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1993 Supreme(Mad) 214
L.N. Ray, P.C. Banerjee, S.P. Das Ghosh, JJ.
SAMUEL FITZE & CO. PVT. LTD.
Versus
COMMERCIAL TAX OFFICER, TALTOLLA CHARGE AND OTHERS. (AND OTHER CASES).
RN-31(T) of 1992, RN-239(T) and 351(T) of 1989, RN-314, 429 and 432 of 1990 and RN-281 of 1991
Decided On: Decided On : 07-04-1993
Important Points
Act Referred
Headnote
Whether carpets resold by the applicants are "declared goods" as defined and narrated in section 14(x) of the CST Act, 1956 and sales of these carpets are taxable at the rate of 4 per cent subject to the restrictions and conditions of section 15 of the CST Act, 1956 or it is a commodity described described is item 24 of Schedule II to the Act of 1941.
Fact of the Case:
The applicants are registered dealers under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the Act of 1941") and the Central Sales Tax Act, 1956. All these cases relate to carpets. In some of these cases such as cases Nos. RN-314 of 1990 and RN-429 of 1990 there was an assessment for the period of four quarters ending on March 31, 1983 by the concerned Commercial Tax Officer in respect of carpets at the rate of 15 per cent on March 18, 1987. This rate of tax was reduced from 15 per cent to 4 per cent by an appellate order dated March 14, 1990, by the respondent No. 3, Assistant Commissioner of Commercial Taxes, South Circle, because of the judgment of the High Court, Calcutta. Subsequently, a notice in form IX under rule 79 of the Rules of 1941 was issued by the respondent No. 3, the Assistant Commissioner of Commercial Taxes, South Circle, on September 5, 1990, for reviewing his appellate order dated March 14, 1990, because of omission of carpets from item 21 in the First Schedule to the CES Act, 1944, by an amendment in 1979.
Finding of the Court:
The rate of tax on woollen carpets, on the basis of the decision of the Calcutta High Court in the case of Madanlal Shroff [1989] 72 STC 56; (1987) 20 STA 465 (Cal), should be allowed to continue at the rate of 4 per cent, if not up to August 17, 1990, at least up to May 12, 1988 till when section 14(x) of the CST Act, 1956 remained unamended since 1961, in spite of amendment of item No. 21 in the First Schedule to the CES Act, 1944 in 1979.
Issues: Whether carpets resold by the applicants are "declared goods" as defined and narrated in section 14(x) of the CST Act, 1956 and sales of these carpets are taxable at the rate of 4 per cent subject to the restrictions and conditions of section 15 of the CST Act, 1956 or it is a commodity described described is item 24 of Schedule II to the Act of 1941.
Ratio Decidendi: The mention of the definition of "woollen fabrics" in item No. 12B and subsequently in item No. 21 of the First Schedule to the CES Act, 1944 in section 14(x) of the CST Act, 1956 is by way of "incorporation" on the authority of the decision in the case of Narasimhan AIR 1975 SC 1835 and not by way of "reference" or "citation".
Final Decision: Case No. RN-31 (T) of 1992/RN-239 (T) of 1989 is allowed in part. The orders of assessments for the period of four quarters ending on December 31, 1978, December 31, 1979 and December 31, 1980 are quashed. If any assessment has been made for the period of four quarters ending on December 31, 1981 or December 31, 1982 or December 31, 1983 or December 31, 1984, on the basis of the interim order of the High Court, Calcutta dated April 18, 1985, such assessment shall be set aside, if such assessments are not in accordance with this judgment and fresh assessments for these years shall be made in accordance with this judgment. The interim order dated April 18, 1985 passed in the case is vacated. Let the record of C.R. No. 4109 (W) of 1985 be sent to the High Court, Calcutta, in so far as that record contains matters relating to the Central Sales Tax Act, 1956, after keeping xerox copies of the writ petition under article 226 of the Constitution in that case. Case No. RN-351 (T) of 1989 is dismissed with the rider that if, in pursuance of the interim order dated April 24, 1985, passed in that case by the High Court, Calcutta, any assessment has been made for the periods of four quarters ending on June 30, 1981 or June 30, 1982 or June 30, 1983 or June 30, 1984, which is not in accordance with this judgment, the assessment shall be set aside and fresh assessments shall be made for these years in accordance with this judgment. Let the record of C.R. No. 4513 (W) of 1985 be sent to the High Court, Calcutta, in so far as that record relates to matters arising out of the Central Sales Tax Act, 1956, after keeping xerox copy of the writ petition in that C.R. No. 4513 (W) of 1985. Case No. RN-314 of 1990 is allowed in part. The trade circular No. 4936 (125) C.T. dated March 28, 1990, issued by the Commissioner, Commercial Tax, West Bengal, is quashed. The two notices dated April 6, 1990 and June 6, 1990, for reopening of the assessments for the period of four quarters ending on March 31, 1980 or March 31, 1985, are also quashed. If any assessment has been made for the period of four quarters ending on March 31, 1980 and March 31, 1985 or for any subsequent year, which is not in accordance with this judgment, on the basis of the interim order of this Tribunal dated June 29, 1990, the assessment shall be set aside and fresh assessments shall be made in accordance with this judgment for these years, if any. The interim order of this Tribunal dated June 29, 1990, is vacated. Case No. RN-429 of 1990 is allowed in part. The order of the respondent No. 3 dated October 30, 1990, is quashed. The stay order of this Tribunal dated December 14, 1990, is vacated. Case No. RN-432 of 1990 is allowed in part. The notice in form No. IX dated October 23, 1990, from the respondent No. 3 is quashed. Case No. RN-281 of 1991 is allowed in part. The assessment for the period of four quarters ending on March 31, 1987, in case No. 77(D)/90-91 is set aside. The Commercial Tax Officer concerned will make fresh assessment for the period of four quarters ending on March 31, 1987, in accordance with this judgment.
Somen Bose, Senior Advocate, Gopal Ch. Mukherjee, G. C. Mookerji and M. L. Nahar, for the petitioners.
D. Majumder, State Representative, for the respondents.
S. P. DAS GHOSH (Chairman). - This judgment will govern case Nos. RN-239 (T) of 1989, RN-31 (T) of 1992, RN-351 (T) of 1989, RN-314 of 1990, RN-429 of 1990, RN-432 of 1990 and RN-281 of 1991 as common questions of law was fact are involved in all these cases. Out of these cases, cases Nos. RN-239 (T) of 1989, RN-31 (T) of 1992 and RN-351 (T) of 1989 arise out of applications under article 226 of the Constitution, which have been forwarded to this Tribunal from the High Court, Calcutta, under section 15 of the West Bengal Taxation Tribunal Act, 1987, for disposal. The other four cases arise out of applications under section 8 of the West Bengal Taxation Tribunal Act, 1987, which are in the nature of writ petitions.
2. The applicants in all these cases are registered dealers under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the Act of 1941") and the Central Sales Tax Act, 1956. All these cases relate to carpets. In some of these cases such as cases Nos. RN-239 (T) of 1989 and RN 351 (T) of 1989 some assessments and proceedings under the Central Sales Tax Act, 1956, have also been challenged. This Tribunal has no jurisdiction in respect of tax under the Central Sales Tax Act, 1956, which is not specified in the Schedule of the West Bengal Taxation Tribunal Act, 1987. As such, the questions relating to the assessments made or proceedings taken under the Central Sales Tax Act, 1956 ("the CST Act, 1956", in short) will not be taken up for consideration in this judgment.
3. The case of the applicant, M/s. Samuel Fitze and Company Private Limited in cases Nos. RN-239 (T) of 1989/RN-31 (T) of 1992 is that rule 3 of the Bengal Sales Tax Rules, 1941 (hereinafter referred to as "the Rules of 1941") provides that in calculating the taxable turnover of a registered dealer, the turnover as specified in the sub-rules and clauses therein shall be deducted from the gross turnover. Sales of woollen fabrics were exempted from payment of sales tax under rule 3(28) of the Rules of 1941 under Notification No. 182-F.T. dated January 19, 1966. Section 5(1)(d) of the Act of 1941 provides that rates of tax on such part of the taxable turnover as represents sales of goods included in Schedule II of that Act. Item No. 24 was introduced in Schedule II of the Act of 1941 with effect from November 16, 1967, as a result of which carpets of all varieties and descriptions became exigible to sales tax. Even then, woollen carpets or carpets of all varieties and descriptions were exempted from levy of sales tax under the Act of 1941 because of operation of rule 3(28) of the Rules of 1941. With effect from April 7, 1975, rule 3(28) of the Rules of 1941 was amended under Notifications Nos. 1820-F.T. and 1823-F.T. dated April 1, 1975 with the result the carpets became exigible to tax. By a judgment delivered on November 13, 1979, his Lordship honourable Mr. Justice Dipak Kumar Sen of the Calcutta High Court held in the case of Madanlal Shroff v. State of West Bengal in C.R. No. 12324 (W) of 1975 [(1980) 13 STA 211] that rule 3(28) of the Rules of 1941, as amended by the Notification Nos. 1820-F.T. and 1823-F.T. both dated April 1, 1975 with effect from April 7, 1975, was ultra vires the powers of the State Legislature. For the periods of four quarters ending on December 31, 1978, the respondent No. 1, the Commercial Tax Officer, Taltolla Charge, did not accept the claim of the applicant for exemption of sale proceeds of woollen carpets from payment of sales tax under section 5(2)(a)(vi) of the Act of 1941, read with rule 3(28) of the Rules of 1941, in spite of this judgment of the High Court, Calcutta, in the case of Madanlal Shroff (1980) 13 STA 211 (Cal) on the ground that the Government had filed appeal against that judgment and stay had been granted. The applicant preferred an appeal before the respondent No. 2, the Assistant Commissioner of Commercial Taxes, South Circle, against the assessment. The appeal is still pending. On
