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Reportable

THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.102 OF 2010

J.K. Lakshmi Cement Ltd.       ... Appellant

                                  Versus

Commercial Tax Officer, Pali       ...Respondent

WITH CIVIL APPEAL NO. 6136 OF 2013

J U D G M E N T

Dipak Misra, J.

Civil Appeal No. 102 of 2010

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, “CST Act”), the

Government  of  Rajasthan  had  issued  a  Notification  No.

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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

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in  Form ‘C’,  inter  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 by

‘C’  and  ‘D’  forms  shall  be  eligible  for  benefit  of  partial

exemption  notification  dated  06.05.1986  and  that  such

benefit would not apply to inter-State sales which are not

supported by declarations in declarations in Forms ‘C’/‘D’.   

4. By 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.  

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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 base year’s

figure 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

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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

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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

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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

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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  State  Government’s  notification

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

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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 Jharkhand1,  M/s Vividh Marbles Pvt. Ltd. v.

Commercial  Tax  Officer2,  State  of  Rajasthan  v.  J.K.

Udaipur Udyog Ltd. and another3,  MRF Ltd. Kottayam

v. Asstt. Commissioner (Assessment) Sales Tax and ors.4

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

1 2006 (16) Tax update 199 2 2007 (17) Tax update 307 3 (2004) 137 STC 438 4 (2006) 8 SCC 702

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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.  

13. We have heard Mr. S. Ganesh, learned senior counsel

for the appellant and Mr. Jatinder Kumar Bhatia, learned

counsel for the respondent.  

14. The  seminal  issue  that  arises  for  consideration,

succinctly put, is whether the appellant is entitled to dual

benefit  of  partial  exemption  under  the  notification  dated

06.05.1986  and  also  the  lower  rate  of  tax  @  6%  under

notification dated 21.01.2000. To answer the issue raised, it

is necessary to refer to the notifications and the language

employed  therein  to  ascertain  the  fundamental  intention

therein  and  to  appreciate  whether  grant  of  simultaneous

exemptions  and  benefits  would  be  contrary  to  the  said

notifications.  The first notification dated 06.05.1986 reads

as under:-

“  Notification  No.F.4(72)FD/Gr.IV/81-18, S.O. 23, May 6, 1986.

In  exercise  of  the  powers  conferred  by

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sub-section (5) of section 8 of the Central Sales Tax Act, 1956( Central Act 74 of 1956), the State Government,  on  being  satisfied  that  it  is necessary  so  to  do  in  the  public  interest,  in supersession  of  the  Finance  Department Notification No. F.4 (72) FD/Gr. IV/81-36, dated December  3,  1985,  hereby  directs  that,  with immediate effect, any dealer, having his place of business and manufacturing goods in the State of Rajasthan, may claim partial exemption from the tax payable in respect of the sales by him of such goods in the course of inter-State trade or commerce by way of reduction at the rate of 50% of the tax so payable on increased sales upto 50% and at the rate of 75% of the tax so payable on increased  sales  made  over  and  above  the aforesaid 50%, in the manner and subject to the conditions as follows:-

(1)  Such reduction of  tax shall  be allowed to a dealer only after and in respect of  the increase which  is  effected  in  the  percentage  of  the quantum  of  goods  sold  in  the  course  of inter-State  trade  or  commerce  out  of  the  total quantum of goods sold within the State and in the course of inter-State trade or commerce and dispatched to Head Office, Branch Office, Depot or  agent  outside  the  State  for  sale  outside  the State,  during  any  accounting  year  as  against such  percentage  during  the  accounting  year 1984-85.

(2)In  the  case  of  a  dealer  who commenced the manufacture of goods in the State of Rajasthan “on  or  after  1.1.1985”,  the  average  of  the aforesaid  percentages  in  respect  of  the  other manufacturers  in  the  State  in  the  relevant industry  during  the  accounting  year  1984-85, calculated  and  determined  by  the  assessing authority with the approval of the Commissioner, shall be deemed to be the percentage in respect of

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such dealer for the accounting year 1984-85;

(3)  This  increase  effected in  the  percentage,  as referred to in clause (1) above in respect of the sales  in  the  course  of  inter-State  trade  or commerce,  to  be  considered shall  be  limited to the extent of  the decrease in the percentage in respect of the despatch of goods to Head Office, Branch Office, Depot or agent outside the State for  sale  outside  the  State,  during  the  relevant accounting  year  as  against  such  percentage during the accounting year 1984-85; and

(4)  No claim for  such reduction of  tax shall  be allowed in respect of levy-cement.”  

15. The notification dated 21.01.2000 is as under:-

“[No.F.4(1) FD/Tax Div. 97-266] Jaipur, 21  st   January, 2000

In  exercise  of  the  powers  conferred  by sub-section (5) of section 8 of the Central Sales Tax  Act,  1956  the  State  Government  being satisfied that it is necessary in the public interest so  to  do,  hereby  directs  that  the  tax  payable under sub-sections (1) and (2) of the said section, by any dealer having his place of business in the State, in respect of sale of cement made by him from any such place of business in the State, in the course of inter-state trade or commerce, shall be calculated at the rate of 6% on the following conditions, namely:-

1. That the dealer shall record the correct name with full and complete address of the purchaser in  the  bill  or  cash  memorandum  for  such inter-State sale to be issued by him;

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2. That the burden of proof that the transaction was in the nature of inter-State sale shall be on the dealer; and

3. That the dealer making inter-State sales under this  notification  shall  not  be  eligible  to  claim benefits  provided  by  notification  No.F.4(72) FD/GR.IV/81-18  dated  6.5.1986  as  amended from time to time.”

16. On  a  careful  scanning  of  the  notification  dated

06.05.1986,  it  is  evident  that  it  allows  partial  exemption

from sales-tax on inter-State  sales,  subject to and in the

manner stipulated therein.  The exemption of 75% or 50% is

granted with reference to the quantum of goods sold in the

course  of  inter-State  trade  or  commerce  out  of  the  total

quantum of  goods sold within the State,  as against  such

percentage during the accounting year 1984-85,  which is

treated  as  the  base  year.   As  per  the  notification,  it  is

applicable to a dealer who has his place of business; and he

must  be  manufacturing  goods  inside  the  State.  The

intention  is  to  encourage  inter-State  sale  of  goods

manufactured  and  sold  by  a  dealer  in  the  State  of

Rajasthan.  It has a purpose.  The increase in quantum of

goods sold in inter-State trade or commerce with reduction

in quantum of stock transfers by way of branch or depot

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transfers on which NIL or no Central Sales tax is applicable

would increase the revenue of the State.  Clause 4 of the

notification  envisages  that  no  reduction  of  tax  is  to  be

allowed in respect of levy cement.  Computation of the total

quantum of  goods with reference to the exclusion of  levy

cement is not a subject matter of the present appeal and

that is pending for consideration before the Appellate Bench

and  Single  Judge  of  the  High  Court.   Nevertheless,  it  is

apparent that changes in figures of the quantum of goods,

whether with reference to inter-State sales and intra-State

sales in the base year and in the year in which benefit is

claimed, would impact the determination and quantification

of the benefit.  Therefore, the exclusion or inclusion in the

quantum or turnover is critical and significant.  

17. The 21.01.2000 notification applies to a dealer having

a place of business in the State and is in respect of sale of

cement made by him from any place of business within the

State in the course of inter-State trade or commerce.  Apart

from the above, certain other conditions are to be satisfied.

They are (a) sales-tax in respect of inter-State sales as per

the notification would be calculated at the rate of 6% and (b)

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the dealer making inter-State sales under notification dated

21.01.2000 would not be eligible to claim benefit provided in

the  notification  dated  06.05.1986.  Clause  3  of  the

notification lays down that if a dealer claims benefit under

notification dated 21.01.2000, he is not eligible to claim the

benefit under notification dated 06.05.1986. Benefit under

the two notifications cannot be claimed at the same time.  It

is simple and clear.  

18. A  dealer  making  inter-State  sales  under  the

notification dated 21.01.2000 is disqualified and not eligible

to  claim benefit  under  the  notification dated 06.05.1986.

The reason is to deny dual benefit and also the notification

dated  06.05.1986  computes  the  benefit  on  the  basis  of

turnover.  Bifurcation and division of turnover would lead to

distortion and cause anomalies.   

19. To get over the aforesaid impasse, the learned counsel

for  the  appellant  has  raised  three  contentions.   The  two

notifications being beneficial should be liberally construed,

for it cannot be assumed that the intendment was that if an

assessee  claims and was  entitled  to  a  relatively  small  or

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partial exemption under notification dated 06.05.1986, he

would be deprived of  the exemption even if  he meets the

conditions in paragraphs 1 and 2 of the notification dated

21.01.2000.  The submission is that the assessee can get

benefit of both the notifications but not the dual benefit in

the  sense  that  inter-State  sales  on  which  benefit  of

concessional  rate  of  tax of  6% is not  availed of  could be

granted  partial  exemption  under  notification  dated

06.05.1986.  Quite apart from the aforesaid argument, it is

urged that  partial  exemption could  be granted under  the

notification dated 06.05.1986 in respect of such intra- State

sales not covered by the notification dated 21.01.2000; and

benefit  of  partial  exemption  under  notification  dated

06.05.1986  would  co-exist  with  the  notification  dated

21.01.2000,  though  in  respect  of  different  and  distinct

transactions.   The  second  limb  of  argument  is  that  this

interpretation was the understanding of the respondents, as

they had issued circular dated 15.04.1994 and pursuant to

the said circular, the appellant and the other assessees were

extended benefit  of  the notification dated 06.05.1986 and

also the notification dated 07.03.1994, which has now been

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replaced and re-introduced in the form of notification dated

21.01.2000.   The plea of  consistency especially  when the

revenue in earlier years had accepted the said interpretation

is highlighted.  The last plank of argument is the circular

dated  15.04.1994  was  clarificatory  and  had  rightly

interpreted and expounded the interplay between the two

notifications.  Therefore,  the  circular  dated  15.04.1994

under the notification dated 07.03.1994 would equally apply

and  would  guide  the  interpretation  of  the  notification

dated 21.01.2000.

20. In  order  to  appreciate  the  contentions  raised,  it  is

imperative to reproduce notification dated 07.03.1994 and

the  circular  dated  15.04.1994,  and  the  circular  dated

16.04.2001  by  which  circular  dated  15.04.1994  was

withdrawn.   The  notification  dated  07.03.1994  reads  as

under:-

“Notification No.F.4 (8) FD/Gr.IV/94-70 S.O. No. 200, Jaipur, dated March 7, 1994.  

In  exercise  of  the  powers  conferred  by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956),  and in supersession  of  this  Department  Notification No.F.4  (72)  FD/Gr.IV/82-34,  dated 27.06.1990, the  State  Government  being  satisfied  that  it  is

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necessary in the public interest so to do, hereby directs that the tax payable under sub-sections (1)  and  (2)  of  the  said  section,  by  any  dealer having  his  place  of  business  in  the  State,  in respect of the sales of cement made by him from any  such  place  of  business  in  the  course  of inter-State trade or commerce shall be calculated at  the  rate  of  4  percent  without  furnishing  of declaration in form “C” or certification in form “D” on the following conditions, namely:-

(i) that the dealer shall record the name and full and complete address of the purchaser in the bill or cash memorandum for such inter-State sale to be issued by him;

(ii) that the burden to prove that the transaction was in the nature of inter-State sale, shall be on the dealer; and

(iii)  that  the  dealer  making  inter-State  sales under this notification shall  not  be eligible to claim  benefit  provided  for  by  the  notification No.F.4.  (72)  FD/Gr.IV/81-18,  dated  6.5.1986, as amended from time to time.

This notification shall come into force from 1st April, 1994 and shall remain in force upto 31st March, 1997.”  

21. The circular dated 15.4.1994 is reproduced below:-

“Tax Policy circular No.2/94-95 STATE OF RAJASTHAN

COMMERCIAL TAX DEPARTMENT No. Pa. 16/Budget/Tax/Commissioner/94-95/108

     Dated 15/4/1994

To,

All Deputy Commissioners, Commercial Tax

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All Assistant Commissioners, Commercial Tax All Commercial/Assistant Commercial Tax Officers

Circular

The notification No. Pa. 4 (8) FD/Group-4/94-70 dated  7/3/1994  was  issued  by  the  State Government and the  rate  of  central  tax on the inter-State sale of cement is fixed unconditionally at 4 percent in case the declaration form-‘C’  or form-‘D’  is  not  submitted between 1/4/1994 to 31/3/1997.   Under  the  said  notification  the trader  doing  the  inter-State  sale  shall  not  be entitled  to  claim for  the benefit  made available through  the  notification  No.  F4  (72) FD/Group-4/61-18  dated  6/5/1986  amended from time to time.

It is made clear in this respect that the benefits made available through the notification No. F 4 (72)  FDR-Group-4/81-18  dated  6/5/1986  as amended from time to time with respect to the inter-State  sale  of  the  cement  done  with  the form-‘C’  or  form-‘D’,  but  aforesaid  benefit  shall not  be  available  in  case  the  inter-State  sale  is done without the form-‘C’ or form-‘D’.”

22. The  circular  dated  16.04.2001  withdrawing  the

circular dated 15.04.1994 is as follows:-

“GOVERNMENT OF RAJASTHAN COMMERCIAL TAXES DEPARTMENT

No.F-16 (Budget) Tax/CCT/94-95/119 Dated April 16th, 2001

All Dy. Commissioners  All Assistant Commissioners

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All Commercial Taxes Officers. All Assistant Commercial Taxes Officers.

CIRCULAR

A question has been raised as to the applicability of  Finance  Department  notification No.F.4(72)FD/Br.IV/  81-18  dated  06.05.1986 vis-a-vis  notification  No.F/(8)  FD/Gr.IV/94-70 dated 07.03.1994 and similar subsequent notifi- cation dated 12.03.1997 and the existing notifi- cation dated 21.01.2000. The issue has been ex- amined and it is clarified that a dealer can avail the benefit of either of these two notifications in any  financial  year.  For  instance,  if  he  opts  for benefit  under  notification  dated  06.05.1986  for the  financial  year  2000-2001,  he  would not  be entitled  to  claim  simultaneous  benefit  in  the same year under the notification providing for re- duce  rate  of  tax  on cement  in  course  of  inter- state trade or commerce without any supportive Form C or D.  Consequently, if the benefit of noti- fication dated 21.01.2000 is being availed in any financial year, the dealer shall be debarred from claiming  any  benefit  under  notification  dated 6.5.1986 for the same assessment year.

Keeping  in  view the  above  status,  the  Circular No.F.16  (Budget)Tax/CCT/94-95/108  dated 15.04.1994 is hereby withdrawn and the dealers will  be entitled to claim benefit  of  either of  the two  notifications  in  any  financial  year.  Action may be taken accordingly.

Sd/- (P.K.Deb) Commissioner”

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23. As the factual  score would depict,  Notification dated

07.03.1994  was  applicable  from  1st April,  1994  to  31st

March,  1997.   It  was  not  applicable  with  effect  from 1st

April, 1997.  In such a situation, the plea of the appellant

that dual benefits were availed of under notification dated

07.03.1994 post 1st April, 1997 is unacceptable and has to

be rejected.  Be it noted, by another notification No. 97-122

dated  12.03.1997,  the  State  Government  had  rescinded

notification dated 07.03.1994 and directed that the Central

Sales Tax shall be calculated @ 4%, subject to the condition

that the dealer making inter State sales in this notification

would not be eligible to claim benefit of partial exemption

under the notification dated 06.05.1986.  The notification

dated 12.03.1997 had remained in force upto 31st March,

1998.  The circular dated 15.04.1994 in express words was

not applicable to the notification dated 21.01.2000.

24. It is limpid that the circular dated 15.04.1994, when in

force, had referred to the notifications dated 07.03.1994 as

well  as  06.05.1986.  Under  the  notification  dated

07.03.1994,  the  rate  of  central  tax  on inter-State  sale  of

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cement was unconditionally fixed at 4%, even when there

was no declaration in Form C and Form D.  The notification

dated 06.05.1986 relating to inter-State sale required Form

C and Form D, for availing the benefit.  The circular did not

in  clear  and  categorical  terms  lay  down  that  dual  or

multiple  benefits  under  the  two  notifications  could  be

availed of  by the same dealer.   It,  however,  appears that

both  the  assessee  and  the  Revenue  had  understood  the

circular  dated  15.04.1994  to  mean  that  inter-State

transactions would qualify and would be entitled to partial

exemption under  the notification dated 06.05.1986, when

accompanied with Form C and D and for inter-State sale

transactions without Form C and D, benefit of notification

dated 07.03.1994 would apply.

25. The understanding by the assessee and the Revenue,

in the obtaining factual matrix, has its own limitation. It is

because  the  principle  of  res  judicata would  have  no

application in spite of  the understanding by the assessee

and the Revenue, for the circular dated 15.04.1994, is not

to the specific effect as suggested and, further notification

dated 07.03.1994 was valid between 1st April, 1994 up to

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31st March, 1997 (upto 31st March, 1997 vide notification

dated 12.03.1997)  and not thereafter.  The Commercial Tax

Department, by a circular, could have extended the benefit

under  a  notification  and,  therefore,  principle  of  estoppel

would apply, though there are authorities which opine that

a  circular  could  not  have  altered  and  restricted  the

notification  to  the  determent  of  the  assessee.  Circulars

issued under tax enactments can tone down the rigour of

law,  for  an  authority  which  wields  power  for  its  own

advantage is given right to forego advantage when required

and considered necessary.  This power to issue circulars is

for just, proper and efficient management of the work and in

public  interest.  It  is  a  beneficial  power  for  proper

administration of  fiscal  law, so that undue hardship may

not  be  caused.  Circulars  are  binding  on  the  authorities

administering the enactment but cannot alter the provision

of  the  enactment,  etc.  to  the  detriment  of  the  assessee.

Needless to emphasise that a circular should not be adverse

and  cause  prejudice  to  the  assessee.  (See  :  UCO Bank,

Calcutta v. Commissioner of Income Tax, West Bengal5).

5 (1999) 4 SCC 599

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26. In  Commissioner  of  Central  Excise,  Bolpur  v.

Ratan Melting and Wire Industries6, it has been held that

circulars and instructions issued by the Board are binding

on the authorities under respective statute, but when this

Court  or  High  Court  lays  down a  principle,  it  would  be

appropriate for the Court to direct that the circular should

not be given effect to, for the circulars are not binding on

the  Court.  In  the  case  at  hand,  once  circular  dated

15.04.1994  stands  withdrawn  vide  circular  dated

16.04.2001, the appellant-assessee cannot claim the benefit

of the withdrawn circular.   

27. The controversy herein centres round the period from

1st April, 2001 to 31st March, 2002.  The period in question

is mostly post the circular dated 16.04.2001. As we find, the

appellant-assessee  has  pleaded  to  take  benefit  of  the

circular  dated  15.04.1994,  which  stands  withdrawn  and

was only applicable to the notification dated 07.03.1994.  It

was  not  specifically  applicable  to  the  notification  dated

21.01.2000.  The  fact  that  the  third  paragraph  of  the

6 (2008) 13 SCC 1

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notification dated 21.01.2000 is  identically  worded to  the

third  paragraph  of  the  notification  dated  07.03.1994  but

that would not by itself justify the applicability of circular

dated 15.04.1994.

28. In this context, we may note another contention that

has been advanced before us. It is based upon the doctrine

of contemporanea exposition.  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. (See : G.P. Singh’s

Principles of Statutory Interpretation, 13th Edition-2012

at page 344).  It has been held in  Rohitash Kumar and

others v. Om Prakash Sharma and others7  that the said

7 (2013) 11 SCC 451

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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

different interpretations.  

29. In this regard,  we may 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 dated

21.01.2000.

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30. In view of the aforesaid analysis, we do not find any

merit in the instant appeal  and the same is,  accordingly,

dismissed.   There shall be no order as to costs.  

Civil Appeal No. 6136 of 2013

31. In view of the judgment passed in Civil Appeal No. 102

of 2010, this appeal also stands dismissed.  There shall be

no order as to costs.

…………………………..J. [Dipak Misra]

……………………….….J. [C. Nagappan]

 New Delhi; September 16, 2016