Orient Traders Vs.
Commercial Tax Officer, Tirupati [2008] INSC 433 (12 March 2008)
Ashok Bhan & Dalveer
Bhandari
U D G M E N T CIVIL APPEAL NO. 4491 of 2002 With Civil Appeal Nos. 4492 of
2002, 4493 of 2002 and 4494 of 2002 BHAN, J.
1. This judgment shall dispose of Civil Appeal No. 4491 of 2002 filed
against a detailed order by which the High Court has dismissed the Writ
Petition filed by the appellant and the three connected appeals which have been
filed by the Assessees against the dismissal of their writ petitions by the
High Court following the impugned Order in Civil Appeal No. 4491 of 2002.
2. Facts are taken from Civil Appeal No. 4491 of 2002, which is the main
appeal.
3. The relevant period is from November, 1994 to March, 1995 which falls in
the Assessment Year 1994-95. The appellant deals in the sale of silver bars. It
filed its return showing a turnover of Rs.14,33,01,470/- and paid sales tax at
the rate of =%. The Assessing Authority accepted the said return and completed
the assessment on 27.11.1995. Later, the Assessing Officer issued notice on
17.8.1996 proposing to reopen the assessment under Section 14(4)(c) of the
Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act") and
bring the above turnover to tax at the rate of 2%, apart from additional tax
and surcharge, on the premise that G.O. Ms No. 1092 and G.O. Ms No. 252
reducing the rate of sales tax to =% were applicable only to gold bullion and
the same were not applicable to silver bullion and specie. Questioning the said
show cause notice, the appellant filed W.P. No. 21503 of 1996. The High Court dismissed the writ petition on the ground of
alternate remedy of filing the objection and getting a decision from the
authorities under the Act on merits. The appellant thereafter filed objections
claiming that the reduced rate of sales tax under the G.O. was applicable not
only to gold bullion but also to silver bullion. That the bracketed words
"gold" used in the above G.O. applies only to specie and not to
bullion. The Assessing Officer rejected the contention of the assessee and
framed the re-assessment. Questioning the said re-assessment, the appellant filed Writ Petition No.
1727 of 1997 which has been dismissed by the impugned order.
4. It was stated in the writ petition that though a remedy of appeal was
available, but the said remedy by way of appeal would not be effective in the
light of the clarification issued by the Commissioner of Commercial Tax by his
order dated 22.3.1995, clarifying that the G.O.Ms No. 1092 is applicable only
to the gold bullion and not to silver bullion. It was also contended that the
issue relates only to the interpretation of G.Os., therefore, to have effective
and binding decision the appellant has approached the High Court by filing the
writ petition. The said writ petition was entertained. It has been dismissed on merits.
5. It is not in dispute that the appellant is a dealer in silver bullion.
Under Item-20 of the First Schedule to the Act the original rate prescribed is
2%. However, the State Government issued Notification under Section 9(1) of the
Act in G.O.Ms. No. 1092 dated 31.10.1994 reducing the rate of sales tax to =%
in respect of 'bullion and specie (gold)' from the date of the said
Notification. In order to appreciate the controversy in issue, it would be
necessary to refer to the Entry in the First Schedule to the Act as well as the
Notification issued on 31.10.1994. Entry 20 in First Schedule to the Act reads :- FIRST SCHEDULE SI. No. Description of goods Point of levy Rate of tax Effective from 20 Bullion and
specie (1020) At the point of first sale in the State 2 4 8-7-1983 1-4-1995
6. The expression 'bullion' in Entries 20 and 21 has been defined in
Explanation I to the First Schedule which reads:- "Explanation-1:--The
expression 'bullion' in items 20 and 21 means pure gold or silver and includes
gold or silver mixed with copper, lead or any other kind of base metal."
7. The relevant portion of G.O.Ms. No. 1092 Rev. (CT-II) dated 31-10-1994 is
extracted hereunder:- "Notification-I In exercise of the powers conferred
by the sub-section (1) of Section 9 of the Andhra Pradesh General Sales Tax
Act, 1957 (Act-VI of 1957), the Governor of Andhra Pradesh hereby directs:
(a) that the tax leviable under the said Act on the said Act on the sale of bullion
and specie (gold) be reduced from 2% to 1/2 %, all included (net 1/2%);
(b) that the tax leviable under the said Act on the sale of jewellery,
including those set with precious stones be reduced to 2%;
(c) that the tax leviable under the
said Act on the sale of precious stones loose, other than pearls, be reduced to
2%.
This notification shall come into
force with immediate effect."
(Emphasis supplied)
8. The subsequent Notification issued u/s. 9(1) dated 19.5.1995 which came
into force with effect from 1.4.1995 and the Notification subsequent thereto in
G.O.Ms No. 625 dated 31.7.1996 superseding the earlier Notification omitting
the expression 'gold' (G.O.Ms. Nos. 1092 and 252 of 1995) occurring in the
bracket, are not reproduced as the same are not relevant for the purposes of
disposing of the present appeals.
9. Learned counsel for the appellant contends that the perusal of G.Os.
issued by the State of Andhra Pradesh clearly shows that the bracketed word
'gold' occurs only after 'specie' and not either before or after 'bullion'.
Therefore, the said bracketed word 'gold' is relevant for the word 'specie'
only and not for the word 'bullion'. If the G.O. is so interpreted, the reduced
rate of sales tax would be available to the appellant at =% as provided
therein, which was accepted by the Assessing Officer at the first instance.
That there was no reason for the Assessing Officer to change his opinion to
revise the assessment levying the sales tax at higher rate. Relying upon the
G.O. Ms. No. 625, dated 31.7.1996 which omitted the expression 'gold' from the
bracket immediately after the term 'specie', it was contended that the
Government did not intend to give the benefit of lower rate of tax only to gold
but also to silver bullion. The action of the respondent-authorities in
re-opening the assessment as well as framing the reassessment is not in
accordance with law and is only a change of opinion with reference to the
Notification issued by the Government under Section 9(1) of the Act. It was
also contended that the Notification was clear and unambiguous and the benefit
granted in the Notification would be available to the dealers dealing in silver
bullion as well. If the G.Os.are interpreted in this manner, then no case was made out to revise the
assessment to levy the higher rate of tax. Reliance was placed on a decision of this Court in Commissioner of Sales Tax
V. Industrial Coal Enterprises, 1999 (2) SCC 607.
10. As against this, the learned counsel appearing for the Revenue submits
that there is no justification to contend that the term 'gold' is applicable
only to specie and not to bullion. According to him, the interpretation sought
to be put by the appellant to the G.O. is not proper and correct. It is
submitted that 'bullion and specie' is one single phrase and they cannot be
bifurcated. The intention of the Government in the said G.O. was to apply the
reduced rate of tax to gold bullion and specie only. As these two words
constitute one single phrase the word 'gold' was bracketed at the end to indicate
that it is meant to be applicable to gold only. It was also submitted that Commissioner of Commercial Tax, Government of
Andhra Pradesh by its order dated 22.3.1995 passed on a request made by the
Twin Cities Jewelers Association clarified that the reduced rate of tax is
applicable only to gold bullion and specie. As such the contention of the
appellant that it is also applicable to silver bullion is unjustified and
untenable.
11. Learned counsel for the parties have been heard at length.
12. Bullion and specie are taxable at the rate of 2% with effect from
8.7.1983 under item 20 of the First Schedule of the Act. Same rate is
applicable to the articles and jewellery mentioned under Entry 21 made out of
bullion and/or specie or both, excluding precious stones. Explanation I to the
said Schedule defines bullion as pure gold or silver and includes gold or
silver mixed with copper, lead or any other kind of base metal. The Government
of Andhra Pradesh by issuing G.O.Ms. No. 1092 dated 31st October, 1994 under Section 9(1) of the Act reduced
the net rate of sales tax to =% on sale of bullion and specie (gold). Andhra
Pradesh General Sales Tax Act was amended by Act 22 of 1995 with effect from
1st April, 1995 prescribing the sales tax in the case of bullion and specie at
the rate of 4%. Again the Government issued a Notification under Section 9(1)
of the Act in G.O.Ms. No. 252, dated 19.5.1995 reducing the rate of sales tax
in the case of bullion and specie (gold) to =% with effect from 1.4.1995.
Subsequent G.O.Ms No. 625 dated 31.7.1996 was issued by the State of Andhra Pradesh omitting the
expression 'gold' in the bracket immediately after the term 'gold and specie'
occurring in G.O.Ms Nos. 1092 of 1994 and 252 of 1995.
13. This Court in the case of Deputy Commissioner of Sales Tax v. M/s. G.S.
Pai and Co., 1980 (1) SCC 142, considered the terms 'bullion and specie', in a
different context i.e., whether ornaments and other articles of gold could be
regarded as bullion and specie as specified in Entry 56 of the First Schedule
of the Kerala General Sales Tax Act, 1963. This Court held in para 3 as under:-
"We will first consider the question whether the ornaments and other
articles of gold purchased by the assessee fall within the description of
"Bullion and specie" given in Entry 56. There are two expressions in this Entry which require consideration; one is
"bullion" and the other is "specie". Now there is one cardinal rule of interpretation which has always to be
borne in mind while interpreting entries in sales tax legislation and it is
that the words used in the entries must be construed not in any technical sense
nor from the scientific point of view but as understood in common parlance. We
must give the words used by the Legislature their popular sense meaning
"that sense which people conversant with the subject-matter with which the
statute is dealing would attribute to it". The word "bullion" must, therefore, be interpreted according to ordinary parlance and must be
given a meaning which people conversant with this commodity would ascribe to
it. Now it is obvious that "bullion" in its popular sense cannot
include ornaments or other articles of gold. "Bullion" according to
its plain ordinary meaning means gold or silver in the mass. It connotes gold
or silver regarded as raw material and it may be either in the form of raw gold
or silver or ingots or bars of gold or silver. The Shorter Oxford Dictionary
gives the meaning of "bullion" as "gold or silver in the lump;
also applied to coined or manufactured gold or silver considered as raw
material." So also in Jowitt's Dictionary of English Law and Wharton's Law
Lexicon we find that the following meaning is given for the word
"bullion": "uncoined gold and silver in the mass. These metals
are called so, either when melted from the native ore and not perfectly
refined, or where they are perfectly refined, but melted down into bars or
ingots, or into any unwrought body, of any degree of fineness". It would,
therefore, be seen that ornaments and other articles of gold cannot be regarded
as "bullion" because, even if old and antiquated, they are not raw or unwrought gold or
gold in the mass, but they represent manufactured or finished products of gold.
Nor do they come within the meaning of the expression "specie". The word "specie" has a recognized meaning and according to
Webster's New World Dictionary, it means "coin, as distinguished from
paper money". The Law Dictionaries also give the same meaning. Wharton's
Law Lexicon and Jowitt's Dictionary of English Law state the meaning of
"specie" as "metallic money" and in Black's Law Dictionary,
it is described as "coin of the precious metals, of a certain weight and
fineness, and bearing the stamp of the Government, denoting its value as
currency" while "Words and Phrases Permanent Edition-Vol. 39A" also gives the same meaning. Therefore, according to common parlance, the
word "specie" means any metallic coin which is used as currency and
if that be the true meaning, it is obvious that ornaments and other articles of
gold cannot be described as "specie". ......"
14. From the reading of the above judgment, it is clear that 'bullion' means
gold or silver in mass, in bars, plates etc., in uncoined form; whereas
'specie' means coined gold or silver or any other metal and also used as
currency. The distinction between the two expressions is that the former refers
to gold and silver when it is in bulk form, either unshaped or shaped like
bars, plates etc., whereas later refers to the coined form of silver or gold.
15. Entry 20 of the First Schedule refers to levy of the tax at the point of
first sale on bullion and specie. Explanation I under the First Schedule provides the meaning of the
expression 'bullion' as pure gold or silver and includes gold or silver mixed
with copper, lead or any other kind of base metal. While issuing Notification
No. 1092 dated 31.10.1994, the rate of tax was reduced on the sale of bullion
and specie (gold) from 2% to =% net. The Legislature used the term 'gold' in
bracket after expression 'bullion and specie' thereby making its intention
clear that it wanted to restrict the benefit of reduced rate of tax to gold
bullion and specie only. Had the intention been to extend the benefit of
reduced rate of tax to silver bullion and specie, then, there was no need to
put the word 'gold' in brackets after 'bullion and specie'.
16. Contention that the word 'gold' is referable to specie only as it finds
mention after the word 'specie', cannot be accepted. "Bullion and
specie" is one single phrase and the same cannot be bifurcated, as
contended by the counsel for the appellant. The intention of the Government in
putting the word 'gold' in the bracket after the words 'bullion and specie'
clearly shows that the intention of the Government was to extend the benefit of
reduced rate of tax to gold bullion and gold specie only and not to silver. The
word 'gold' was put in brackets to indicate that the concessional rate of tax
is applicable only to the gold in either of the two forms i.e. bullion or
specie.
17. Contention of the learned counsel for the appellant that bracketed word
'gold' contained in Clause (a) of G.O.Ms No. 1092 dated 31.10.1994 and G.O.Ms
No. 252 dated 19.05.1995 having been omitted by G.O.Ms No. 625 dated 31.07.1996
clearly shows that the intention of the Legislature was that the concessional
rate of tax is to be applied to both gold and silver bullion species for the
period in question, cannot be accepted. G.O.Ms No. 625 dated 31.07.1996 has been made effective from 01.08.1996. The relevant
period in the present appeals is from 01.11.1994 to 31.03.1995. Hence, the
appellant cannot take any benefit of omission of the word 'gold' in brackets
for the period in question as the G.O.Ms No. 625 dated 31.07.1996 is to take
effect from 01.08.1996.
18. It is well established principle that the exemption notifications are to
be construed strictly, reference may be made to State of Jharkhand & Others
V. Tata Cummins Ltd., and another, 2006 (4) SCC 57 and Kartar Rolling Mills V.
Commissioner of Central Excise, New Delhi, 2006 (4) SCC 772. If the intention
of the legislature is clear and unambiguous, then it is not open to the courts
to add words in the exemption notification to extend the benefit to other items
which do not find mention in the notification. In the present case, there is no
ambiguity in the expression used in the G.O. The intention of the State
Government is clear that only gold bullion and specie is entitled to the
concessional rate of tax. Under the circumstances, the same cannot be extended to the silver as
claimed by the assessee.
19. For the reasons stated above, we do not find any merit in these appeals
and dismiss the same with costs.
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