemption notification adversely effecting the rights already accrued
was challenged by the assessee on the principle of promissory
estoppel. From the facts obtaining before the Supreme Court it would
appear that original notification granting exemption for expansion in
manufacture of certain products including rubber based goods was
promulgated and relying thereon the assessee manufacturer
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
26/40
commenced commercial production after investing huge amount and
it also obtained eligibility certificate from the competent authority.
The assessee under the said scheme was entitled to exemption for a
fixed period of seven years in respect of rubber based goods
manufactured by it. During the currency of the period of exemption
the State Government issued another notification excluding the
formation of compound rubber from the definition of `manufacture'
for the purpose of the original exemption notification. Such
subsequent notification was challenged by the assessee on the ground
that it was hit by the principle of promissory estoppel as well as by
doctrine of legitimate expectation and the assessee could not be
prematurely deprived of the exemption under the original notification.
Upholding the contention of the assessee, the Court held in para no.
43 as under:
“Under Section 10(1) of the Kerala General
Sales Tax Act, 1063, the State Government has the
power to make an exemption or reduction in rate either
prospectively or retrospectively in respect of nay tax
payable under that Act. However, the power of the
Government under Section 10(3) by notification in the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
gazette to cancel or vary any notification issued under
Section 10(3) cannot be exercised retrospectively. That
was the view taken by a Single Judge of the Kerala
High Court, which was later approved by a Division
Bench. The appeal preferred by the State of Kerala in
Dy.Commr.(Law) case, (2000) 9 SCC 286 was
dismissed and the judgment of the High Court has
therefore become final. Accordingly, it was held that
Section 10(3) does not confer the power to withdraw
an exemption with retrospective effect. The effect
thereof is that the amendment Notification SRO
No.38/98 has to be read so as not to take away or
disturb any manufacture's pre-existing accrued right of
exemption for a period of 7 years. If SRO No.38/98 is
construed as now contended by the respondent, then
the inevitable consequence would be that SRO
No.38/98 would itself be rendered ultra vires Section
10(3) of the Act, and therefore, illegal, bad in law and
null and void.”
However, no such plea of promissory estoppel has been raised
in the present case against issuance of the later Notification dated
21/1/2000 and rightly so, therefore, this case law does not apply in
the facts of the present case.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
23. In State of Jharkhand vs. Ambay Cement -(2005) 1 SCC 368
cited by the learned counsel for the Revenue also, the Hon'ble
Supreme Court held that in order to avail exemption the unit had to
fulfill eligibility criteria and the requirement to obtain permission
from the Industries Department of the State Government before
31/8/2000 was a condition precedent for such units to be eligible to
exemption and in the absence of the unit having obtained that
permission, the High Court exercising its jurisdiction under Article
226 of the Constitution of India could not direct grant of exemption to
the writ petitioner-industrial unit, overlooking the mandatory
statutory conditions prescribed therefor, particularly in the absence of
any challenge to the validity of such condition. In para no.24, 25 and
26 of the said judgment, the Court held as under:
“24. In our view, an exception or an exempting
provision in a taxing statute should be construed strictly
and it is not open to the Court to ignore the conditions
prescribed in the Industrial Policy and the exemption
Notifications.
25. In our view, the failure to comply with the
requirements renders the writ petition filed by the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
respondent liable to be dismissed. While mandatory rule
must be strictly observed, substantial compliance might
suffice in the case of a directory rule.
26. Whenever the statute prescribes that a particular
act is to be done in a particular manner and also lays
down that failure to comply with the said requirement
leads to severe consequences, such requirement would
be mandatory. It is the cardinal rule of the interpretation
that where a statute provides that a particular thing
should be done, it should be done in the manner
prescribed and not in any other way. It is also settled
rule of interpretation that where a statute is penal in
character, it must be strictly construed and followed.
Since the requirement, in the instant case, of obtaining
prior permission is mandatory, therefore, noncompliance
of the same must result in canceling the
concession made in favour of the grantee-the respondent
herein.”
24. In G.P.Ceramics Pvt. Ltd. vs. Commissioner, Trade Tax,
Uttar Pradesh – (2009) 2 SCC 90 the Apex Court has reiterated in
para no.29 of the judgment that it is now a well established principle
of law that various eligibility criteria laid down in an exemption
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
30/40
notification are required to be construed strictly, once it is found that
the applicant satisfies the same, the exemption notification should be
construed liberally.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
30/40
notification are required to be construed strictly, once it is found that
the applicant satisfies the same, the exemption notification should be
construed liberally.
From the conspectus of the above legal authorities, it is clear
that the condition no.3 of the Notification dated 21/1/2000 has to be
given its plain and clear meaning and cannot be restricted only to the
specific transaction of sale covered by the said Notification dated
21/1/2000 itself, irrespective of circulars issued by the Commissioner
which in any case could not override, nor they can expand the scope
of statutory notifications. The said condition no.3 in its own term is
very clear. Once the assessee avails the benefit of concessional rate of
tax under the Notification dated 21/1/2000, condition no.3 would
apply in its full force and logically. The said condition no.3 in clear
terms stipulates that dealer making inter-state sale under this
notification shall not be eligible to claim benefits (emphasize plurality
benefits) provided by the Notification dated 6/5/86 as amended from
time to time is very clear and it cannot be said that even though the
assessee had availed benefit of concessional rate of 6% under the
Notification dated 21/1/2000, it should still be further eligible for
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
31/40
partial exemption from CST payable in respect of other inter-state
sales made by him during the same year under Notification dated
6/5/86.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
31/40
partial exemption from CST payable in respect of other inter-state
sales made by him during the same year under Notification dated
6/5/86.
26. One cannot lose sight of the fact that both the Notifications
dated 6/5/86 and 21/1/2000 provide for exemption or concession to
the assessee, a manufacturer of cement. While the Notification dated
6/5/86 does not specify any dealer or type of manufacturer, the later
Notification dated 21/1/2000 applies to manufacturers of cement. As
noted above, for other commodities manufacturers, other similar
notifications were also issued by the State Government. Therefore,
the State Government cautiously wanted not to apply or allow the
benefit of Notification dated 6/5/86 to those manufacturers or
specified dealers for which subsequent notifications like the one in
hand dated 22.1.2000 was issued, if they make sales and avail benefit
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
of concessional rate of tax under these notifications issued under
Section 8(5) of the CST Act. Therefore, dissecting this condition and
still allowing the benefit of partial exemption under the Notification
dated 6/5/86 would be doing violence to the condition no.3 which
was never intended by the State Government. It is for the assessee to
opt either for availing benefit of concessional rate of tax under the
Notification dated 21/1/2000 or not to do so altogether. Once, he
does so and opts for the same, the applicability of the notification
dated 6/5/86 is excluded altogether and not in piece meal. Therefore,
it cannot be contended by the assessee that in respect of other inter-
State sales, still partial exemption may be allowed in terms of
Notification dated 6/5/86, applicability of which stands excluded.
Doctrine of exclusion and eclipse would apply in such cases rather
than doctrine of liberal construction.
27. The contention of learned counsel for the assessee that since
the Circular dated 15/4/1994 which was withdrawn later on on
16/4/2001 clarified that such benefit of Notification dated 6/5/86
would be applicable in respect of inter-state sales, if such sales were
made against declaration in Form `C' or `D' but not when such inter
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
33/40
state sales are made without furnishing of declaration in form `C' or
`D' as specified in Notification dated 7/3/1994 and all assessments of
assessee were completed accordingly and on this ground for the
assessment year 2001-02 also similar benefit may be extended to the
assessee does not impress this Court. The principles of res judicata
do not apply in tax matters and all assessment years are independent
and moreso, the controversy for assessment year 2001-02 is after new
Notification dated 21/1/2000 and Circular dated 16/4/2001came into
being, which materially altered the situation which obtained while
previous Notification dated 7/3/1994 and Circular dated 15/4/1994
prevailed.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
33/40
state sales are made without furnishing of declaration in form `C' or
`D' as specified in Notification dated 7/3/1994 and all assessments of
assessee were completed accordingly and on this ground for the
assessment year 2001-02 also similar benefit may be extended to the
assessee does not impress this Court. The principles of res judicata
do not apply in tax matters and all assessment years are independent
and moreso, the controversy for assessment year 2001-02 is after new
Notification dated 21/1/2000 and Circular dated 16/4/2001came into
being, which materially altered the situation which obtained while
previous Notification dated 7/3/1994 and Circular dated 15/4/1994
prevailed.
The contention of the learned counsel for the petitionerassessee
that the Notification dated 6/5/86 contained a scheme of
exemption applicable to all kinds of dealers whereas the Notification
dated 21/1/2000 is transaction specific and, therefore, condition no.3
applicable to a transaction specific Notification cannot undo the
benefit available to a dealer under a scheme notified under Section 8
(5) of the Act is also devoid of merit. Section 8 (5) of the CST Act
which is reproduced hereunder does not empower the State
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
34/40
Government to grant any exemption to any class of dealer or a dealer
as such and the power to grant exemption given to the State
Government under the Central legislation namely CST Act, 1956 is
restricted to be transaction specific only, namely inter-State sale i.e.
the taxable event covered under CST Act. Therefore, it is wrong to
contend that Notification dated 6/5/86 exempted a class of dealer or
manufacturer. Partial exemption granted is also relating to taxable
event in the form of taxable inter-state sales only and the rebate or
remission or partial exemption granted under the Notification dated
6/5/86 cannot and does not travel beyond the scope of Section 8(5) of
the CST Act and, therefore, the question is only whether the
subsequent Notification dated 21/1/2000 deprives the benefit of
partial exemption under the Notification dated 6/5/86 or not, which it
does, in the opinion of this Court, in view of condition no.3 of the
later Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
34/40
Government to grant any exemption to any class of dealer or a dealer
as such and the power to grant exemption given to the State
Government under the Central legislation namely CST Act, 1956 is
restricted to be transaction specific only, namely inter-State sale i.e.
the taxable event covered under CST Act. Therefore, it is wrong to
contend that Notification dated 6/5/86 exempted a class of dealer or
manufacturer. Partial exemption granted is also relating to taxable
event in the form of taxable inter-state sales only and the rebate or
remission or partial exemption granted under the Notification dated
6/5/86 cannot and does not travel beyond the scope of Section 8(5) of
the CST Act and, therefore, the question is only whether the
subsequent Notification dated 21/1/2000 deprives the benefit of
partial exemption under the Notification dated 6/5/86 or not, which it
does, in the opinion of this Court, in view of condition no.3 of the
later Notification dated 21/1/2000.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
direct,
(a) that no tax under this Act shall be payable
by any dealer having his place of business in the State
in respect of the sales by him, in the course of inter-
State trade or commerce, from any such place of
business of any such goods or classes of goods as may
be specified in the notification, or that the tax on such
sales shall be calculated at such lower rates than those
specified in sub-section (1) or sub-section (2) as may be
mentioned in the notification;
(b)..........”
29. The principles of res judicata or estoppel do not apply in taxing
statutes. There is hardly any need to re-emphasize these principles.
There is no estoppel against statute. It is also well settled that the
Circulars issued by the Commissioner do not have any statutory force
and they can neither restrict or expand the scope of statutory
Notification. The confusion on account of different interpretations
given in the Circulars dated 15/4/1994 & 16/4/2001, cannot enure to
the benefit of assessee, in view of clear terms of condition no.3 in the
Notification dated 21/1/2000 at least after 16/4/2001, when previous
Circular dated 15/4/1994 was withdrawn. As a matter of fact, the
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
36/40
Hon'ble Supreme Court as well as this Court have consistently
deprecated the practice on the part of Commissioner, Commercial
Taxes Department to issue these kind of Circulars which directly
impede or interfere with the quasi-judicial discretion of the assessing
authority and force them to take a particular view of the law or
statutory notification. It would be opportune to refer to the judgment
of this court in the case of CTO Vs. M/s Bombay Machinery Store –
2007 (19 ) Tax up-date 315. This court in para no.12 quashed such
circulars issued by the Commissioner in respect of period prescribed
for constructive delivery for the purpose of Section 6(2) of the CST
Act and it was held as under;
“12. Therefore, the proposition of law by the
learned Commissioner in the impugned circulars that
“as per legal position, `transit' gets over as soon as a
reasonable time elapses for the consignee to elect
whether he would take the goods away or leave them in
the transporters premises, because at the conclusion of
reasonable time there is deemed to be a constructive
delivery of goods from the transporter to the
consignee”, cannot be said to be a correct legal
position. The subsequent Circular dated 15.04.1998
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
purportedly issued to ameliorate the situation for
dealers created by previous circular dated 16.09.1997,
merely ended up extending the time limit of days to 30
days by propounding a particular view of constructive
delivery. Commissioner giving a particular
interpretation of law purported binding on all the
assessing authorities is doubtful. There is no specific
provision in the Sales Tax Act, either under the RST
Act or under the CST Act, empowering the
Commissioner to issue such circulars, as against such
powers conferred under Section 19 of the Income Tax
Act on the Central Board of Direct Taxes. Even Section
119 of the Income Tax Act, which empowers the way
of its proviso restricts and provides that no such order,
instruction or direction shall be issued so as to require
any Income Tax authority to make a particular
assessment or dispose of a particular case in a
particular manner and such orders or instructions shall
also not interfere with the discretion of the
Commissioner(Appeals) in exercise of its appellate
functions. Therefore, this court cannot countenance the
issuance of such circulars by the Commissioner of
Sales Tax, which unduly fetter with the quasi-judicial
discretion of the assessing authorities, who are
expected in law to give their findings of fact and
interpret the statutory law in their own quasi-judicial
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
discretion in accordance with the law as interpreted by
the Supreme Court or jurisdictional High Court. The
circulars issued by the Commissioner in the aforesaid
manner like done vide Circulars dated 16.09.1997 and
15.04.1998 are likely to hamper and throttle such
quasi-judicial discretion which vests with the assessing
authorities. Therefore, the aforesaid circulars issued by
the Commissioner aforesaid on 15.04.1999
(S.No.1132A) and 16.09.1997 (S.No.1115B) are in
conflict with the Division Bench decision of this Court
in Guljag Industries Ltd's case (supra) and even
otherwise they are found to be without any authority or
law. Consequently, both these circulars are found to be
ultra vires and are hereby quashed.
13. In view of aforesaid, since there was no basis for
the learned Commissioner to stipulate the time frame of
10 days or 30 days and, thereafter to require the
assessing authority to invoke the concept of
constructive delivery so as to deny the exemption of
CST on subsequent sales made by transfer of
documents of title to the goods made under Section 6
(2) of Act, though requisite conditions of Section 6(2)
of the Act are fulfilled by the dealer and such circulars
have already been held to be ultra vires and have been
quashed and in absence of any other material justifying
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
39/40
the denial of exemption under Section 6(2) of the Act
to the assessee, the impugned order of the Tax Board
allowing such exemption to the assesee is not required
to be interfered with in the present revision petitions
filed by the Revenue.”
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
39/40
the denial of exemption under Section 6(2) of the Act
to the assessee, the impugned order of the Tax Board
allowing such exemption to the assesee is not required
to be interfered with in the present revision petitions
filed by the Revenue.”
Therefore, even though the assessee's assessments might have
been completed in accordance with the Circular dated 15/4/1994
issued by the Commissioner and even the assessment of preceding
year 2000-01 in terms of the order passed by this Court in earlier writ
petition filed by the assessee as quoted above, the same does not
furnish a valid ground to allow petitioner-assessee to avail benefit of
partial exemption contrary to the condition no.3 of the Notification
dated 21/1/2000 for the assessment year 2001-2002, involved in the
present case.
31. Thus, this Court is of the considered opinion that the Tax Board
was perfectly justified in holding the assessee to be not entitled to
partial exemption under the Notification dated 6/5/86 for the
assessment year 2001-02 in question and the revision petition filed by
the petitioner-assessee is sans merit and is liable to be dismissed. The
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
40/40
same is accordingly dismissed with no order as to costs.
S.B.C.Sales Tax Revision No.613/05- Lakshmi Cement vs. CTO, Pali.
Judgment dt:17/4/2009
40/40
same is accordingly dismissed with no order as to costs.
item no.5
baweja/