1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH WRIT PETITION NO. 2937 OF 2007 WITH WRIT PETITION NO. 2088 OF 2008 WRIT PETITION NO. 2937 OF 2007 M/s. G.M. Thaokar and Company, through its Partner Shri Kalmesh s/o Gunaji Thaokar, aged about 32 Years, Occupation – Business, r/o 166, Vardhman Nagar, Nagpur 440 008. ... PETITIONER Versus 1. The State of Maharashtra, through the Secretary, Department of Finance, Mantralaya, Mumbai – 32. 2. The Commissioner of Sales Tax, Maharashtra State, Mumbai. ... RESPONDENTS Shri F.T. Mirza, Advocate for the petitioner. Mrs. Bharti Dangre, Additional GP for the respondents. ..... 2 WRIT PETITION NO. 2088 OF 2008 M/s. Ramanbhai Motibhai Patel & Company – through its Partner Shri Sunil s/o Raojibhai Patel, aged about 45 years, occupation Business, r/o Patel Chowk, M.G. Road, Wardha. ... PETITIONER Versus 1. The State of Maharashtra, through the Secretary, Department of Finance, Mantralaya, Mumbai – 32. 2. The Commissioner of Sales Tax, Maharashtra State, Mumbai. ... RESPONDENTS Shri F.T. Mirza, Advocate for the petitioner. Mrs. Bharti Dangre, Additional GP for the respondents. ..... CORAM : B.P. DHARMADHIKARI & F.M. REIS, JJ. AUGUST 20, 2009. ORDER : (PER B.P. DHARMADHIKARI, J.) Heard finally with the consent of Shri Mirza, learned counsel for the petitioner and Mrs. Dangre, learned Additional 3 Government Pleader for the respondents. 2. The challenge in both these writ petitions is to the Notification dated 29.3.2007 which adds Entry No.45A in Schedule A of the Maharashtra Value Added Tax Act, 2002, (hereinafter referred to as 2002 Act) with further prayer to declare that the classification of Tobacco done by the respondents as manufactured and unmanufactured tobacco is unreasonable and illegal. 3. The petitioners – firms are engaged in business of selling Tobacco. The procedure through which Tobacco is prepared and marketed like grinding, blending etc. is not relevant at this stage because the petitioners have not received any notice from the respondents as per the impugned amended/ added entry. The question whether that procedure constitutes manufacturing process or not, therefore, does not arise and cannot be gone into at this stage. The case of the petitioners is that by said entry 45A, entry in Chapter 24 of the Central Excise 4 Tariff Act, 1985, has been imported into 2002 Act and tax at 12.5% has been imposed on product of the petitioners by classifying it as “manufactured” Tobacco. They contend that earlier that duty was Nil. 4. Shri Mirza, learned counsel has contended that impugned notification dated 29.3.2007 has not been published in Government Gazette as required by Section 9 of 2002 Act and it was not laid before the each House of State Legislature as required by Section 83 of 2002 Act. Hence, that notification is bad and unconstitutional. He further states that after reply was filed by the respondents, the petitioners have learnt from it that notification was placed before the State Legislature on 10.4.2008 but it was not published in Official Gazette even thereafter. He has relied upon various judgments to contend that when such notification is not published in Official Gazette or when it is not placed before each House of State Legislature, it cannot come into force. His second contention is, the provisions of the Central Excise Tariff Act, 1985, dealing with unmanufactured tobacco 5 cannot be adopted through such notification for the purpose of 2002 Act as concept of “manufacture” in both the enactments is totally different and it is not permissible to read that concept in 2002 Act when Legislature itself did not provide for it. Lastly, it is urged that notification dated 29.3.2007 cannot come into force until and unless it is published in Official Gazette, after compliance with provisions of Section 9 read with Section 83 of 2002 Act. He has also contended that the product of the petitioners is found to be not manufactured tobacco by the Maharashtra Sales Tax Tribunal in Second Appeal No. 901 of 2002 and by adopting entries from Central Excise Tariff Act, said judgment is sought to be defeated by executive action. Though in written synopsis of arguments, it is contended that classification of tobacco in two distinct classes and levy of separate rate of tax upon it is discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution of India, no such arguments were orally advanced and hence the respondents also have not replied to those points. Lastly, it is also submitted in written synopsis that subordinate legislation cannot prevail over 6 the provisions of parent statute and question argued is. notification cannot be issued to read the provisions of Central Excise Act in 2002 Act. However, again no arguments were advanced even on this issue. 5. Mrs. Dangre, learned Additional Government Pleader has contended that the petitions as filed are without any merit because product of the petitioners has not been subjected to impugned legislation as yet. The question whether there is any manufacturing process involved or not, can be gone into at that stage and the contention that the concept of manufacture as understood in Excise legislation is being imported in 2002 Act is without any merits. She has invited our attention to affidavits placed on record to point out how the notification was placed before both the Houses of State Legislature. She contends that there is no specific case of non publication of notification dated 29.3.2007 in Government Gazette and there is full compliance with provisions of Section 83(6) read with Section 9 of 2002 Act in present matter. She has placed reliance upon the judgment of 7 the Hon’ble Apex Court in the case of Atlas Cycle Industries Limited vs. State of Haryana, reported at 1979 (2) SCC 196 and Prohibition & Excise Supdt. vs. Toddy Tappers Coop. Society, reported at (2003) 12 SCC 738. She has also tried to distinguish the judgments relied upon by the learned counsel for the petitioners. 6. The provisions of Section 9 of 2002 Act deal with amendment of Schedule and State Government can amend that Schedule by notification in Official Gazette so as to add or modify or delete any entry therein. After such notification in Official Gazette, the schedule stands amended for the purposes of levy of tax. As per sub-section (2) thereof, the provisions of Section 83(6) apply mutatis mutandis to any such notification as they apply to rules made by the State Government. Section 83 is the power of State Government to make rules by notification in the Official Gazette. Sub-section (6) thereof contemplates that every rule made shall be laid, as soon as may be, after it is made, before each House of the State Legislature, while it is in session. 8 Such laying has to be for a total period of 30 days which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following, both Houses agree to modify the rule or agree that the rule should not be made and notify such decision in the Official Gazette, the rule, from the date of publication of such notification, has the effect only in such modified form or then has no effect as the case may be. However, it is also clarified in said sub-rule (6) that such modification or annulment shall not prejudice the validity of anything previously done or omitted to be done under that rule. In short, the notification dated 29.3.2007 comes into effect after it is published in the Official Gazette and thereafter it has to be placed before both the Houses and then after decision of both the Houses upon it, it is required to be published in Official Gazette. The rule operates in modified form or cannot operate if it is annulled by both the Houses. In other words, notification after it is published operates in the form in which it is published till it is duly modified or annulled by the Houses and such modification 9 or annulment is published in Government Gazette. 7. In the facts before us, it is not the case of any of the petitioners that any demand has been made to them by the respondents after the Notification dated 29.3.2007 or then after the said notification was placed before both the Houses on 10.4.2008. In fact, the petitions as originally filed nowhere expressly contains a statement of fact that notification dated 29.3.2007 has not been published in Government Gazette. The statement for the first time is made in second rejoinder filed on 1.8.2008 wherein it is mentioned that the respondents themselves admitted that the rule or amendment would come into force after placing of it before both the Houses and notification of such placing by publication. In para 3, it is stated that publication of notification is made after 10.4.2008 and hence impugned modification dated 29.3.2007 claimed to have come into force from 1.4.2007 is null and void. We do not find any substance in this contention. The second rejoinder only shows that again the petitioners have not come up with specific 10 case that Notification dated 29.3.2007 was notified/ published in Official Gazette. They have modified their stand in rejoinder and urged that notification can come into force after publication after 10.4.2008. Again they have not stated that there is no publication after 10.4.2008. Their case is, it cannot have effect prior to 10.04.2008. This is contrary to scheme of Section 83(6) mentioned above. 8. The petitioners have placed reliance upon the Division Bench judgment of this Court in the case of Ruby Mills Ltd. vs. Textile Commissioner, reported at 2002 (1) Mh.L.J. 551, to urge that the notification can be enforced only from the date of publication in Official Gazette. The Division Bench of this Court in said judgment in para 13 has concluded that publication of Notification in the Official Gazette is the date on which the Official Gazette is made available to the public at large and not merely on the date on which the Official Gazette is printed. In view of this finding, the effective date of notification dated 7.4.1994 there, which was printed in Gazette of India on 11 12.4.1994 and was made available for sale to public at large on 26.9.1994 was held to be 26.9.1994 when Gazette was made available for sale. There cannot be any dispute about this position and in present facts, in absence of specific factual pleading, reliance upon this judgment is misconceived. 9. The next ground is about placing of the Notification before both the Houses. Under Section 83(6) such placing has to be as soon as after the notification is made. The learned counsel for the petitioner has relied upon various judgments to substantiate his contention. The case of ITC Bhadrachalam Paperboards vs. Mandal Revenue Officer, reported at 1996 (6) SCC 634, considers similar position and in para 29 it is observed that the requirement of “laying” before the Legislature was not mandatory. The provisions of Section 11 of A.P. Non- Agricultural Lands Assessment Act, 1963, considered there are pari materia with Section 83(6). After noticing earlier judgments in the case of Atlas Cycle Industries Limited vs. State of Haryana, (supra) and D.K. Krishnan vs. Secretary, Regional Transport 12 Authority, reported at AIR 1956 AP 129, the Hon’ble Apex Court found that it was a case of simple laying in contradistinction to laying, subject to the negative resolution and laying subject to the affirmative resolution. It was not mandatory notwithstanding the use of expression “shall” in the relevant provision. In para 30, the arguments about publication in gazette being mandatory are considered. However, for the reasons already recorded above, it is not necessary for us to go into that aspect. 10. Mrs. Dangre, learned Additional Government Pleader, has relied upon the above mentioned judgment in the case of Atlas Cycle Industries Limited vs. State of Haryana, (supra). As it is considered in later judgment, it is not necessary for us to reappreciate the same. 11. In the case of Prohibition & Excise Supdt. vs. Toddy Tappers Coop. Society, (supra), relied upon by the learned Additional Government Pleader, the Hon’ble Apex Court has considered this ruling in the case of Atlas Cycle Industries 13 Limited as also ruling in the case of Union of India vs. National Hydroelectric Power Corporation Ltd., reported at AIR 2001 SC 2512 = 2001 (6) SCC 307 (relied upon by the petitioner). The Hon’ble Apex Court found that High Court was not justified in striking down the retrospective effect of Rule 24 of A.P. Excise Rules, 1969, which were amended in larger public interest and as amendment was procedural in nature, retrospective effect can be given to said rule. In fact, it has been held that Section 72(3) and 72(4) need to be harmoniously construed and object of requirement under sub-section (3) of placing the rule made with retrospective effect before Houses of both Legislature was to apprise members of the Houses, the need and reason therefor. In present circumstances, it is not possible for us to hold that notification dated 29.3.2007 had any retrospective effect and hence that part of said ruling has no application in present facts. In fact, sub-section (4) of Section 72 is identical with Section 83(6) of 2002 Act mentioned above. 12. This brings us to consideration of last argument and it 14 is about importing provisions of the Central Excise Tariff Act, 2002. The contention is because of different definition of phrase “manufacture” in both Acts, the added entry 45A cannot import unmanufactured tobacco covered under Tariff heading No.2401 under Central Excise Tariff Act, 1985. After this notification dated 29.3.2007, a trade circular has been issued on 30.3.2007 which states that a new entry viz. Entry No.45A has been introduced in Schedule A of 2002 Act. This entry covers unmanufactured tobacco and bidis. It further states that unmanufactured tobacco will mean tobacco covered under heading 2401 of the Central Excise Tariff. Products covered by Chapter 24 of Central Excise Tariff like Cigarettes, cigar, cheroots, snuff, Jarda, scented tobacco, gutkha, tobacco extracts and essences including quimaam are declared to be taxable @ 12.5%. It is to be noted that the petitioners themselves admit that definition of “manufacture” in Central Excise Act, 1944, or then under 2002 Act are different. Thus, when 2002 Act prescribes a distinct definition of “manufacture”, by merely using a tariff entry in Central Excise, it cannot be said that concept of 15 manufacture as contained in Central Excise Act is also imported in 2002 Act. The petitioners have not pointed out that they have been assessed in any particular manner under 2002 Act though their product does not satisfy requirements of Section 2(15) of 2002 Act which defines “manufacture”. Whether their activities constitute manufacture under Section 2(15) or not is the question which cannot be gone into at this stage as it is only hypothetical. 13. The learned counsel for the petitioners has relied upon the judgment of the Hon’ble Apex Court in the case of CIT vs. Tara Agencies, reported at (2007) 6 SCC 429, to contend that by adding Entry 45A in 2002 Act and thereby importing tariff in Heading No. 2401, a concept alien to definition of “manufacture” in 2002 Act has been added by the Executive fiat. The perusal of paras 54, 55 and 56 of said judgment of the Hon’ble Apex Court clearly show that there the Hon’ble Apex Court has noticed that Section 35-B(1-A) governing the case before it incorporated the terms “manufactured” or “produced” and omitted the term 16 “processing”. Because of this, the respondent assessee could not be extended benefit of that provision of Section 35-B(1-A) of Income-tax Act, 1961. It has been found that processing is only an inter-mediate stage of production and/ or manufacturing. The processing of Tea by the respondent assessee was found falling short of either manufacturing or production and hence he was found not entitled to benefits extended to assessees in other two cases. In this background, it has been found that when the Legislature in its wisdom did not use the term “processing” in section 35B-(1A) of the Income-tax Act, it would be erroneous to incorporate that word in that section and then interpret the statute. The view in the other two cases was found to be clearly distinguishable because of the language of Central Sales Tax Act where term “processing” was specifically incorporated and, therefore, the assessee was found entitled to benefit because of said word appearing in Section 8(3)(b) of Central Sales Tax Act, 1956. In provisions of Section 35-B(1-A) of the Income Tax Act, 1961 said word is omitted and hence cannot be read as it would amount to importing a process not envisaged in it. In the facts 17 before us, there is no such effort. The definition of “manufacture” as contained in 2002 Act is separate and added Entry 45-A will have to be understood in its light only. It is not the argument before us that said entry is ultra vires to the provisions of 2002 Act itself. 14. The Notification dated 29th March 2007 is admittedly laid before both Houses for requisite period and it was approved by both Houses on 10th August 2008. In this view of the matter, we do not find any merit in both these Writ Petitions. Writ Petitions are accordingly dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs. JUDGE JUDGE ******* *GS.