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1990 Supreme(Mad) 974
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE VENKATASWAMI & THE HONOURABLE MR. JUSTICE ABDUL HADI
Bimetal Bearings Limited - Appellant
Versus
State of Tamil Nadu - Respondents
Tax Case (Revision) No. 921 of 1982
Decided On : 08 November 1990
Special entry excludes general entry. The Revenue is bound by the clarifications issued by the Board of Revenue and the Government.
Headnote:
TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTION 3, 55, 111 - SALE OF BEARINGS FOR DIESEL ENGINES - CLASSIFICATION - LEVY OF TAX - SPECIAL ENTRY EXCLUDES GENERAL ENTRY - USE TO WHICH GOODS ARE PUT IS IMMATERIAL - CLARIFICATIONS ISSUED BY BOARD OF REVENUE AND GOVERNMENT - REVENUE BOUND BY CLARIFICATIONS - TAX LEVIABLE ONLY UNDER ENTRY 111 AT 8 PER CENT.
Fact of the Case:
The petitioner, an assessee under the Tamil Nadu General Sales Tax Act, 1959, challenged the levy of tax on sales of bearings for diesel engines. The Revenue levied tax at 13 per cent treating the turnover falling under entry 3 of the First Schedule and the balance of the turnover at 9 per cent treating that turnover falling under entry 55 of the First Schedule. The Tribunal accepted the levy of tax at 13 per cent and 9 per cent as levied by the Revenue rejecting the case of the assessee that the turnover must be taxed only under entry 111 of the First Schedule.
Finding of the Court:
The court held that the bearings sold by the assessee will fall only under entry 111 of the First Schedule, being a special entry, and not under entry 3 or entry 55 of the First Schedule which are general entries. The court also held that the Revenue cannot take a different stand from the clarifications issued by the Board of Revenue and the Government.
Issues: 1. Whether the sale of bearings for diesel engines falls under entry 111 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, or under entry 3 or entry 55 of the First Schedule? 2. Whether the Revenue is bound by the clarifications issued by the Board of Revenue and the Government?
Ratio Decidendi: 1. The court held that entry 111 of the First Schedule, being a special entry for oil engines and parts and accessories, introduced for the first time by Tamil Nadu Act 23 of 1974 from March 4, 1974, will exclude all other general entries like entry 3 and entry 55. The bearings in question having been sold only for diesel engines, the tax liability has to be fixed with reference to entry 111 of the First Schedule which is a special entry and not under entry 3 or entry 55 of the First Schedule which are general entries. 2. The court held that the Revenue is bound by the clarifications issued by the Board of Revenue and the Government. The court relied on the judgments in Gondakar v. Commissioner of Commercial Taxes and G. Ramaswamy v. State of Andhra Pradesh, which held that administrative interpretations given to a tax provision by the agency responsible for its administration and enforcement are entitled to weight in the construction of doubtful language.
Final Decision: The court allowed the tax case and held that the tax is leviable only under entry 111 at 8 per cent.
VENKATASWAMI, J.
The petitioner, an assessee on the file of the Assistant Commissioner (Commercial Taxes), Central Assessment Circle I, Coimbatore, under the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act"), aggrieved by the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in C.T.A. No. 459 of 1981 dated January 27, 1982, has filed this revision.
2. The assessment year in question is 1978-79. The disputed turnover amounting to Rs. 33, 11, 816.85 represents sales of bearings for diesel engines sold to various dealers. According to the petitioner/assessee, sales of bearings for diesel engines will squarely fall under entry 111 of the First Schedule to the Act, and as such, liable to tax at 8 per cent in the absence of production of form 17, and on production of the declaration under form 17, concessional rate of tax alone will have to be levied. On the other hand, the Revenue levied tax on a turnover of Rs. 29, 52, 596.38 at 13 per cent single point treating the turnover falling under entry 3 of the First Schedule and the balance of the turnover of Rs. 3, 59, 220.41 at 9 per cent treating that turnover falling under entry 55 of the First Schedule. The Tribunal accepted the levy of tax at 13 per cent and 9 per cent as levied by the Revenue rejecting the case of the assessee that the turnover must be taxed only under entry 111 of the First Schedule. Hence the present revision petition.
3. Mr. K. J. Chandran, the learned counsel appearing for the petitioner, submitted that entry 111 of the First Schedule, being a special entry for oil engines and parts and accessories, introduced for the first time by Tamil Nadu Act 23 of 1974 from March 4, 1974, will exclude all other general entries like entry 3 and entry 55. The bearings in question having been sold only for diesel engines, the tax liability has to be fixed with reference to entry 111 of the First Schedule which is a special entry and not under entry 3 or entry 55 of the First Schedule which are general entries.
4. The next contention of the learned counsel for the petitioner is that the Tribunal's view that the rate of tax has to be fixed with reference to the use to which the goods are put, is not sustainable. The other contention of the learned counsel is that if persons administering law, namely, sales tax, understand the entry in a particular way and issue clarifications when asked for, that cannot be lightly overlooked, and to the extent possible, those clarifications must be given effect to.
5. The learned Additional Government Pleader (Taxes), in answering the contentions advanced by the learned counsel for the petitioner, submitted that the sales of bearings by the petitioner being to manufacturers of tractors, bulldozers and automobiles, the levy of tax treating those sales under entry 3 or entry 55 is justified. He submitted that any clarification issued by the Board of Revenue or Government is not binding on the Tribunal or the court if the entry warrants a different interpretation.
6. On the first contention that "special excludes general", the learned counsel for the petitioner placed reliance on two judgments, one of this Court and another of the Gujarat High Court. In State of Tamil Nadu v. Blue Star Engineering Co. reported in 1977 (6) CTR 40, 1977 (39) STC 194, a Division Bench of the Madras High Court has observed as follows :
"In order to come within the scope of entry 41 of Schedule I to the Tamil Nadu General Sales Tax Act, 1959, it is not enough if electrical power is used in the working of the equipment. It must essentially be electrical machine or electrical goods described in that entry. Moreover, where there are two entries, one general and the other particular, the particular or specific entry should be applied for the purpose of levying the tax. Entry 1 specified duplicating machines and, therefore, machines intended for taking copies of blue prints and documents were taxable only
