Since the issue involved in the above Trade Tax Revisions is common, therefore, all the above revisions are being decided by this common judgement.
Aggrieved by the order of the Commercial Tax Tribunal dated 23.1.2013 this revision has been filed by the revisionist principally on the following questions of law:-
1. Whether tyres and tubes of tractors having been specifically mentioned at serial no.125 of Schedule II Part A of the VAT Act taxable at the rate of four per cent having not been excluded from serial no.1 of the notification no.419 dated 31.3.2011, hence the additional tax was leviable at the rate of one per cent and not three per cent under serial no.5, as held by the Tribunal ?
2. Whether in view of the subsequent clarificatory notification no.898 dated 7th September, 2012, by which in the exclusion clause of serial no.5 of tyres and tubes of cycles, cycle rickshaw, animal driven vehicle, tractor as described in Schedule II was specifically mentioned; hence the Tribunal was not justified in overlooking the fact that since there was an ambiguity regarding tyres and tubes of tractor hence the subsequent notification can be looked into to provide the proper interpretation of entry no.5 which has to be given to entry no.1 of the notification dated 31.3.2011?
3. Whether even otherwise, where two views are possible in respect of the tyres and tubes of tractor on which the additional tax of one percent or three per cent was to be levied and in view of the fact that tyres and tubes of tractors were not excluded from the description of the goods mentioned at serial no.1 of Schedule II of VAT Act and other interpretation that tractor has not been mentioned at serial no.5 while cycle, cycle rickshaw have been mentioned, the view in favour of dealer has to be accepted ?
The revisionist is stated to be carrying on the business of tyres and tubes of tractor, car etc. It is submitted that Section 4 of the U.P. VAT Act, 2008 (hereinafter referred to as 'the VAT Act' ) prescribes the rate of tax to be levied on the turnover of goods. Entry no.125 of Schedule II part A of the VAT Act specifically mentions tractors, tractors trolley, harvesters and attachment and parts thereof and provides the tax shall be payable at the rate of 4%.
Entry No. 125 of Schedule II Part A of the VAT Act reads as follow:-
"125. Tractors, tractor trolley, harvesters and attachment and parts thereof; tractor tyres and tubes."
The rate of tax of tractor tyres and tubes is 4% in terms of Section 4 (1) (a) of the VAT Act. The case of the revisionist further is that in terms of Notification no.419 dated 31.3.2011 issued in exercise of the powers under Section 3-A of the VAT Act provision was made for levy of additional tax on different goods mentioned in the Notification. The rate of tax has been prescribed for different goods at 1%,5%,3%, 2%, 3%, 5% and 1%. The grievance of the revisionist is that although under the head 'Description of goods' in Entry no.5 tyres and tubes excluding tyres and tubes of cycles, cycle-rickshaw and animal driven vehicle the rate of tax is prescribed at 3%, however, in Entry no.1 for the goods described in Schedule II to the VAT Act 'other than declared goods' the rate of additional tax has been fixed at 1% and the submission is that tyres and tubes of Tractor etc. would be liable to additional tax at 1% being goods "other than declared goods" and not at 3% as erroneously determined by the Tribunal.
I have heard Sri Bharat Ji Agarwal as well as Sri S. M. K. Chaudhary, learned Senior Counsel assisted by Sri Vaibhav Pandey for the revisionist and Sri Sanjeev Shankhdhar, learned counsel for the respondents.
Learned Senior Counsel has referred to the order of the Tribunal particularly para-22 thereof and it is submitted that the Tribunal also was of the view that no doubt reading only Entry No. 1 of the Notification dated 31.3.2011 tyres and tubes of Tractors seem to be covered therein. But thereafter the Tribunal took an erroneous view that on an examination of the goods mentioned in Entry no.5 of the Notification, tyres and tubes of tractors are not excluded from that entry.
Learned Senior Counsel further submitted that subsequently the Notification dated 31.3.2011 was itself amended by the State Government by issuing another Notification dated 7.9.2012 clarifying the Entry no.5 of the earlier Notification and it was specifically mentioned therein that tractor tyres and tubes were not included in the goods mentioned at Entry no.5 with particular reference to the goods referred to in Schedule II Part A of the VAT Act. He, therefore, submitted that by excluding tractor tyres and tubes the intention of the authorities was quite clear that if tractor tyres and tubes are excluded from the prescription of goods at Entry no.5 for which the rate of additional tax is prescribed as 3% then the only rate of additional tax, which could be imposed on such goods, would fall under Entry no.1 for which rate of tax is 1%.
Sri Bharat Ji Agarwal has further referred to the provisions of Section 14 of the Central Sales Tax Act, 1956 and submits that the goods mentioned therein are "declared goods". He further submits that Section 14 (7) Clause (XI) speaks of steel tubes, both welded and seamless, of all diameters and lengths including tube fittings. He has also referred to Section 14 (7) (xiv) which provides for wheels, tyres, axles and wheel sets; but he submits that tractor tyres and tubes have not been mentioned anywhere as declared goods under Section 14 of the Act, 1956. He submits that these are taxing statutes and if it was the intention of the Legislature to include tractor tyre and tubes, the statute would have specifically said so without mincing words and, therefore, tractor tyres and tubes cannot be held to be declared goods by mere inference.
The submission of learned Senior Counsel for the revisionsit further is that under Section 3-A of the U.P. VAT Act, 2008 an additional tax is payable on the taxable turnover of sale or purchase of goods or both at a rate not exceeding 5% as may be specified by the State Government by notification. He submits that under subsection (2) of Section 3-A, no additional tax shall be levied and paid on :-
(a) The turnover of sale or purchase or both as the case may be, of goods specified in Column 2 of Schedule I and Schedule III; and
(b) The turnover of sale or purchase or both as the case may be, of goods declared to be of special importance in the inter-State trade or commerce under Section 14 of the Central Sales Tax Act, 1956.
Sri Sanjeev Shankhdhar, learned Additional Chief Standing Counsel, however, rebutting the submissions of the learned counsel for the revisionist submitted that this matter was already considered by the Tribunal and the Tribunal in para-23 had held that what is not excluded would be held to be included.
I have considered the submissions of learned counsel for the parties and perused the records.
The question is whether tractor tyres and tubes can be held to be excluded from goods mentioned in Entry no.5 of the G.O. Dated 31.3.2011. So far as the G.O. dated 7.9.2012 is concerned, Sri Sanjeev Shankhdhar very fairly stated that tractor tyres and tubes have been excluded from the goods mentioned in Column II in Entry no.5 by way of amendment of the Notification dated 31.3.2011 and, therefore, in all cases of assessment after the issuance of the Notification dated 7.9.2012, the quantum of additional tax leviable on tractor tyres and tubes would be at 1% but for the period prior to issuance of the Notification dated 7.9.2012 it would remain 3%.
Section 2 (i) of the VAT Act defines 'declared goods' to mean goods declared under Section 14 of the Central Sales Tax Act, 1956.
Section 2(i) of the VAT Act reads as follow:-
(i) "declared goods" means goods declared under section 14 of the Central Sales Tax Act, 1956, to be of special importance in the inter-State trade or commerce;
Section 14 of the Central Sales Taxt Act itself does not include tractor tyres and tubes under any of its sub-sections or sub-clauses. Section 14(xi) speaks of steel tubes, both welded and seamless, of all diameters and lengths including tube fittings.
Section 14(xi) reads as under :-
"(xi) steel tubes, both welded and seamless, of all diameters and lengths including tube fitting;"
Section 14 (xiv) mentions goods as wheels, tyres, axles and wheels sets.
Section 14 (xiv) reads as under:-
"(xiv) wheels, tyres, axles and wheels sets;"
Tractor tyres and tubes are nowhere mentioned in any of the clauses of Section 14 of the Central Sales Tax Act,1956. It must be borne in mind that these are taxing statutes and have to be interpreted very strictly and the intention of Legislature is to be culled out from what is stated in the statute and not on mere presumption of what the legislature intended to say but did not say. Clause (xiv) of Section 14 of the Act, 1956 only mentions wheels, tyres, axles and wheels sets. Tractor tyres are not mentioned therein. Mere mention of 'Tyres' in clause (xiv) cannot lead to the inference that tractor tyres and tubes are also 'included'. The word 'Tyres' follows the word 'wheels' and is succeeded by the words 'axels and wheel sets'. The doctrine of 'ejusdem generis' provides that the word or words succeeding any word must partake of the same meaning or context or flavour as the word immediately proceeding it.
In AIR 1955 SC 504, Thakur Amar Singhji and others vs. State of Rajasthan and others the Constitution Bench has held that the true scope of the 'ejusdem generis' is that words of a general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified and not its reverse.
In AIR 1955 SC 810, State of Bombay vs. Ali Gulshan para 8 the Supreme Court has held that 'ejusdem generis' rule of construction must be confined within narrow limits and general or comprehensive words should receive their full and natural meaning unless they are clearly restrictive in their intendment. It is requisite that there must be a distinct genus, which must comprise more than one species, before the rule can be applied.
In AIR 1960 SC 1080, Kavalappara Kottarathil Kochuni @ Moopil Nayar and others vs. State of Madras and Kerala and others the Supreme Court in para-50 has held that the rule of 'ejusdem generis' is that when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified. But it has also been held that the specific words must form a distinct genus or category.
In (1989) 2 SCC 458, M/s Siddeshwari Cotton Mills (P) Ltd. vs. Union of India and another it was held that the principle underling the 'ejusdem generis' rule of construction is that the subsequent general words were only intended to guard against some accidental omission in the objects of the kind mentioned earlier and were not intended to extend to objects of a wholly different kind but the preceding words or expressions of restricted meaning must be susceptible of the import that they represent a class. If no class can be found, the rule of 'ejusdem generis' is not attracted.
Similar view has been taken by the Court in (1998) 6 SCC 103, State of Karnataka and others vs. Kempaiah wherein it was held that the rule of 'ejusdem generis' is an exception to the rule of construction that general words should be given their full and natural meaning. The Supreme Court was following the principle of law enunciated by Lord Campbel in R.V. Edmundosn (1859) 2 E&E 77 that where there are general words following particular and specific words, the general words must be confined to things of the same kind as those specified.
Section 3-A(1) and Section 3-A (2) (a) and (b) of the VAT Act read as follows:-
"3-A. Levy of Additional Tax.-(1) Notwithstanding anything to the contrary contained in any other provision of this Act but subject to the provisions of sub- section (2), every dealer liable to pay tax under this Act shall be liable to pay in addition to the tax payable under any other provision of this Act, an additional tax on the taxable turnover of sale or purchase of goods or both, at such rate not exceeding five percent, as may be specified by the State Government by notification in the Gazette. Different rates may be specified in respect of different goods or different classes of goods.
(2) No additional tax under sub-section (1) shall be levied and paid on-
(a) the turnover of sale or purchase or both as the case may be, of goods specified in column 2 of Schedule I and Schedule III;
(b) the turnover of sale or purchase or both as the case may be, of goods declared to be of special importance in the inter-State trade or commerce under Section 14 of the Central Sales Tax Act, 1965;"
The word 'Wheels' in clause (xiv) of Section 14 cannot be interpreted to have any correlation to Tractors and, therefore, the word 'Tyres' also cannot consequently be interpreted to mean 'Tractor Tyres and Tubes'. In any view of the matter clause (xiv) does not include "tubes" which is an indicator that clause (xiv) does not include 'tractor tyres and tubes' and are not 'declared goods' and therefore, additional tax is payable on 'Tractor tyres and tubes' under clause (b) of subsection (2) of Section 3-A of the U.P.VAT Act. The word 'Tyres' must correlate to the preceding word 'Wheels' and the succeeding words "Axels and Wheel Sets" and in the absence of the word 'Tyres', the word 'Tyres' cannot be inferred to relate to "Tractor Tyres and Tubes".
So far as clause (a) of subsection 2 of Section 3-A is concerned Scheduled-II is specifically omitted therefrom which means that goods mentioned in Entry 125 of Scheduled-II will also be subject to levy of additional tax as goods "other than declared goods in view of Entry I to the Notification dated 31.3.2011.
The subsequent notification dated 7.9.2012 which brought an amendment into the earlier notification dated 31.3.2011 to specifically exclude " Tractor tyres and tubes from Entry 5 of the notification dated 31.3.2011 is also an indicator that the Respondent authorities never intended "Tractor tyres and tubes" to be read into Entry 5 of the Notification dated 31.3.2011. The amended Entry 5 in the Notification dated 7.9.2012 reads as under:-
"Tyre evam tubes, jismey ukt adhiniyam ki anusuchi-2, Bhag-ka mey yathawarnit cycle, cycle-riksha, pashuchalit yaan evam tractor ke tyre evam tubes sammilit nahi hai"
The Supreme Court in 1998 UPTC 1086 (SC), (1998) 7 SCC 228 M/S Pappu Sweets & Biscuits, Etc vs. Commissioner of Trade Tax, U.P. has held that a subsequent legislation can be looked into for proper interpretation of words in the earlier notification when the earlier legislation is found to be ambiguous, obscure or capable of more than one interpretation.
Para-13 of the judgment reads as follows:-
"13. The learned Counsel for the appellant also drew our attention to a similar exemption notification for the subsequent period issued by the State of U.P. wherein the relevant item is worded thus: "Units making sweetmeats, namkin, reori, gazak (but excluding such confectionery manufacturing units as are registered under the Factories Act, 1948) and restaurants." The learned Counsel submitted that subsequent legislation can be looked at in order to see what is the proper interpretation to be put upon the earlier legislation when the earlier legislation is found to be obscure or ambiguous or capable or more than one interpretation. In support of his contention, he relied upon the decisions of this Court in State of Bihar vs. S.K. Roy (1966) Supp. SCR 259 and Yogender Nath Naskar v. Commissioner of Income Tax, Calcutta (1969) 3 SCR 742. In Naskar's case (supra), this Court quoted with approval the following observations made in Cape Brandy Syndicate v. I.R.C. 1921 (2) K.B.403):
"I think it is clearly established in Attorney General v. Clarkson that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier Act."
It is an equally well settled rule of interpretation particularly in taxing statutes that when two views are possible, the one which favours the assessee should be adopted.
In (2008) 12, VST 259 (SC), Mauri Yeast India Pvt. Ltd. vs. State of U.P. and another, in para 56 the Supreme Court has held that when two views are possible the one which favours the assessee should be adopted.
Para 56 of the judgment reads as under:-
"56. It is now a well-settled principle of law that when two views are possible, one which favours the assessee should be adopted.[See Bihar State Electricity Board v. Usha Martin Industries [1997] 5 SCC 289."
In (1997) 6 SCC 564 Sun Export Corporation vs. Collector of Customs, the Supreme Court in para 13 thereof has held as under:-
"13. We are in agreement with the above view expressed by the Bombay High Court. No doubt it was contended on behalf of the Revenue that the contrary view taken by the Tribunal has been challenged in this Court which was rejected in limine at the admission stage. We do not think that that dismissal at the admission stage can be relied upon as a binding precedent. Even assuming that there are two views possible, it is well settled that one favourable to the assessee in matters of taxation has to be preferred."
Thus from a composite analysis of the various statutory provisions as well as the Notification dated 31.3.2011 and Notification dated 7.9.2012 it is seen that the only Entry under which Tractor tyres and tubes can be subjected to additional tax is Entry 1 of the Notification dated 31.3.2011 and such additional tax will be paid at 1% and not 3% under Entry 5.
The impugned order of the Tribunal dated 23.01.2013 is therefore illegal and is accordingly set aside.
All the above revisions stand allowed.
Dated: 28th August, 2014 Asha