Radha Ballabh Satish Chandra vs The Commissioner of Sales Tax

Rajes Kumar, J.—Present two revisions arises, one out of the rejection of the certificate of exemption under Rule 19 and another arising from the assessment order under Rule 41.

In the aforesaid revisions the dispute relates to whether the applicant is karkhanedar within the notification No. ST-II-1771/X-6(19)-78-U.P. Act XV-48-Order-79, dated 28.02.1979 and its turn over of the sale manufacture silli-gulli, brass circles and koramal (Kora brassware) is exempted from tax.

Heard learned counsel for the parties.

Learned counsel for the applicant submitted that for the assessment years 1975-76, 76-77 and 77-78 this Court held the applicant as karkhanedar as defined under notification No. ST-II-8453/X-1(2)-75, dated 01.10.1975 and held not liable to pay tax on the sale of old manufactured silli-gulli. Brass circles and koramal (Kora brassware) in the case of applicant itself as Radha Ballabh Satish Chandra v. CST, reported in 1987 UPTC 748. He submitted that for the assessment year 1978-79 assessing authority examined the sales of silli-gulli and koramal for the period of 01.04.1978 to 28.04.1979 but levied the tax for period of 01.03.1979 to 31.03.1979, which was also deleted by the first appellate authority and the appeal against the said party filed by the Commissioner of Trade Tax was dismissed by the Tribunal vide order dated 23.02.1999. He submitted that for the assessment year 1980-81 matter again came up for consideration before this Court and vide order dated 27.07.1987 again held the applicant as karkhanedar, not liable to pay tax on the sale of silli-gulli and koramal. Judgment of this Court is reported as Radha Ballabh Satish Chandra v. CST, reported in 1987 UPTC 1759. Against the said order, SLP before the Apex Court was dismissed on 23.10.1993. He submitted that in the previous year as well as in the subsequent years, applicant had been held as karkhanedar and held not liable to tax. He submitted that the relevant notification for the year under consideration is notification No. ST-II-1771/X-6(19)-78-U.P. Act No. XV-48-Order-79, dated 28.02.1979. This notification came up for consideration before this Court in the case of Sikka Metal Works, Morabad v. CST, reported in 1992 UPTC 1342. This Court in the said case on the basis of the circular letter No. 77 of 1979 dated 10.05.1979 held that the department was bound by the aforesaid circular. Special Leave Petition, filed by the Commissioner of Sales Tax against the said judgment in the case Sikka Metal Works v. CST has been dismissed by the Hon''ble Supreme Court. He submitted that the case of the applicant is similar to the case in the case of Sikka Metal Works, Moradabad and therefore, the applicant should also be treated as karkhanedar and the exemption should be allowed on the party. Learned Standing Counsel supported the order of Tribunal. He submitted that the applicant is not entitled for the benefit of the notification-dated 28.02.1979 because the condition of the notification was not ful-filed. He further submitted that the notification-dated 28.02.1979 was not relevant for the earlier year and for the subsequent years. In as much as there was further amendment in the subsequent year and, therefore, the case of the earlier year and subsequent years are not relevant. He further submitted that each year is independent year for the purpose of assessment and the claim of the exemption has to be decided on the basis of the notification, which existed during the year under consideration. He submitted that vide circular letter No. 77 of 1979 dated 10.05.1979 the realization of the tax in pursuant of the notification dated 28.02.1979 has only been stayed by the State Government and there is nothing to show that the liability of tax has been waived.

Notification No. ST-II-1771/X-6(19)-78-U.P. Act No. XV-48-Order-79, dated 28.02.1979 reads as follows:

"In the exercise of the powers u/s 4 of the U.P. Sales Tax Act, 1948 (U.P. Act No. XV of 1948), read with Section 21 of the U.P. General Clauses Act, 1904 (U.P. Act No. 1 of 1904), the Governor is pleased to make, with effect from March 1, 1979, the following amendment in Government Notification No. ST-II-9453/X-1(2)-75, dated October 1, 1975.

AMENDMENT

In the aforesaid notification, for the existing explanation the following new explanation shall be substituted:-

"Explanation :- For the purpose of this notification the term "Karkhanedar" means a dealer who-

(i) manufactures his own utensils or art brasswares or parts thereof from his own raw material on his own Darja, Para or Gulli bhattis,

(ii) does not hold more than two Darja/Para/Gulli bhattis

(iii) manufactures such utensils or wares or parts thereof himself or with the aid of his family members and does not employ and person to work on his bhatti,

(iv) does not purchase more than twenty quintals of zinc and thirty quintals of copper during a financial year, and

(v) sells such utensils or wares or parts thereof without buffing, engraving, colouring or siyash Kalam (that is to say, who sells such utensils for (sic) brass wares or parts thereof as are commonly known as "kora maal" and as are not ordinarily sold director to the consumer)"."

Notification No. ST-II-8453/X-1(2)-75-U.P. Act No. XV-48-Order-79 dated 01.10.1975 reads as follows:

In exercise of the powers u/s 3 of the U.P. Sales Tax Act, 1948 (U.P. Act No. XV of 1948), read with Section 21 of the U.P. General Clauses Act, 1904 (U.P. Act No. 1 of 1904), and in suppression of Government Notification No. ST-II-5263/X-902(16)-52, dates September 13, 1971, the Governor is pleased to order that, with effect from October 2, 1975, no tax shall be payable on the turnover of Sales of Art Brasswares and utensils made in whole or part of brass, bronze (Kansa), bellmetal (Phool) or German Silver by the class of manufactures of such art brasswares or utensils known as karkhanedars specified in Column 2 of the table below, subject to the following conditions;

(a) The concession shall be admissible only such Karkhanedars as are registered u/s 8-A of the U.P. Sales Tax Act, 1948.

(b) Every karkhanedar seeking to obtain exemption shall, within three months of the commencement of the assessment year for which exemption is sought, deposit the fee calculated at the rate specified against each category of dealer in Column 3 of the said table:"

Assessing authority had disallowed the exemption on the ground that the applicant had got brasswares utensils manufactured more than 20 qtls. of Zink and 30 qtls. of copper and accordingly condition Nos. 3 and 4 of the Explanation of the notification was not complied with.

Learned Counsel for the applicant has not disputed this fact.

Circular dated 10.05.1979 reads as follows:

Karkhanedar-change in the definition vide notification dt. 28.2.1979.

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y[kum% fnukad 10 ebZ] 1979

tSlk fd vki dks Kkr gS foKfIr l[;k ,l-Vh-&2&1971@nl&6 �19�@785@ iz&vfo&15@48@vkns''k 79& fnukad 28&2&1979 }kjk dkj[kkusnkj dh ifjHkk"kk esa la''kks/ku fd;k x;k gS! ''kklu us vkns''k fn;k gS fd mDr foKfIr fnukad 28&2&1979 ds vk/kkj ij dj&fu/kkZj.k ;k olwyh vfxze vkns''k rd LFkfxr j[kh tk; !

Aforesaid circular came up for consideration in the case of Sikka Metal Works, Moradabad v. CST, reported in 1992 UPTC 1342, in that case also admittedly, dealer did not come within the definition of karkhanedar given in notification No. ST-II-1771/X-6(19)-78-U.P. Act XV-48-Order-79, dated 28.02.1979, the exemption has been sought on the basis of the circular. This Court held as follows:

"Learned counsel for the assessee claimed that assessee should be exempted from sales tax since by the aforesaid circular letter dated 10.05.1979, the notification dated 28.02.1979 was stayed. Learned Standing Counsel for the other hand urged that the circular letter dated 10.05.1979 has only stayed the recovery and has not stayed the tax liability. The Tribunal has rejected the assessee''s claim on the ground that the circular cannot overrule the notification. I have held in U.P. Ceramics Pvt. Ltd. v. C.S.T., STR No. 1236/92 decide don 04.09.1992 that a Circular of Commissioner of Sales Tax is binding on the department and following the said decision I am of the view that the department cannot say that it is not bound by circular dated 10.05.1979. As regard the interpretation of the said circular I am of the option that it mentions that the notification dated 28.2.1979 it stayed till further orders. No doubt the wording circular is that only the recovery is stayed but we have to see substance of the matter. The stayed but we have to see substance of the matter. The intention was to encourage manufacturers and hence an interpretation in favour of the assess should be preferred.

In the circumstances of the case I set aside the impugned order of the Tribunal dated 7.8.1979. Revision is allowed. No order as to costs"

Against the aforesaid order. SLP has been dismissed. This fact is mentioned in the order of Deputy Commissioner (Appeals) dated 30.04.2001. ON 18.08.2004 this Court has asked Learned Standing Counsel to inform whether the circular dated 10.05.1979 is still continues. On 26.08.2004 further three weeks time was allowed to inform about the circular. On 04.10.2004 Learned Standing Counsel stated that he has not received any instructions inspite of the best efforts and in the circumstances. Court has heard the case and reserved the judgment.

In my opinion, there is no dispute that the circulars are binding on the revenue authorities, even if it is contrary to the provisions as held in the case of CST v. Indra Industries, reported in 122 STC 100 in the case of Simplex Castings Ltd. Vs. Commr. of Cus., Vishakhapatnam, and in the case of The Paper Products Ltd. Vs. Commissioner of Central Excise, . But the question is whether the circular dated 10.05.1997 on which reliance has been placed relaxes the conditions of the notification dated 01.10.1975, which is applicable to the year under consideration and whether it says on the non-compliance of the condition Nos. 3 and 4, the benefit can be allowed or notification has been rescinded. Perusal of the circular shows that for the time being the recovery was only been stayed. In my opinion, staying the recovery for the time being does not amount to relaxing the condition of the notification. Learned Counsel for the applicant is not able to show that after the circular dated 08.05.1979 notification dated 01.10.1975 has been rescinded or the Government relaxed the conditions of the notification. In this view of the matter, I am of the view that since the condition Nos. 3 and 4 have not been complied with, applicant was not entitled for the benefit of the exemption. It is settled principle of law that unless the conditions of the notification granting the exemption are complied with exemption can not be allowed.

In the result, both the revisions fail and are accordingly dismissed.