K. Vinod Chandran, CJ. – The assessment years with which the appeals are concerned are 2001-02, 2002-03, 2003-04 and 2004-05.

2. The following questions of law were framed for consideration in the appeal: –

(1) Whether the provision granting exemption has to be interpreted keeping in mind the objective and the legislative intent behind the said exemption and not by adopting the literal meaning?

(2) Whether it was permissible for the Tribunal to deviate from the view taken in the previous years and deny exemption in absence of any material change in the facts and circumstances of the appellant's case and act contrary to the law settled by the Hon'ble Supreme Court in the case reported in 193 ITR 321 (SC) followed by the Delhi High Court in 264 ITR 276 (Del)?

3. The aforesaid questions arise in the context of the exemption granted by the State Government under Section 7 of the Bihar Finance Act, 1981(for brevity ‘the Act of 1981’). Sub-section (3) of the Section 7 empowers the State Government by notification and subject to such conditions or restrictions as it may impose, to exempt sale or purchase of any goods or class of description of goods or dealers from payment of tax. The State Government has brought out a notification dated 01.09.1993, including Serial No. 29 under the Schedule of the Act of 1981, wherein ‘condoms and all types of oral contraceptives pills’ were granted exemption from payment of tax.

4. The assessee is concerned with two variants of an Intrauterine Device (for brevity, IUD) used by females for the purpose of contraception with the commercial nomenclature of ‘Multiload’. The appellant is also engaged in the sale of contraceptive pills which have been granted exemption by the tax authorities. In fact, in the earlier years the appellant was granted exemption for the sale of Multiload also and the subsequent denial of exemption in the instant assessment year being 2001-02, without any change in circumstances, gave rise to the second question raised in the appeal. The first question has been raised insofar as the established principles for considering an exemption from tax and the relevance of the object and intention of the Legislature in granting such exemption.

5. Learned Senior Counsel Shri. H.M.Tiku appeared for the appellant and emphatically pointed out that the intention behind the exemption was population control and any contraceptive device should fall within the exemption. In the earlier assessment years, there was an exemption granted for the very same product, which was introduced in the market sometime in the year 1997, by the appellant. The Multiload used for contraception merely for the reason that it is used in females cannot be denied such exemption which would be applicable to all devices used for contraception; when the exemption itself is aimed at ensuring population control.

6. Considering the legislative intent behind the exemption, the tax authority cannot take a different view. It is also pointed out that even in the impugned order the minority view was in favour of the appellant. As far as the change in opinion of the tax authority, declining exemption, contrary to the earlier assessment years, without any change in circumstances, the learned Senior Counsel relies on Radhasoami Satsang, Saomi Bagh, Agra vs. CIT, (1992) 1 SCC 659, Commissioner of Income-Tax vs. A.R.J. Security Printers, (2003) 264 ITR 276 (Delhi), and Prem Kumar Chopra vs. Assistant Commissioner of Income Tax, Circle 46(1) and Ors. [2023] 456 ITR (Delhi). It is argued that consistency as has been held by the Delhi High Court is an antidote to the vice of arbitrariness and if there are not sufficient reasons to deviate from a decision taken by the coordinate authorities, then it would suffer from the vice of arbitrariness.

7. CCE vs. Parle Exports (P) Ltd., (1989) 1 SCC 345, is relied on to contend that an exemption has to be looked at in accordance with the purpose and provisions of the Act and when there are two views possi