Madras High Court
M/S Radel Electronics Pvt. Ltd vs India on 3 September, 2021
W.P.Nos.16595 to 16598 of 2008
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03-09-2021
CORAM
THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.Nos.16595 to 16598 of 2008
And
M.P.Nos.1, 1, 1 and 1 of 2008
M/s Radel Electronics Pvt. Ltd.
Represented by its Manager,
Mrs. Santhoshi Janardhan,
Challa Mall, 203, 2nd Floor,
No. 11 & 11A, Sir Thyagaraya Road,
T.Nagar,
Chennai – 17. ... Petitioner in all WPs
Vs
The Government of Tamil Nadu,
Represented by its Secretary,
Commercial Taxes Department,
Fort St. George,
Chennai – 600 009. ... R-1 in WPs 16595,
16597 & 16598/2008
Commissioner of Commercial Tax
Ezhilagam,
Chepauk,
Chennai – 05. .... R-2 in WPs 16595, 16597
& 16598/2008 /
R-1 in WP 16596/2008,
1/24
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W.P.Nos.16595 to 16598 of 2008
Deputy Commercial Tax Officer,
Office of the Commercial Tax Officer,
Nandanam Assessment Circle,
No. 46, Greenways Road,
Chennai – 600 028. ... R-3 in WPs 16595, 16597
& 16598/2008 /
R-2 in WP 16596/2008
WP 16595 of 2008 is filed Under Article 226 of the Constitution of
India, for the issuance of a Writ of Declaration, declaring the impugned
G.O.MS No.193 (CT & R (B2) dated 30.12.2006 as ultravires Section 17 of
the TNGST Act, Article 14, 19 (1) (g) and 265 of the Constitution of India
and therefore requires to be declared invalid,
WP 16596 of 2008 is filed Under Article 226 of the Constitution of
India, for the issuance of a Writ of Certiorari, calling for the records
comprised in Clarification Lr.No.VAT Cell/8567/2008 A2 (VCC No.1510)
dated 18.06.2008 on the file of the first respondent and quash the same.
WP 16597 of 2008 is filed Under Article 226 of the Constitution of
India, for the issuance of a Writ of Certiorari, calling for the records
comprised in Impugned Notice in CST No.818386/2005-06 dated 12.10.2007
on the file of the third respondent and quash the same.
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W.P.Nos.16595 to 16598 of 2008
WP 16598 of 2008 is filed Under Article 226 of the Constitution of
India, for the issuance of a Writ of Certiorari, calling for the records
comprised in Impugned Notice in TNGST No.1581900/2005-06 dated
12.10.2007 on the file of the third respondent and quash the same.
For Petitioner in all WPs : Ms.Anuradha P.M.
For Respondents in all WPs: Mr.V. Nanmaran,
Government Advocate.
COMMON ORDER
The writs on hand are filed questioning the validity of G.O.MS
No.193 (CT & R (B2) dated 30.12.2006 as ultravires Section 17 of the
TNGST Act, Articles 14, 19 (1) (g) and 265 of the Constitution of India and
liable to be declared as null and void, Clarification Lr.No.VAT
Cell/8567/2008 A2 (VCC No.1510) dated 18.06.2008, Impugned Notice in
CST No.818386/2005-06 dated 12.10.2007 and Impugned Notice in TNGST
No.1581900/2005-06 dated 12.10.2007 on the file of the third respondent and
quash the same.
2. The petitioner is a Private Limited Company incorporated
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W.P.Nos.16595 to 16598 of 2008
under the Companies Act, 1956 and having its Registered Office at Bangalore
and engaged in the manufacture and sale of Indian Musical Instruments.
3. The petitioner-Company states that they are pioneer in the
field of electronic musical instruments and teaching and practice aids for
music. The abovesaid Company is operating for more than about 4 decades
and has designed, developed, manufactured and marketed unique Indian
Musical Instruments, which operates on electronic principles, that has found
wide acceptance amongst top musicians as well as Teachers, Students, Music
Colleges, Universities and Government Institutions such as Akashvani, across
the country. The Department of Secondary Education in Karnataka has
permitted these instruments to be used in music examinations.
4. The learned counsel for the petitioner contended that the
petitioner had claimed exemption on the sales of the Indian Musical
Instruments in terms of G.O.Ms.No.45/CT(B2) dated 12.02.2004, which
exempted sales of Indian Musical Instruments. The said Notification reads
that “exemption in respect of tax payable by any dealer on the sale of Indian
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W.P.Nos.16595 to 16598 of 2008
Musical Instruments”. Thus, any item which qualifies as Indian Musical
Instrument is eligible for exemption. The said Notification does not impose
any further condition such as the composition of the instrument or the
source/mode of operation of the instrument to qualify for the exemption.
5. The said Notification issued in G.O.Ms.No.45, dated
12.02.2004, under Section 17 of the TNGST Act was superseded by
G.O.Ms.No.193 (CT & R (B2) dated 30.12.2006. The said Government
Order reads as under:-
“Notification IX : G.O.Ms.No.193,
Commercial Taxes and Registration (B2) dated the
30th December, 2006 No.II(1)/CTR/58(h-10)/2006
– In exercise of the powers conferred by sub
section (1) of Section 17 of the Tamil Nadu
General Sales Tax Act, 1959 (Tamil Nadu Act 1 of
1959) and in supersession of the Commercial
Taxes Department Notification No.II (1) CT/72(a-
5)2004, published in Part II-Section 1 at page 3 of
the Tamil Nadu Government Gazette
Extraordinary, dated 12th February, 2004, the
Governor of Tamil Nadu hereby makes an
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W.P.Nos.16595 to 16598 of 2008
exemption in respect of tax payable by any dealer
under the said Act, on the sale of Indian Musical
Instruments namely, Veena, Violin, Tambura,
Mirdangam, Ghatam, Khanjira, Flute, Sitar,
Sarod, Santoor, Dilruba, Nadaswaram, Dolu,
Tabla, Shenai, Pakwaz, Vichitra Veena, Gottu
Vadyam, Morsing, Chancle, Triangle,
Rudraveena, Sarangi, Thalam, Dholak, Dholki,
Thavil, Magudi, Salangai, Sangu, Uthu, Edakka,
Mathalam, Chendai, Sruti Box, Tar Shenhai,
Mahanaveena, Kanjeeris, Urumi, Kombu,
Panchaloga Vadhyam, Mandolin, Udukku, Khol,
Horns, Nagara, Jalatharangam, Villadi Vadhyam
and parts and accessories thereof shall be added.
2. This Notification shall be deemed to have
come into force on the 12th day of February,
2004.”
6. The learned counsel for the petitioner reiterated that the above
impugned Notification clearly curtails and narrows down the benefit
conferred by G.O.Ms.No.45/CT (B2) dated 12.02.2004, since while the
Notification dated 12.02.2004 exempted all Indian Musical Instruments, the
same while being superseded by Notification dated 30.12.2006 restricts it
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W.P.Nos.16595 to 16598 of 2008
only to items enumerated in the said Notification.
7. It is contended that the Notification issued on 30.12.2006,
curtailing and whittling down the benefit is made retrospectively by the
delegatee viz., the State Government, which is clearly beyond the scope of its
power conferred under Section 17 of the TNGST Act from 12.02.2004.
8. Relying on Section 17 of the TNGST Act, which provides
power of Government to notify exemptions and reductions of tax, the learned
counsel for the petitioner states that the manner in which the impugned
Notification was issued classifying the Indian Musical Instruments is in
violation of Section 17 itself.
9. In view of the impugned Notification dated 30.12.2006, the
respondents have issued the impugned notice proposing to reject the
petitioner's claim of exemption by placing reliance on G.O.Ms.No.193, dated
30.12.2006 on the ground that the said Notification is a clarification and
therefore, it is to be applied from the date of the original Notification on
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12.02.2004.
10. The learned counsel for the petitioner is of an opinion that
under First Schedule Part C Entry 49A of the TNGST Act, the Legislators
had specifically stated of the Typewriters (excluding electronic typewriters).
However, no such descriptions are provided in the impugned order and
therefore, in the absence of express condition, the petitioner-Company is
entitled for an exemption as they are the manufacturers of Indian Musical
Instruments.
11. It is not stated whether the Indian Musical Instrument is
manufactured either electronically or manually. In the absence of any such
specific description in the Act, there is no reason for denying the benefit of
exemption granted by the Government, especially for the Indian Musical
Instruments.
12. In this regard, the learned counsel for the petitioner relied on
the judgment of the Karnataka High Court in the case of State of Karnataka
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W.P.Nos.16595 to 16598 of 2008
vs. Radel Electronics Pvt Ltd [pronounced on 02.11.2012 in STRP
No.109 of 2011], the petitioner in these writ petitions.
13. The Karnataka High Court interpreted the Indian Musical
Instruments, more specifically, 'Shruthi Box' and 'Tabala' in paragraph-9 of its
judgment, which reads as under:-
“9. With regard to Shruthi box and Tabala,
although they do not bear the appearance and shape
of Tabala and traditional Shruthi box but they play
the music of traditional Tabala and Shruthi box. It
may be that electronic chips are fitted in the said
instruments with prerecorded tunes and sounds but
the dominant function of the said instruments is to
play the music of Indian musical instruments. The
need of skills to play the traditional Shruthi box and
Tabala is dispensed with. The vocalist by switch of a
button can have the tunes and musical sounds to suit
the convenience. It is said that two instruments are
of great assistance to the beginners for the music in
practice. Merely because the said instruments have
prerecorded chips, the dominant function of the said
instruments is to play the role of Indian musical
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W.P.Nos.16595 to 16598 of 2008
instruments. The said two instruments are only used
in practice and not in concerts. In order to use the
said instruments, the vocalist should have
necessarily have the basic knowledge of thalas and
ragas in order to use the instruments in their
practice. Merely because they have shape of a tape-
recorder and electronic chips fitted in, it cannot be
said that they do not be called as Indian musical
instruments because the functional features of the
said instruments is very much that of traditional
Shruthi box and traditional Tabala. It should be
noted that the market for these instruments are very
very marginal. There is a decline in the musical
taste of the people towards the Indian music and
Indian musical instruments. It is said that Shruthi
box and Tabala manufactured by the assessee are
very much necessary for the beginners who practice
in music. In fact these instruments would play a tune
for the practicing vocalist. Therefore, in order to
propagate the object of Entry 15(i) of the Second
Schedule of the Karnataka Sales Tax Act, 1957, to
promote Indian music and Indian musical
instruments, it is just and necessary to hold that all
the instruments come under the definition within the
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purview of Entry 15(i) and should be taxed.
Accordingly, the revision is dismissed.”
14. Relying on the above observations made in the judgment of
the Karnataka High Court in the case of State of Karnataka vs. Radel
Electronics Pvt Ltd (cited supra), the petitioner made a submission that
Indian Musical Instruments manufactured electronically are also eligible to be
classified as Indian Musical Instruments and therefore, the petitioner is
entitled for exemption from payment of tax.
15. The learned Government Advocate, appearing on behalf of
the respondents, disputed the said contentions raised by the learned counsel
for the petitioner, by stating that the exemption is provided to encourage the
poor artisans, who are engaged in the manufacturing of those instruments
from generation to generation, who are normally living in penurious
circumstances. There is another angle in granting such relief, which is to
make available within the reach of poor and needy artisans, so as to develop
the traditional Indian Music as far as possible, which is synonymous of Indian
culture and tradition.
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W.P.Nos.16595 to 16598 of 2008
16. In these cases, the petitioner-Company having their
manufacturing facility at Bangalore are manufacturing and selling electronic
Musical Instruments. All the Musical Instruments manufactured and sold by
the petitioner were electronically operated Indian Musical Instruments and
they have not sold any Indian Musical Instruments other than as operated by
electronic musical system. The petitioner under the guise of selling musical
instruments is only marketing the electronic instruments manufactured en
masse with only aim of making profit in the business. Therefore, the third
respondent has correctly approached the issue by issuing pre-revision notices
by treating the electronic musical instruments sold by the petitioner as falling
under Item 14(iv) of Part D of First Schedule taxable at 12%. On the same
analogy, similar revision notice has also been issued for the corresponding
CST turnover for the year 2005-2006.
17. The petitioner-Company have challenged the Notification
issued in G.O.Ms.No.193, dated 30.12.2006 on the ground that once
exemption granted under sub-section (1) of Section 17 cannot be cancelled or
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W.P.Nos.16595 to 16598 of 2008
varied under sub-section (3) of Section 17 with retrospective effect. The
abovesaid contention of the petitioner is mainly relied upon the decision of
this Court in the case of G.Packirisamy and Co. vs. State of Tamil Nadu
[(1995) 099 STC 0021], which was followed by the subsequent decision of
this Court in the case of Honest Corporation vs. State of Tamil Nadu
[(1999) 113 STC 0026].
18. In these cases, while issuing amendment under sub-section
(3) of Section 17 in G.O.Ms.No.193, dated 30.12.2006, earlier Notification
was neither cancelled nor varied with retrospective effect. As a matter of fact,
in the earlier Government Order, exemption was granted on the sale of Indian
Musical Instruments. In the subsequent Government Order also, exemption
was granted for the Indian Musical Instruments. As in the earlier Government
Order, even though exemption was granted for sale of Indian Musical
Instruments, they were not sufficiently enumerated which resulted in difficulty
and unsettlement in identifying the said Indian Musical Instruments. In order
to clarify the doubts and difficulties, these musical instruments were
exclusively enumerated in the later Government Order. By this act, it cannot
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be said that the scope of the earlier Government Order was neither narrowed
down nor curtailed nor withdrawn retrospectively. On the other hand, more
clarity has been introduced and therefore, there is no question of giving
retrospective effect to the earlier Government Order.
19. The electronic musical instruments as manufactured by the
petitioner would squarely fall under Item 14(iv) of Part D of the First
Schedule to the Tamil Nadu General Sales Tax Act, 1959 and therefore
taxable at 12%. The above Entry starts with the term 'electronic instruments',
which is comprehensive enough to bring within its fold electronic musical
instruments also.
20. It is the contention of the petitioner in the affidavit that the
goods enumerated under the said Entry are quite different from the musical
instruments and therefore, the said Entry is not appropriate to the goods
manufactured by them. The items which cannot straightaway be treated as
electronic by their very names such as cash registers, tabulaing and
calculating machines etc., have been specifically enumerated in the Entry and
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W.P.Nos.16595 to 16598 of 2008
this does not mean that the principle of ejusdem genaeris has to be applied in
order to identify as to whether a particular item is electronic instrument or
not.
21. It is contended that the writ petitions are preferred against
the notice inviting objections. If at all the petitioner is having any
documentary evidences in respect of their contentions, it is for them to place
the said documents before the Authority Competent. Contrarily, the writ
petitions against such notice need not be entertained as they are not
maintainable.
22. Considering the arguments, this Court is of an opinion that
the exemption was granted initially in Notification G.O.Ms.No.45, dated
12.02.2004. In the said Notification, it is generally stated that the exemption
in respect of tax payable by any dealer in sale of Indian Musical Instruments.
In view of the fact that the Commercial Taxes Department found certain
difficulties, inconsistency and discrepancy, though not to describe further in
respect of classification of Indian Musical Instruments. Situation warranted
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for issuing the subsequent order in G.O.Ms.No.193, dated 30.12.2006.
23. A close reading of these two orders would reveal that
Notification in G.O.Ms.No.45 was issued under Sub-section (1) of Section
17 of the TNGST Act, 1919, granting exemption on the sale of Indian
Musical Instruments. The subsequent Notification was issued stating that an
exemption in respect of the tax payable by any dealer under the said Act, on
the sale of Indian Musical Instruments namely, Veena, Violin, Tambura,
Mirdangam, Ghatam, Khanjira, Flute, Sitar, Sarod, Santoor, Dilruba,
Nadaswaram, Dolu, Tabla, Shenai, Pakwaz, Vichitra Veena, Gottu Vadyam,
Morsing, Chancle, Triangle, Rudreveena, Sarangi, Thalam, Dholak, Dholki,
Thavil, Magudi, Salangai, Sangu, Uthu, Edakka, Mathalam, Chenadi, Sruti
Box, Tar Shenhai, Mohanaveena, Kanjeeris, Urumi, Kombu,
Panchalogavadhyam, Mandolin, Udukku, Khol, Horns, Nagara,
Jalatharangam, Villadi Vadhyam and parts and accessories thereof shall be
added.
24. Perusal of these two Notifications would reveal that both
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relatable to Indian Musical Instruments. However, in the first Notification, the
details/classification of Indian Musical Instruments have not been provided
and in the subsequent Notification, it is clearly stated that the exemption in
respect of the tax payable by any dealer under the said Act on the sale of
Indian Musical Instruments namely, Veena, Violin etc. Thus, the subsequent
Notification dated 30.12.2006 is only in the nature of clarification to
understand what are all the instruments falling under the head of 'Indian
Musical Instruments'. The benefit of exemption is not taken away and the
benefit of exemptions conferred in Notification G.O.Ms.No.45 remains in
tact. The subsequent Notification was issued on 30.12.2006 enumerating the
list of instruments which all are falling under the category of Indian Musical
Instruments. Thus, the impugned notice dated 30.12.2006 cannot be
construed as if an alteration made in respect of the exemption granted in
Notification G.O.Ms.No.45.
25. Even in the counter, the respondents have clearly stated that
the intention in granting exemption of tax on Indian Musical Instruments is to
grant relief to poor artisans, who are engaged in the manufacture of those
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instruments from generation to generation, who are normally living in
penurious circumstances and further to make available such instruments
within the reach of poor and needy artisans, so as to develop the traditional
Indian music in India. Thus the purpose and object of the exemption must be
for Indian Musical Instruments are well enumerated by the respondents.
26. As rightly pointed out by the respondents, the State has not
intended to grant exemption in respect of large scale manufacturers of
electrically made Indian Musical Instruments. Such Indian Musical
Instruments, which all are using the electronic technologies, then it is to be
classified as electronic instruments, which would squarely fall under 14(iv) of
Part D of the First Schedule of TNGST Act, 1959.
27. This apart, when tax liability is fixed for electronic
instruments, it is to be construed that Indian Musical Instruments electrically
manufactured is to be classified as electronic instruments.
28. At the outset, whether it is Indian Musical Instruments or
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any other instruments, if it is an electronic instrument, then the same would
fall under the further classification of “electrical instruments” and cannot be
construed as traditionally manufactured Indian Musical Instruments, for
which exemption was granted with the specific intention to grant the relief to
poor artisans, who all are engaged in the manufacturing of these instruments
from generation to generation and living in penurious circumstances in the
State.
29. Tax exemption is a concession. Thus, exemption from
payment of tax can never be claimed as a matter of right. Exemptions are to
be granted strictly in consonance with the provisions of the Act. Thus,
purposive and contextual interpretation of exemption provisions are imminent
for the purpose of extending the benefit of exemption. The Government is
vested with the power to grant exemption and such exemptions are to be
granted in judicious manner. Power of exemption is conferred in order to
minimise the inequality and to mitigate the unjust circumstances and to ensure
that the Constitutional principles are achieved to the extent possible. Thus,
exemptions granted under any Statute is to be measured with reference to the
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Constitutional principles and its perspectives. Excessive or erroneous
exercise of power of exemption undoubtedly would lead to
unconstitutionality. The State is duty bound to ensure that exemptions are
granted to mitigate the unjust circumstances and to remove the injustice in a
particular issue. Thus, exemptions cannot be granted in a routine manner, so
as to facilitate the large scale manufacturers to gain profits in an unjust
manner. The Legislative intention of conferring power of exemption to the
Government is to enforce the Constitutional principles of social justice
equality in status amongst the citizen, including the economic status, which all
are to be achieved. The power of exemption is to be utilised for the up-
liftment of the depressed, oppressed and the poor class of people and not for
the purpose of granting benefit to the large profit making organisations. Thus,
any abuse or excessive grant of exemption is to be construed as opposed to
public policy under the Constitutional philosophy.
30. In these cases, as discussed in the aforementioned
paragraphs, exemptions granted by invoking Section 17 of the TNGST Act,
remains as it is in respect of Indian Musical Instruments and the impugned
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Notification dated 30.12.2006 in G.O.Ms.No.193 was issued to clarify the
Indian Musical Instruments, which all are falling under the exemption clause
notified in G.O.Ms.No.45, dated 12.02.2004 and therefore, the subsequent
Notification is a clarificatory in nature and cannot be construed as
cancellation of the exemption granted in G.O.Ms.No.45, dated 12.02.2004.
31. The very Government Notification dated 30.12.2006 in
G.O.Ms.No.193 would reveal that it is also relatable to Indian Musical
Instruments and what are all the instruments, which all are falling under the
category are enumerated for the purpose of removing the doubts for levying
tax.
32. This being the scope of the order impugned, this Court do
not find any merit on the contentions raised on behalf of the petitioner.
Further, the writ petitions are filed challenging the Notice. No writ against the
notice is to be entertained in a routine manner. If at all the petitioner is
aggrieved, they are bound to file their objections along with the documents
and the evidences.
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33. For all these reasons the writ petitions are devoid of merits
and stand dismissed. However, there shall be no order as to costs.
Consequently, connected miscellaneous petitions are also dismissed.
03-09-2021
Index : Yes/No
Internet : Yes/No
Speaking order/Non-speaking order
Svn
To
1.The Secretary,
Government of Tamil Nadu,
Commercial Taxes Department,
Fort St. George,
Chennai – 600 009.
2.Commissioner of Commercial Tax,
Ezhilagam,
Chepauk,
Chennai - 05.
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W.P.Nos.16595 to 16598 of 2008
3.Deputy Commercial Tax Officer,
Office of the Commercial Tax Officer,
Nandanam Assessment Circle,
No. 46, Greenways Road,
Chennai – 600 028.
S.M.SUBRAMANIAM, J.
Svn
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W.P.Nos.16595 to 16598 of 2008
03-09-2021
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