Case: J.K. Lakshmi Cement Ltd Vs. Commercial Tax Officer, Pali

The appellant is a Public Limited Company incorporated under the Companies Act, 1956 and engaged in the business of manufacturing and selling Grey Portland Cement. In exercise of powers conferred by Section 8(5) of the Central Sales Tax Act, 1956 (for short,, the Government of Rajasthan had issued a Notification No. F4(72)FD/Gr.IV/81-18 dated 06.05.1986 allowing partial exemptions from the sales tax payable in respect of inter-State sales in the manner and subject to the conditions mentioned therein. Partial exemption was granted under the said notification at the rate of 50%/75% on the basis of increase in the percentage of the entire inter-State sales and decrease in percentage of stock transfers but the benefit under the said notification was not available on levy cement. From the assessment year 1989-90 to 1997-98 the appellant had been granted benefit of partial exemption under the notification dated 06.05.1986 except for the assessment year 1995-96 and 1996-97 as no claims were made by the appellants being not eligible.2. It is necessary to state here that the State, in exercise of powers conferred by Section 8(5) of the CST Act, issued Notification No. F4(8)FD/GR.IV/94-70 dated 07.03.1994 superseding the notification dated 09.01.1990 and directing that in respect of inter-State sales of cement, tax payable under sub-sections (1) and (2) of the said Section shall be calculated at the rate of 4% without furnishing declaration in Forminter alia, subject to the condition that the dealer making inter-State sales under this notification shall not be eligible to claim benefit provided by partial exemption notification dated 06.05.1986. This notification remained in force from 01.04.1994 to 31.03.1997.3. The CCT vide Circular No. 2/94-95 dated 15.04.1994 clarified that inter-State sales of cement duly supported byBy Notification No. 97-122 dated 12.03.1997 issued under Section 8(5) of the CST Act, the State Government rescinded the Notification No. 94-70 dated 07.03.1994 and directed that CST on inter-State sales of cement shall be calculated at the rate of 4% inter alia subject to fulfilment of the condition that the dealer making inter-State sales under this notification shall not be eligible to claim benefit provided by partial exemption notification dated 06.05.1986. This notification remained in force upto 31.03.1998.5. As the factual score has been depicted, for the assessment year 1997-98, dispute arose whether the sale of levy cement in the base year, i.e., 1984-85, can be included and taken into consideration for calculating the basefigure for the purpose of calculating the benefits under the notification dated 06.05.1986. A re-assessment notice was issued to the appellant for disallowing the said partial exemption on the ground that while calculating the benefits under notification dated 06.05.1986 the appellant-company had not included the figure of sale of levy cement made in the base year, that is, 1984-85. The said re-assessment notice was challenged by the appellant which formed the subject matter of Writ Petition No. 1790 of 2001 which was dismissed by the Rajasthan High Court vide order dated 24.07.2002. A Special Appeal bearing No. 497 of 2002 was filed against the order dated 24.07.2002 before the Division Bench and on a reference being made by the Division Bench, the matter was referred to a larger Bench and the same is pending consideration. A similar dispute about inclusion of levy cement had also arisen for the assessment year 1991-92 which had been decided by the Tax Board, Rajasthan vide order dated 16.01.2003 in favour of the appellant which attained finality since no revision petition was filed by the State against the said decision. For the assessment year 1999-2000, the appellant was asked vide show cause notice dated 16.10.2001 to explain why the benefit of partial exemption under notification dated 06.05.1986 should not be disallowed on the ground that while calculating the benefits under notification dated 06.05.1986 the appellant had not included the figure of sale of levy cement made in the base year, that is, 1984-85. Against the said show cause notice writ petition bearing No. 4300 of 2001 was filed and vide order dated 14.08.2002 the High Court disposed of the said writ petition in light of the order dated 24.07.2002 passed in Writ Petition No. 1790 of 2001. Being aggrieved by the said order, the appellant had filed a DB Special Appeal No. 539 of 2002 which is pending consideration. We may immediately clarify that we are not concerned with the said assessment years.6. For the assessment year 2000-2001, a Show Cause Notice dated 11.01.2001 was issued to the appellant seeking to disallow the benefit under notification dated 06.05.1986 on the ground that the appellant had not calculated the benefits under notification dated 06.05.1986 after including the figure of sale of levy cement in the base year, that is, 1984-85. Against the said show cause notice Writ Petition bearing No. 551 of 2002 was filed which is pending before the High Court.7. In exercise of power under Section 8(5) of the CST Act the State Government vide Notification No. 97-266 dated 21.1.2000 directed that tax payable under sub-sections (1) and (2) of the said Section on the inter-State sales of cement shall be calculated at the rate of 6% inter alia subject to the condition that the dealer making inter-State sales under this notification shall not be eligible to claim benefit provided under partial exemption notification dated 06.05.1986.8. After a lapse of seven years from the previous circular dated 15.04.1994, the CCT issued another Circular No. 94-95/119 dated 16.04.2001 purporting to clarify the applicability of partial exemption notification dated 06.05.1986 vis-a-vis notification dated 07.03.1994 and subsequent notifications dated 12.03.1997 and 21.01.2000. By the said circular the competent authority purported to state that the dealer can avail of the benefit of either of these two notifications in any financial year meaning thereby that if he opts for the benefit under notification dated 06.05.1986 for the year 2000-2001, he would not be entitled to claim simultaneous benefit in respect of the same year under the notification dated 21.01.2000.9. For the assessment year 2000-2001, a show cause notice dated 19.08.2003 was issued by the Commercial Taxes Officer to the appellant seeking to disallow the benefits under notification dated 06.05.1986 on a purported retrospective application of the Circular dated 16.04.2001. Appellant challenged the said show cause notice before the High Court by way of a Writ Petition bearing No. 6192 of 2003. The High Court vide order dated 18.11.2003 held that the said show cause notice dated 19.08.2003 was not justified as Circular dated 16.04.2001 could apply only prospectively and not retrospectively.10. While finalizing the assessment for the assessment year 2001-2002, a show cause notice dated 19.08.2003 was issued purportedly based on Circular dated 16.04.2001 requiring the appellant to show cause why the partial exemption claimed under Statenotification No. F4(72)FD/Gr.IV/81-18 dated 06.05.1986 should not be disallowed. The appellant submitted its reply but the assessing authority vide order dated 26.08.2003 rejected the claim of partial exemption only on the basis of Circular dated 16.04.2001 and imposed additional tax on the assessee for the assessment year 2001-2002.11. The appellant filed an appeal before the Deputy Commissioner (Appeals), who allowed the appeal on 03.01.2004 holding that the appellant would be entitled to avail such partial exemption in respect of inter-State sales made on which concessional rate of 6% was not availed of by it under notification dated 21.01.2000.12. Being aggrieved by the order of the appellate authority, the revenue approached the Rajasthan Tax Board in appeal contending, inter alia, that as per circular dated 16.04.2001 the benefit could not be claimed under notification dated 06.05.1986 if the unit had made sales under notification dated 21.01.2000. In essence, it was urged that benefit of both the notifications could not be availed of in the same financial year. The Tax Board allowed the appeal filed by the revenue. Against the order of the Tax Board, the appellant filed revision petition before the High Court and the learned Single Judge vide order dated 17.04.2009 considering the submissions put forth by the parties and upon analysing the principle stated in Tata Cummins Ltd. v. State of Jharkhand (2006 (16) Tax update 199), M/s Vividh Marbles Pvt. Ltd. v. Commercial Tax Officer (2007 (17) Tax update 307), State of Rajasthan v. J.K. Udaipur Udyog Ltd. and another (2004) 137 STC 438  ), MRF Ltd. Kottayam v. Asstt. Commissioner (Assessment) Sales Tax and ors. (2006) 8 SCC 702  )and other authorities came to hold that condition no. 3 of Notification No. 21.01.2000 has to be given its plain and clear meaning and cannot be restricted only to the specific transaction of sale covered by notification dated 21.01.2000 itself and when the condition no. 3 unequivocally states that once the assessee avails of the benefit of concessional rate of tax under notification dated 21.01.2000, he cannot get the partial benefit as envisaged in the Notification dated 06.05.1986 and accordingly repelled the stand of the assessee.

Reasoning: In our considered opinion, the said doctrine would not be applicable and cannot be pressed into service. Usage or practice developed under a statute is indicative of the meaning prescribed to its words by contemporary opinion. In case of an ancient statute, doctrine of contemporanea exposition is applied as an admissible aid to its construction. The doctrine is based upon the precept that the words used in a statutory provision must be understood in the same way in which they are usually understood in ordinary common parlance by the people in the area and business.the said doctrine has to be applied with caution and the Rule must give way when the language of the statute is plain and unambiguous. On a careful scrutiny of the language employed in paragraph 3 of the notification dated 21.01.2000, it is difficult to hold that the said notification is ambiguous or susceptible to two views of interpretations. The language being plain and clear, it does not admit of two differentmay state that the circular dated 15.04.1994 was ambiguous and, therefore, as long as it was in operation and applicable possibly doctrine of contemporanea exposition could be taken aid of for its applicability. It is absolutely clear that the benefit and advantage was given under the circular and not under the notification dated 07.03.1994, which was lucid and couched in different terms. The circular having been withdrawn, the contention of contemporanea exposition does not commend acceptation and has to be repelled and we do so. We hold that it would certainly not apply to the notification datedour considered opinion, the said doctrine would not be applicable and cannot be pressed into service. Usage or practice developed under a statute is indicative of the meaning prescribed to its words by contemporary opinion. In case of an ancient statute, doctrine of contemporanea exposition is applied as an admissible aid to its construction. The doctrine is based upon the precept that the words used in a statutory provision must be understood in the same way in which they are usually understood in ordinary common parlance by the people in the area and business.