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IN THE HIGH COURT OF JUDICATURE AT PATNA
K. VINOD CHANDRAN, PARTHA SARTHY, JJ.
M/s Martin and Harris Pvt. Ltd. - Appellant
Versus
The State of Bihar & Ors. - Respondents
Miscellaneous Appeal Nos. 342, 336, 343, 344 of 2013
Decided On : 13-09-2023
Bihar Finance Act, 1981–Section 7(3)–Exemption from payment of tax on sale or purchase of any goods or class of description of good (in the present case, contraceptives)–appellant is engaged in sale of contraceptive pills and also Intra Uterine Device (IUD) with the commercial nomenclature of 'Multiload'–exemption to pay tax granted on sale of contraceptive pills and device (Multiload) has been denied–the exemption notification is very clear that, it grants exemption to condoms and oral contraceptive pills–there is no reason why the legislative intent should be imported, that too of population control, to bring in every product developed as a contraceptive, which enables production control–it is not as if the legislature was not aware of the very many measures and various devices used contraception even at the time when notification was introduced–though the specific product, 'Multiload' was not in vogue, within the country, at the time of the notification, there were many devices used for contraception which could be implanted or used on a female, other than and contraceptive pills, which have not been brought under the specific exemption notification –'condoms' as if is understood in common parlance is a sheath used on the male genital organ–Legislature granted and restricted exemption to the specific contraceptive device used on males and oral pills used for contraception–the words employed only grants exemption to those products under the exemption notification and there is no ground to judicially extend the exemption notification to devices which do not clearly fall under the notification, on mere perception of the laudable object, of population control, behind the exemption notification–an exemption notification has to be strictly construed, the same being in the nature of an exception from the general rule of taxation and one ambiguity or doubt about the applicability is effaced and the subject falls within the four corners of the notification, then full play, should be, given to it and then there should be a wider and liberal construction–as it is bite, one has to go by the words employed in the statute or the exemption notification and aids of interpretation should be resorted to, only when there is an ambiguity–in the present case there is no reason to deviate from the literal meaning; 'the golden rule of interpretation'–Appeals stand dismissed. (Paras 18, 22 and 25)
(1992)1 SCC 659, (2003)264 ITR 276 (Delhi), [2023] 456 ITR (Delhi), (1989)1 SCC 345, (2017)2 SCC 629, (2018)9 SCC 1, (1997)6 SCC 564, (2001)1 SCC 578, (1994) Supp (3) SC 6065–Referred.
JUDGMENT :
K. Vinod Chandran, J.
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 :-
(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 v. CIT, (1992) 1 SCC 659, Commissioner of Income-Tax v. A.R.J. Security Printers, (2003) 264 ITR 276 (Delhi), and Prem Kumar Chopra v. 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 v. 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 pos
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Excise duty exemptions granted for industrial development are capital receipts, not subject to taxation under normal provisions or included in MAT calculations.
Every action of the executive government, including exercise of its power to grant or withdraw tax exemption, should be suffused with public interest. The government must provide relevant and suffici....
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