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2009 Supreme(Mad) 1078
High Court of Judicature at Madras
THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN & THE HONOURABLE MR. JUSTICE K.K. SASIDHARAN
Dharampal Satyapal Limited
Versus
The Commercial Tax Officer & Others
W.P. Nos.4001 and 4604 to 4609 of 2002
Decided on : 13-04-2009
For the Petitioner:C. Natarajan, Senior Counsel, N. Inbarajan, M/s. Narendra Sharma, Advocates.
For the Respondents:P.S. Raman Additional Advocate General, K. Radhakrishnan, Govt. Advocate (Taxes)., Advocate.
The word "including" in Entry 1(iv)(d) Part-A of the Third Schedule to the TNGST Act and also in sub-heading 2404.41 of the CET Act is to be considered as restrictive and not enlarging the meaning of chewing tobacco.
Headnote:
PAN MASALA - SALES TAX - EXEMPTION - PAN MASALA CONTAINING TOBACCO - WHETHER PAN MASALA CONTAINING TOBACCO IS EXEMPT FROM TAX UNDER SECTION 8 OF THE TAMIL NADU GENERAL SALES TAX ACT, 1959 (TNGST ACT) - WHETHER PAN MASALA CONTAINING TOBACCO IS COVERED BY ENTRY 2, PART-J OF THE FIRST SCHEDULE TO THE TNGST ACT - WHETHER THE WORD "INCLUDING" FOUND IN ENTRY 1(IV)(D) PART-A OF THE THIRD SCHEDULE TO THE TNGST ACT AND ALSO IN SUB-HEADING 2404.41 OF THE CENTRAL EXCISE TARIFF ACT, 1985 (CET ACT) IS TO BE CONSIDERED AS ENLARGING THE MEANING OF CHEWING TOBACCO AND THEREFORE, WOULD HAVE EXTENDING FORCE SO AS TO ENCOMPASS GUTKHA AS PREPARATION OF CHEWING TOBACCO - WHETHER INCLUSION OF PAN MASALA CONTAINING TOBACCO AS TAXABLE GOODS UNDER SECTION 3(2) READ WITH ENTRY 2 PART-J OF FIRST SCHEDULE OF TNGST ACT, 1959 WOULD PREVAIL OVER SECTION 8 READ WITH ENTRY 1(IV)(D) PART-A OF THIRD SCHEDULE, ASSUMING SUCH GOODS FELL WITHIN THE DESCRIPTION CONTAINED IN ENTRY 1(IV)(D) PART-A OF THE THIRD SCHEDULE.
Fact of the Case:
The petitioners are engaged in the manufacture and marketing of Pan Masala containing tobacco under the brand name Pan Parag, Pan Zarda, Pan Parag Gutkha and also Pan Masala which does not contain tobacco. The first respondent passed provisional assessment orders for the months of October, November and December, 2000, levying tax under Entry-II, Part-J of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act in short). The petitioners filed a revision before the Deputy Commissioner (C.T.). The revisional authority confirmed the provisional assessment orders. Aggrieved by that, the petitioners approached the Tamil Nadu Taxation Special Tribunal. The Tribunal dismissed all the original petitions filed by the petitioners. The petitioners also filed original petitions seeking the substantial relief of declaration that the word "or tobacco" in Sl. No.2, Part-J of the First Schedule to the TNGST Act is ultra vires Sections 14 and 15 of the Central Sales Tax Act, 1956 (CST Act in short) and Article 286 of the Constitution of India and is repugnant to Sl. No.1 (iv) (d) of Part-A to the Third Schedule read with Section 8 of the TNGST Act and the general scheme of levy of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADE Act in short). Aggrieved by the orders passed in the the said petitions, these writ petitions have been preferred.
Finding of the Court:
The Court held that Pan Masala containing tobacco is not exempt from tax under Section 8 of the TNGST Act and is covered by Entry 2, Part-J of the First Schedule to the TNGST Act. The Court further held that the word "including" found in Entry 1(iv)(d) Part-A of the Third Schedule to the TNGST Act and also in sub-heading 2404.41 of the CET Act is to be considered as restrictive and not enlarging the meaning of chewing tobacco. Therefore, Gutkha cannot be encompassed as preparation of chewing tobacco. Lastly, the Court held that the inclusion of Pan Masala containing tobacco as taxable goods under Section 3(2) read with Entry 2 Part-J of First Schedule of TNGST Act, 1959 would prevail over Section 8 read with Entry 1(iv)(d) Part-A of Third Schedule, assuming such goods fell within the description contained in Entry 1(iv)(d) Part-A of the Third Schedule.
Issues: 1. Whether Pan Masala containing tobacco is exempt from tax under Section 8 of the TNGST Act? 2. Whether Pan Masala containing tobacco is covered by Entry 2, Part-J of the First Schedule to the TNGST Act? 3. Whether the word "including" found in Entry 1(iv)(d) Part-A of the Third Schedule to the TNGST Act and also in sub-heading 2404.41 of the CET Act is to be considered as enlarging the meaning of chewing tobacco and therefore, would have extending force so as to encompass Gutkha as preparation of chewing tobacco? 4. Whether inclusion of Pan Masala containing tobacco as taxable goods under Section 3(2) read with Entry 2 Part-J of First Schedule of TNGST Act, 1959 would prevail over Section 8 read with Entry 1(iv)(d) Part-A of Third Schedule, assuming such goods fell within the description contained in Entry 1(iv)(d) Part-A of the Third Schedule?
Ratio Decidendi: 1. The word "Pan Masala" in Entry 2, Part-J of the First Schedule to the TNGST Act means any preparation containing betel nuts and any one or more of the following ingredients, namely lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol. 2. The word "including" in Entry 1(iv)(d) Part-A of the Third Schedule to the TNGST Act and also in sub-heading 2404.41 of the CET Act is to be considered as restrictive and not enlarging the meaning of chewing tobacco. 3. The inclusion of Pan Masala containing tobacco as taxable goods under Section 3(2) read with Entry 2 Part-J of First Schedule of TNGST Act, 1959 would prevail over Section 8 read with Entry 1(iv)(d) Part-A of Third Schedule, assuming such goods fell within the description contained in Entry 1(iv)(d) Part-A of the Third Schedule.
Final Decision: The writ petitions were dismissed.
Prabha Sridevan, J.
The petitioners are engaged in the manufacture and marketing of Pan Masala containing tobacco under the brand name Pan Parag, Pan Zarda, Pan Parag Gutkha and also Pan Masala which does not contain tobacco. The first respondent passed provisional assessment orders for the months of October, November and December, 2000, levying tax under Entry-II, Part-J of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act in short). The petitioners filed a revision before the Deputy Commissioner (C.T.). The revisional authority confirmed the provisional assessment orders. Aggrieved by that, the petitioners approached the Tamil Nadu Taxation Special Tribunal. The Tribunal dismissed all the original petitions filed by the petitioners. The petitioners also filed original petitions seeking the substantial relief of declaration that the word "or tobacco" in Sl. No.2, Part-J of the First Schedule to the TNGST Act is ultra vires Sections 14 and 15 of the Central Sales Tax Act, 1956 (CST Act in short) and Article 286 of the Constitution of India and is repugnant to Sl. No.1 (iv)
(d) of Part-A to the Third Schedule read with Section 8 of the TNGST Act and the general scheme of levy of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADE Act in short). Aggrieved by the orders passed in the the said petitions, these writ petitions have been preferred.
2. We will briefly narrate the submissions of the writ petitioners which are dealt with elaborately in the written submissions filed by them. Gutkha, according to them, is a preparation which, apart from tobacco, contains betel nut, katechu, lime, flavours, permitted spices and saffron and tobacco is its essential character in relation to the dominant object of the user. The percentage of tobacco varies from 7% to 15%. They are aggrieved by the inclusion of the goods as Pan Masala by whatever name called containing betel nuts, that is to say, nut of areca, catachu broken and perfumed and lime or menthol or sandal oils or cardamom or tobacco or any one or more of these ingredients at Sl. No.2 of Part-J of the First Schedule read with Section 3(2) of the TNGST Act.
3. It is admitted by the petitioners that the period of dispute is only from October, 2000 to February, 2001. According to them, if the goods fall within the description of Sl.No.1 (iv)(d) of the Third Schedule of the TNGST Act, they are exempt from tax by virtue of Section 8. Once the goods are exempted by enumeration under the Third Schedule, Section 8 of the State Act operates, to exempt the goods from levy under the State Act. The subsequent specification of the goods in the First Schedule will have no effect in view of the above exemption. The exemption under Section 8 of the TNGST Act is not subject to any restriction or condition as far as Sl. No.1(iv)(d) of the Third Schedule is concerned. The definition under Sl. No.1(iv)(d) of the Third Schedule is not restricted to chewing tobacco, but includes preparations containing chewing tobacco and the word including should be construed to enlarge the Entry to comprehend all preparations of chewing tobacco and not restricted to just chewing tobacco.
4. To support their case of inclusive definition, petitioners place reliance on (2008) 15 V.S.T. 256 (SC) [Ponds India Limited vs. Commissioner of Trade Tax, Lucknow] and A.I.R. 1972 S.C. 168 [The Commissioner of Income-Tax, Andhra Pradesh vs. Taj Mahal Hotel, Secunderabad]. It was submitted that the words that is to say in Sl. No.1(iv) have been used so that no other kind of manufactured tobacco can be brought under Sl. No.1(iv), but that does not mean that the said words have any effect on the word including in Sl. No.1(iv)(d) of the Third Schedule. That is, while the words that is to say are restrictive, that cannot take away the effect of the inclusive definition in Sl. No.1(iv) (d).
5. Alternatively, it was submitted on behalf of the petiti
