W.P.Nos.6123 to 6126 v. The Commercial Tax Officer (FAC)R.S. Puram East CircleCoimbatore

M/s. Nitin Trading Co. Rep by its ProprietorNithin Kumar,Jaiswal, Erode.... Petitioner in W.P.2412/06M/s. Shree Trading Company rep by its Proprietor P. Jayakumar,Erode.... Petitioner in W.P.2640/06M/s. Shree Krishna Trading Corep by its ProprietorSunil Kumar, singhal,Erode.... Petitioner in W.P.2641/06M/s. Dhiraj Internationalrep by its ProprietorDhiraj Jaiswal Erode.... Petitioner in W.P.Nos.3131 and 3132/06M/s. Chanchal Exportsrep by its ProprietorChanchal JaiswalErode.... Petitioner in W.P.Nos.3254 /06, 3617/06M/s. Shakthi Enterprisesrep by its PartnerK.V. RavishankarErode. ... Petitioner in W.P.Nos.3408 and 3409/06Krishna Enterprisesrep by its ProprietorBimala Devi,Erode.... Petitioner in W.P.No.3919/06Shri Jagadambal Traders rep by its ProprietorSakunthala DeviKhetan, Erode.... Petitioner in W.P.Nos. 6328 & 6329 of 2006M/s.Gokul Trading Companyrep by its PartnerT. BagavathiappanErode.... Petitioner in W.P.No.8822/06 https://hcservices.ecourts.gov.in/hcservices/ M/s. Synthite IndustrialChemicals Ltd., Karamadai, Mettupalayam Taluk.... Petitioner in W.P.Nos.9309 & 9310/06Tvl. Duraisamy Foods and SpicesPvt. Ltd.,rep by its ManagerM. NachiappanPerumalpalayam,Mullampatti.... Petitioner in W.P.No.9400/06Tvl. Hari Narayana Chabil Chandrep by its Partner Dinesh Chandra AgarwalErode.... Petitioner in W.P.No.9742/06M/s. Nani Agro Foods Pvt Ltd.,Erode.... Petitioner in W.P.12393/06M/s. Aditya Spices Pvt Ltd.,Erode.... Petitioner in W.P.NO.12499/06VSThe Commercial and SpecialCommissioner of Commercial TaxesEzhilagam, Chennai... Ist Respondent in W.P.Nos.30250 and 30251 of 2005The Commercial Tax Officer Chithode Assessment CircleErode.... 2nd Respondent in W.P.Nos.30250 and 30251 of 2005State of Tamilnadurep by its SecretaryCommercial Taxes Department Chennai-9.... Ist Respondent in W.P.No.47132/02The Commercial Tax OfficerPark Road CircleErode.... 2nd Respondent in W.P.No.47132/02Respondent in W.P.Nos.1830 to1832 of 2006, 2410 to 2412 of2006, 2640/06, 3131 & 3132/06,3254 & 3255 of 2006, 3593/06,3617/0, 6328, 6329 of 2006 https://hcservices.ecourts.gov.in/hcservices/ The Deputy Commercial Tax Officer Park Road Circle, Erode.... Respondent in W.P.Nos.2641 of 2006, 3919/06, 9742/06The Commercial Tax OfficerSathy Road Circle,Erode.... Respondent in W.P.Nos.3408 and 3409/06The Commercial Tax Officer (FAO)Chithode Circle,Erode.... Respondent n W.P.Nos.8822 of2006, 12393/06The Commercial Tax Officer Mettupalayam.... Respondent in W.P.Nos.9309 and 9310 of 2006The Commercial Tax Officer (FAC)Park Road, Circle, Erode.... Respondent in W.P.12499/06Writ Appeals preferred under Clause 15 of the Letters patentagainst the orders of this Court 1. dated 6.12.07 in W.P.NO.33459 of 2005 W.A.465/072. dated 22.6.06 in W.P.NO.18966 of 20063. dated 13.12.05 in W.P.NO.39779 of 2005 4. dated 13.12.05 in W.P.NO.39780 of 20055. dated 13.9.05 in W.P.No.29320 of 2005 respectively.W.P.Nos.33459/05, 18966 of 2006, 39779 and 39780 of 2005, 29320 of2005.Writ Petitions presented under Article 226 of the Constitutionof India to issue a writs of certiorari calling for the records onthe file of the second respondent herein in his proceedings inTNGST NO.3001666/2001-2002 dated 6.10.2003 and set aside the same.(in W.P.No.33459 of 2005)2. Certiorarified Mandamus a. calling for the records on thefile of the Respondent herein in his proceedings in TNGSTNO.1941761/1999-2000 dated 28.3.2006 and quash the same and furtherdirecting the respondent not to levy purchase Tax on the TurmericPowder chllies, Coriander and Tamarind purchased by the Petitionerfor own consumption in as much as the Petitioners total turnoveris below Rs.300 crores. https://hcservices.ecourts.gov.in/hcservices/ b. Calling for the records of the Respondent in TNGSTAsst.No.2040530/2002-03 and 2003 -2004 respectively quash thenotice dated 23.9.2005 and 26.9.2005 respectively issued thereinand further directing the respondent not to levy purchase tax onthe turmeric purchased by the Petitioner and exported out of thecountry or sent by way of branch transfer in as much as thepetitioner's total turnover is below Rs.300 crores. (inW.P.Nos.39779/05 and 29780/05)3. Writ of certiorari calling for the records relating to thepre- Revision notice issued by the 2nd respondent dated 18.7.2005 inrespect of the Petitioners TNGST Asst.No.2920699 for the Assessmentyear 2000-2001 and quash the same. (in W.P.No.29320/05)Writ Petitions Petitions presented under Article 226 of the Constitution of Indiato issue a writ of certiorari 1. calling for the records relatingto the pre-revision notice issued by the Second Respondent dated13.12.2004 in respect of the Petitioners TNGST Assessment number2920699 for the Assessment year 2002-2003 and to quash the same.(in W.P.6123 of 2005)2. calling for the records relating to the notice issued by thesecond respondent dated 2.2.2005 in respect of the Petitioner TNGSTassessment Nos.2922204, 2922745 and 2922821 respectively for theAssessment year 2003-2004 and to quash the same.(in W.P.Nos.6124 to6126 of 2005)3. calling for the records relating to the proceedings of thesecond respondent dated 30.6.2005 in TNGST No.3063276/2003-04 and2002-03 respectively and quash the same. (W.P.Nos.30250 & 30251 of2005)4. Writ of Declaration declaring that the letter dated9.4.2002 of the Commercial Taxes Department by itself in theabsence of any valid notifications under Section 59(1) of the T.N.General sales Tax Act cannot bring out an amendment to notificationG.O.Ms.No.29 commercial Taxes dated 27.3.2002 and levy the benefitof exemption on the inter state sales turn over of Turmeric (inW.P.No.47132/02)5. Writ of Certiorari calling for the records relating to the prerevision notice issued by the 2nd respondent dated 10.5.2004 inrespect of the petitioners TNGST Assessment No.2920699 for theAssessment year 2001-2002 and to quash the same. (in W.P.No.28798of 2004)6. Writ of certiorari calling for the records of theRespondent in his notice in Assessment number 2860022/2003-2004 and https://hcservices.ecourts.gov.in/hcservices/ 2002-03 respectively dated 17.1.2005 and 5.1.2005 respectively andconsequential penalty notice in TNGST Assessment No.2860022/2003-2004 and 2002-03 respectively dated 8.11.2005 and quash the same asillegal. (in W.P.Nos.1830 and 1832 of 2006)7. Writ of certiorari calling for the records of theRespondent in his notice in TNGST No.2860022/2000- 2001Reg.No.(AG)dated 26.12.2005 and quash the same as illegal. (in W.P.No.1831 of2006)8. Writ of certiorari calling for the records of therespondent in his notice in TNGST No.2861593/2001-2002 dated26.12.2005 and quash the same as illegal. (in W.P.No.2410/06)9. writ of Certiorari calling for the records of theRespondent in his notice in TNGST Nos.2861784 / 2861653respectively/2002-2003 dated 5.1.2005 and consequential penaltynotice in TNGST Assessment Nos.2861784 and 2861653 respectively/2002-2003 dated 8.11.2005 and quash the same as illegal (inW.P.Nos.2411 and 2412 of 2006)10. Writ of Certiorari calling for the records of theRespondent in his notice in (a) TNGST No.2861754/2002-2003 dated3.10.2005 and b. TNGST No. 2861177/CST No.603923/2001-02/ 2001-2002dated 7.11.2005 respectively and quash the same as illegal. (inW.P.No.2640 and 2641/06)11. Writ of certiorari calling for the records of theRespondent in his notice in TNGST No.2861246/2002-2003 and 2003-2004 respectively dated 5.1.2005 and 17.1.2005 and consequentialpenalty notice in TNGST Assessment No.2861246/2002-2003 and 2003-2004 respectively dated 8.11.2005 and quash the same as illegal.(in W.P.No.3131 and 3132 of 2006)12. Writ of Certiorari calling for the records of theRespondent in his notice in TNGST Nos.2861085 and 2861784respectively 2003-2004 dated 17.1.2005 and 19.1.2005 andconsequential penalty notice in TNGST Assessment Nos.2861085 and2861784 respectively / 2003-2004 dated 8.11.2005 and quash the sameas illegal. (in W.P.Nos. 3254 and 3255 of 2006)13. Writ of Certiorari calling for the records of theRespondent in his TNGST Assessment No.2861593/2000-2001 dated18.1.2006 quash the same as illegal. (in W.P.No.3593/06)14. Writ of certiorari calling for the records of theRespondent in his notice in TNGST Assessment number 2861085/2002-03dated 5.1.2005 and consequential penalty notice in TNGST Assessment https://hcservices.ecourts.gov.in/hcservices/ No.2861085/2002-2003 dated 8.11.2005 and quash the same as illegal.(in w.P.No.3617/06)15. Writ of Certiorari calling for the records of theRespondent in his notice in TNGST No.2875217/2002-2003 and 2003-2004 respectively dated 30.6.2005 and 14.3.2005 respectively andquash the same as illegal (in W.P.No.3408 and 3409/06)16. Writ of Certiorari calling for the records on the files ofthe respondent herein in TNGST NO.2860501/ 2000-2001 dated7.11.2005 and quashing the proceedings of the Respondent herein inTNGST No.2860501/2000-201 dated 7.11.2005 (in W.P.No.3919/06)17. Writ of certiorari calling for the records on the files ofthe Respondent herein in TNGST No.2860507/2001-2002 and 2003-2004dated 29.12.2005 and 17.1.2005 respectively and quashing theproceedings of the Respondent herein in TNGST No.2860507/2002-2002and 2003-2004 dated 29.12.2005 and 17.1.2005 respectively. (inW.P.Nos.6328 and 6329 of 2006)18. Writ of Certiorari calling for the records of theRespondent in his proceedings in TNGST No.3063416/2003-2004 dated31.1.2006 and quash the same as illegal. (in W.P.No.8822 of 2006)19. Writ of Certiorari Mandamus calling for the records of theRespondent n TNGST Assessment No.2040530/2002-2003 and 2003-2004respectively quash the impugned order 28.2.2006 passed therein andfurther directing the respondent not to levy purchase tax on theTurmeric purchased by the Petitioner and exported out of thecountry or sent by way of Branch transfer in as much as thepetitioners total turnover is below Rs.300 Crores. (in W.P.Nos.9309and 9310 of 2006)20. Writ of Certiorari calling for the records relating tothe notice issued by the second respondent dated 9.3.2006 and10.3.2006 respectively in respect of the Petitioners TNGSTAssessment number 2922821 and 2922204 for the Assessment year20040-2005 and to quash the same. (in W.P.No.9399 and 9400 of 2006)21. Writ of Certiorari calling for the records of theRespondent in his revision notice TNGST No.2860040/2002-2003 dated13.3.2006 and quash the same as illegal. (in W.P.NO.9742 of 2006)22. Writ of Certiorarified Mandamus calling for the records ofthe Respondent in TNGST 3061965 /2003-2004 set aside the noticedated 17.1.2005 issued therein and further directing the respondentnot to levy purchase Tax on the Turmeric purchased by thePetitioner and exported out of the Country or sent by way of Branch https://hcservices.ecourts.gov.in/hcservices/ Transfer in as much as the Petitioner total turn over is belowRs.300 crores (in W.P.No.12393/06)23. Writ of Certiorari Mandamus calling for the records of theRespondent in TNGST No.2861599 /2002-2003 set aside the noticedated 31.5.2005 issued therein and further directing the respondentnot to levy purchase Tax on the Turmeric purchased by thePetitioner and exported out of the Country or sent by way of BranchTransfer in as much as th Petitioners total turn over is belowRs.300 crores.(in W.P.No.12499/06)For Appellant : Mr.C.Natarajan, in W.A.No.199/2006200/06Senior Counsel and for petitionerfor M/s.Pushya Sitaramanin W.P.Nos.9309 & 9310/2006 and W.P.No.12393/2006 &12499/06For Appellant in:Mrs.R.HemalathaW.A.No.465 of 2007W.A.No.909 of 2006Mr.R. Gandhi SC for Mr.R.G. Narendhiran Advocate for theAppellant in W.A.1882/05 and for the Petitioner in W.P.Nos.6123 to6126 of 2005 , 28798 of 2004 and 9399 & 9400 of 2006Mr.R. Nalliappan, Advocate for the Petitioner inW.P.No.47132/02Mr.R. Saravanakumar, Advocate for the Petitioner in W.P.No.30250and 30251 of 2005Mr.S. Ramanathan, Advocate for the Petitioner in W.P.Nos.1830 to1832 of 2006, 2410 to 2412 of 2006, 2640 and 2641 of 2006, 3131 and3132 of 2006, 3254 and 3255 of 2006, 3593, 3617, 3408 and 3409 of2006, 8822 of 2006, 9742 of 2006 Mr.C. Natarajan, SC for Mr.N. Inbarajan, Advocate for thePetitioner in W.P.Nos.3919, 6328, 6329 of 2006For Respondents :Mr.Haja Nazirudeen Spl. Government Pleader J U D G M E N T(Delivered by P.D.DINAKARAN,J.)The challenge in these batch of writ appeals and writ https://hcservices.ecourts.gov.in/hcservices/ petitions is as to the power to levy purchase tax under Section 7-Aof the Tamil Nadu General Sales Tax Act (for brevity, "the Act") bythe Revenue from the respective appellants/petitioners (forbrevity, "the Dealers") in the context of the Circular D.Dis.ActsCell II/75893/99, dated 24.12.1999, as amended by the clarificationNo.91/2000, D.Dis.Acts Cell II/52300/2000, dated 4.10.2000 issuedby the Revenue to the effect that the stock transfer of turmeric toother States is liable to purchase tax under Section 7-A of the Actif it is purchased from unregistered dealers within the State; thatpurchase tax under Section 7-A of the Act is leviable only if theturnover of the dealer under the Act exceeds Rupees Three hundredcrores in a year; that the exemption granted under Third Scheduleto the Act is not a general exemption, but on conditional that thesale of turmeric by a dealer whose turnover exceeds Rupees threehundred crores per year does not fall under Third Schedule; thatsince there is no other entry in the Schedules, such dealers areliable to pay tax at 11% under Entry 67 of Part-D of the FirstSchedule; and that turmeric in any form such as balls, fingers andpowder continue to be the same commodity, if tax was paid in onestage, the subsequent change in forms will not attract sales taxsince it is only second sale of the tax suffered commodity.2. Concededly, the Revenue issued show causes notices to thedealers, who have escaped assessment of purchase tax and havepurchased turmeric, an agriculture produce from eitheragriculturists, marketing committee, householders or unregistereddealers or in some cases from registered dealers. When such showcause notices were challenged in writ petitions, finding that suchshow causes notices are of pre-revision assessments and the dealerscould raise their objections to the same, they were permitted tosubmit their objections with supporting materials and the Revenuewas directed to consider the same and pass appropriate orders inaccordance with law. As a result, writ appeals were preferred andother writ petitions challenging the show cause notices were taggedwith the writ appeals.3.1. Mr.C.Natarajan, learned Senior Counsel arguing on behalfof the dealers invited our attention to Sections 2(ooo), 2(q), 2(r), 7-A, 8, 28-A of the Act and Entry 16 of Part-B of Third Schedule.Our attention was also drawn to the Circular D.Dis.Acts CellII/75893/99, dated 24.12.1999, as amended by the clarificationNo.91/2000, D.Dis.Acts Cell II/52300/2000, dated 4.10.2000 issuedby the Revenue, the existence of which in the statute book is notdenied by the learned Special Government Pleader.3.2. The core contention of Mr.C.Natarajan, learned SeniorCounsel for the dealers is that the Revenue, having issued CircularD.Dis.Acts Cell II/75893/99, dated 24.12.1999, as amended by theclarification No.91/2000, D.Dis.Acts Cell II/52300/2000, dated https://hcservices.ecourts.gov.in/hcservices/

4.10.2000, either by exercise of the power conferred under Sections8 or 28-A of the Act, as the case may be, is bound by the same, asthe same are in force. In this regard, reliance was placed on thedecision of the Division Bench of this Court in Mohan Breweries &Distilleries Ltd. v. Commercial Tax Officer (139 STC 477), to whichone of us was a party (P.D.DINAKARAN,J.), wherein the below stateddecisions of the Apex Court and other High Courts were followed:i.STATE BANK OF TRAVANCORE v. C.I.T., [1986] 158 ITR 102(SC);ii.KESHAVJI RAVJI & CO. v. COMMISSIONER OF INCOME TAX,[1990] 183 ITR 1 (SC);iii.COLLECTOR OF CENTRAL EXCISE, PATNA v. USHA MARTININDUSTRIES, [1998] 111 STC 254 (SC);iv.PAPER PRODUCTS LTD. v. COMMISSIONER OF CENTRAL EXCISE,[1999] 112 ELT 765 (SC);v.UCO BANK v. C.I.T., [1999] 237 ITR 889 (SC);vi.COMMISSIONER OF SALES TAX, U.P. v. INDRA INDUSTRIES,[2001] 122 STC 100 (SC);vii.COMMISSIONER OF INCOME TAX v. KELVINATOR OF INDIA LTD.,[2002] 256 ITR 1 (Delhi);viii.COLLECTOR OF CENTRAL EXCISE, VADODRA v. DHIREN CHEMICALINDUSTRIES, [2002] 126 STC 122 (SC);ix.COLLECTOR OF CENTRAL EXCISE, VADODARA v. DHIREN CHEMICALINDUSTRIES, [2002] 143 ELT 19 (SC); andx.COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN OILCORPORATION LTD., [2004] 165 ELT 257 (SC).3.3. Mr.C.Natarajan, learned Senior Counsel also relied on thedecision of the First Bench of this Court in an unreported judgmentdated 19.9.2006 in W.A.No.1101 of 2006, etc (between Om Plasticsand The Deputy Commercial Tax Officer), and also the decision ofthis Bench in INDIA CEMENTS LTD. v. ASST. COMMISSIONER (CT), [2007]6 VST 140 whereunder the applicability of the circular andclarification issued under Section 28-A of the Act was dealt withand the ratio laid down by the Apex Court and other High Courts onthe point, as followed in Mohan Breweries & Distilleries Ltd. v.Commercial Tax Officer (139 STC 477), was referred to. 3.4. According to Mr.C.Natarajan, learned Senior Counsel, asthe circular and the clarification referred to above, were inexistence during the relevant period, in view of the settledproposition of law that the circular is binding on the Revenue, theshow cause notice raising a demand contrary to the terms of thecircular and the clarification is ab initio void, as per the ratiolaid down by the Apex Court in COMMISSIONER OF CUSTOMS, CALCUTTAv. INDIAN OIL CORPORATION LTD., [2004] 165 ELT 257; and PAPERPRODUCTS LTD. v. COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT765. https://hcservices.ecourts.gov.in/hcservices/

4.1. Per contra, Mr.Haja Nazirudeen, learned SpecialGovernment Pleader, vehemently contends that even though theexistence of the Circular D.Dis.Acts Cell II/75893/99, dated24.12.1999, as amended by the clarification No.91/2000, D.Dis.ActsCell II/52300/2000, dated 4.10.2000 is not disputed, the same isnot valid, inasmuch as the same is contrary to the terms of thestatute.4.2.1. According to Mr.Haja Nazirudeen, learned SpecialGovernment Pleader, the impugned circular either could have beenissued under Sections 8 or 28-A of the Act. If it is construedthat the circular has been issued under Section 8 of the Act readwith Entry 16 of Part-B of Third Schedule, the Circular iscontrary to the terms of the statute, as Entry 16 of Part-B ofThird Schedule refers only to sale tax, but not purchase tax, asthe same is applicable only to the commodities specified thereunderbeing "sold", but not purchased. Entry 16 of Part-B of ThirdSchedule reads as under:"16. Chillies, tamarind, corriander, turmeric and shikakaisold by any dealer whose total turnover in respect of theseitems does not exceed Rs.300 Crores in a year"(emphasis supplied)4.2.2. Argued that there is no reference to "purchase" inEntry 16 of Part-B of Third Schedule. Therefore, what was intendedto be exempted under Entry 16 of Part-B of Third Schedule is only'sales tax', but not 'purchase tax', even though Section 8 of theAct provides that subject to such restrictions and conditions asmay be prescribed, a dealer who deals in the goods specified in theThird Schedule shall not be liable to pay "any tax" under this Act,in respect of such goods.4.3. Mr.Haja Nazirudeen, learned Special Government Pleaderalso contends that the circular relied upon by the dealers, viz.,Circular D.Dis.Acts Cell II/75893/99, dated 24.12.1999, as amendedby the clarification No.91/2000, D.Dis.Acts Cell II/52300/2000,dated 4.10.2000 could not have been issued under Section 28-A ofthe Act, as Section 28-A of the Act refers to only theclarifications relating to the rate of tax, but not with referenceto the exemption of any tax.5. We have given careful consideration to the submissions ofboth sides.6. Before proceeding further, it is apt to refer Sections 2(ooo), 2(q), 2(r) , 7-A, 8, 28-A of the Act and Entry 16 of Part-Bof Third Schedule, which read as under: https://hcservices.ecourts.gov.in/hcservices/ "Section 2(ooo): “tax” means and includes a sales tax,purchase tax, resale tax or surcharge, as the case may be,payable under this Act;Section 2(q): "total turnover" means the aggregate turnoverin all goods of a dealer at all places of business in theState, whether or not the whole or any portion of suchturnover is liable to tax;Section 2(r): "turnover" means the aggregate amount forwhich goods are bought or sold, or delivered or supplied orotherwise disposed of in any of the ways referred to inclause (n), by a dealer either directly or through another,on his own account or on account of others whether for cashor for deferred payment or other valuable consideration,provided that the proceeds of the sale by a person ofagricultural or horticultural produce, other than tea andrubber (natural rubber latex and all varieties and grades ofraw rubber), grown within the State by himself or on anyland in which he has an interest whether as owner,usufructuary mortgagee, tenant or otherwise, shall beexcluded from his turnover;Explanation 1: "Agricultural or horticultural produce" shallnot include such produce as has been subject to anyphysical, chemical or other process for being made fit forconsumption, save mere cleaning, grading, sorting or drying.Explanation 1A: Any amount charged by a dealer by way of taxseparately without including the same in the price of thegoods bought or sold shall not be included in the turnover.Explanation 2: Subject to such conditions and restrictions,if any, as may be prescribed in this behalf—(i)[Omitted](ii)the amount for which goods are sold shall include anysums charged for anything done by the dealer in respect ofthe goods sold at the time of, or before the deliverythereof;(iii)any cash or other discount on the price allowed inrespect of any sale and any amount refunded in respect ofarticles returned by customers shall not be included inthe turnover; and(iv)where for accommodating a particular customer, a dealerobtains goods from another dealer and immediately disposesof the same to the said customer, the sale in respect ofsuch goods shall be included in the turnover of the latterdealer but not in that of the former. https://hcservices.ecourts.gov.in/hcservices/ Explanation 3: Any amount realised by a dealer by way ofsale of his business as a whole, shall not be included inthe turnover.Explanation 4: The aggregate amount for which the goods arebought or sold or delivered or supplied through a factor,broker, commission agent or arhati, del credere agent or anauctioneer or any other mercantile agent, by whatever namecalled, whether for cash or for deferred payment or othervaluable consideration, shall be deemed to be the turnoverof such factor, broker, commission agent, arhati, delcredere agent, auctioneer or any other mercantile agent, bywhatever named called.Section 7-A. Levy of purchase tax.-(1) Subject to theprovisions of sub-section (1) of section 3, every dealer whoin the course of his business purchases from a registereddealer or from any other person, any goods (the sale orpurchase of which is liable to tax under this Act) incircumstances in which no tax is payable under section 3 or4, as the case may be, (not being a circumstance in whichgoods liable to tax under sub-section (2) (2-A) or (2-C) ofsection 3 or section 4, were purchased at a point other thanthe taxable point specified in Schedule in the First theFifth, the Eleventh or the Second Schedule respectively andeither.-(a) consumes or uses such goods in or for the manufacture ofother goods for sale or otherwise, or(b) disposes of such goods in any manner or other than byway of sale in the State; or(c) despatches or carries them to a place outside the Stateexcept as a direct result of sale or purchase in the courseof inter-State trade or commerce, or(d) installs and uses such goods in the factory for themanufacture of any goods,shall pay tax on the turnover relating to the purchase asaforesaid at the rate mentioned in section 3 or 4, as thecase may be.(2) Notwithstanding anything contained in sub-section (1),the provisions of section 7 shall apply to a dealer referredto in sub-section (1) who purchases goods the sale of which https://hcservices.ecourts.gov.in/hcservices/ is liable to tax under sub-section (1) of section 3 andwhose total turnover for a year is not less than one lakh ofrupees but not more than two lakhs of rupees, and such adealer may, at his option, instead of paying the tax inaccordance with the provisions of sub-section (1), pay taxat the rates mentioned in sub-section (1) of section 7: PROVIDED that this sub-section shall not apply to thepurchases made on or after the 1st day of April, 1990.(3) Every dealer liable to pay purchase tax under sub-section (1) shall, for the purpose of this Act, be deemed tobe a registered dealer.Section:8 Exemption from tax.- Subject to such restrictionsand conditions as may be prescribed, a dealer who deals inthe goods specified in the Third Schedule shall not beliable to pay any tax under this Act, in respect of suchgoods.Section 28-A: Power to issue clarification by Commissionerof Commercial Taxes.- (1) The Commissioner of CommercialTaxes on an application by a registered dealer, may clarifyany point concerning the rate of tax under the Act. Suchclarification shall be applicable to the goods specified inthe application:PROVIDED that no such application shall be entertainedunless it is accompanied by proof of payment of such fee,paid in such manner, as may be prescribed.(2) The Commissioner of Commercial Taxes may, if heconsiders it necessary or expedient so to do, for thepurpose of uniformity in the work of assessment andcollection of tax, clarify any point concerning the rate oftax under this Act or the procedure relating to assessmentand collection of tax as provided for under this Act.(3) All persons working under the control ofCommissioner of Commercial Taxes shall observe and followthe clarification issued under sub-section (1) and sub-section (2)."(emphasis supplied)7. There cannot be any dispute that the tax payable under thisAct, as defined under Section 2(ooo) of the Act means and includessales tax, purchase tax, resale tax or surcharge, as the case maybe, and the total turnover, as defined under Section 2(q) of theAct means aggregate turnover in all goods of a dealer at all places https://hcservices.ecourts.gov.in/hcservices/ of business in the State, whether or not the whole or any portionof such turnover is liable to tax. The words "whether or not thewhole or any portion of such turnover is liable to tax" makes itclear that the turnover means aggregate turnover without referenceto the payment of any particular tax, namely sales tax, purchasetax, resale tax or surcharge, which are liable to be paid on thewhole or any portion of such turnover.8. The Apex Court, while considering the scope and object ofSection 7-A of the Act, in THE STATE OF TAMIL NADU v.M.K.KANDASWAMI & OTHERS, [1975] 36 STC 191, held that the mainobject of Section 7-A of the Act is to plug leakage and preventevasion of tax and therefore, while interpreting Section 7-A of theAct, construction which would defeat its purpose and, in effect,obliterate it from the statute book should be eschewed. If morethan one construction is possible, that which preserves itsworkability and efficacy is to be preferred to the one which wouldrender it otiose or sterile.9. With this rule of interpretation, we do not have anyhesitation to hold that Section 7-A of the Act is held to be acharging section as well as a remedial one, inasmuch as it levies atax on the purchases of goods by a dealer from a registered dealeror from any other persons who may be either unregistered dealer orother persons (such as agriculturists and other producers) who arenot liable to pay tax under this Act on their sales or purchases.A careful reading of Section 7-A of the Act makes it clear that ifthe purchases at a point other than the point at which tax isleviable under Section 3(2) or 4, the tax under this Section willnot be attracted, as tax in such cases is liable to be recovered atthe earlier or later point. In other words, the tax under thisSection would be attracted only if the goods so purchased areeither not sold in the State (when they cannot get taxed underSection 3 or 4) or not sold in the course of inter-State trade orcommerce from this State (when they will get taxed under the CSTAct). 10. Pointing out the above object behind Section 7-A of theAct, Mr.Haja Nazirudeen, learned Special Government Pleadercontends that the Circular D.Dis.Acts Cell II/75893/99, dated24.12.1999, as amended by the clarification No.91/2000, D.Dis.ActsCell II/52300/2000, dated 4.10.2000 relied upon by the dealers, ifgiven effect to, would defeat the very object of Section 7-A of theAct. The learned Special Government Pleader for the Revenue, ofcourse argues that even though the existence of the CircularD.Dis.Acts Cell II/75893/99, dated 24.12.1999, as amended by theclarification No.91/2000, D.Dis.Acts Cell II/52300/2000, dated4.10.2000 could not be disputed by the Revenue, the same runscontrary to the terms of Section 7-A of the Act and therefore, the https://hcservices.ecourts.gov.in/hcservices/ dealers are not entitled to any benefit of exemption because theexemption under Entry 16 of Part-B of the Third Schedule read withSection 8 of the Act could be granted only on sales tax, but notfor the purchase tax in view of the word "sold" used in the saidEntry 16 of Part-B of the Third Schedule. But, we are unable toappreciate such contention of the learned Special GovernmentPleader for the obvious reason that the focal point of theexpression used in the Circular D.Dis.Acts Cell II/75893/99, dated24.12.1999, as amended by the clarification No.91/2000, D.Dis.ActsCell II/52300/2000, dated 4.10.2000 only refers to 'purchase tax'and not 'sales tax'.11.1. Of course, the argument made by the learned SpecialGovernment Pleader as to the interpretation of Section 28-A of theAct is interesting. According to the learned Special GovernmentPleader, Section 28-A of the Act only empowers the Commissioner ofCommercial Taxes to clarify any point concerning the rate of taxand not for exempting the tax itself.11.2. As rightly pointed out by the learned Special GovernmentPleader, Section 28-A(1) of the Act deals with the power of theCommissioner of Commercial Taxes on an application by a registereddealer, to clarify any point concerning the rate of tax under theAct, provided such application is accompanied by proof of paymentof such fee. 11.3. Section 28-A(2) of the Act confers suo motu power on theCommissioner of Commercial Taxes to issue clarification, if andwhen he considers it necessary or expedient to do so, the purposebeing (i) to maintain uniformity in the work of assessment andcollection of tax; (ii) to clarify any point concerning the rate oftax under the Act; and (iii) to clarify the procedure relating toassessment and collection of tax.12.1. A careful reading of Sections 28-A(1) and 28-A(2) of theAct make it clear that the suo motu power conferred on theCommissioner of Commercial Taxes under Section 28-A(2) of the Actis wider, inasmuch Section 28-A(1) of the Act only empowers theCommissioner of Commercial Taxes to clarify any point concerningthe 'rate of tax' under the Act, as applicable to the goodsspecified in the application, but as per Section 28-A(2) of theAct, the Commissioner of Commercial Taxes has got suo motu power,which he can exercise whenever he considers it necessary andexpedient to do so, and the reasons for conferring such suo motupower on the Commissioner are (i) to maintain uniformity in thework of assessment and collection of tax; (ii) to clarify any pointconcerning the rate of tax under the Act; and (iii) to clarify theprocedure relating to assessment and collection of tax. Therefore,under Section 28-A(2) of the Act, the Commissioner of Commercial https://hcservices.ecourts.gov.in/hcservices/ Taxes is empowered not only to clarify any point concerning therate of tax under the Act, but also to clarify the procedurerelating to assessment and collection of tax as provided for underthe Act, which includes the power to grant exemption of tax itselfin view of the word "or" used in between the words "clarify anypoint concerning the rate of tax under this Act" and "the procedurerelating to assessment and collection of tax as provided for underthis Act". That apart, it is a settled law that Nil rate of duty(which occurs in the case of exemption of tax) is also a rate ofduty, vide C.C.E. v. Vazir Sultan Tobacco Co. Ltd., [1996] 3 SCC434.12.2. We are, therefore, of the considered opinion that thepower conferred under Section 28-A(2) of the Act on theCommissioner of Commercial Taxes to issue clarifications is widerin nature and independent, notwithstanding the statutory powerconferred under Section 8 of the Act read with Entry 16 of Part-Bof Third Schedule and such exercise of power by the Commissioner ofCommercial Taxes under Section 28-A(2) of the Act cannot berestricted only with reference to the clarifications concerningrate of tax, denying the power of exempting the tax itself, as thenil rate of duty is also a rate of duty.13. As long as the Circular D.Dis.Acts Cell II/75893/99,dated 24.12.1999, as amended by the clarification No.91/2000,D.Dis.Acts Cell II/52300/2000, dated 4.10.2000 is in force, thesame is binding on the Revenue as held by this Bench in INDIACEMENTS LTD. v. ASST. COMMISSIONER (CT), [2007] 6 VST 140,following the well settled principles laid down by the Apex Courtand other High Courts, referred to therein. The relevant portionof the said order is extracted hereunder:"In Mohan Breweries & Distilleries Ltd. v. Commercial TaxOfficer (139 STC 477) a Division bench of this Court inwhich one of us was a party (P.D.DINAKARAN,J.), interpretingthe power of issuing clarifications u/s.28A of the TNGSTAct, held as follows: "....the law is well settled on the point in the lightof the following decisions, which are discussed hereunder.8.6.2. The Apex Court in STATE BANK OF TRAVANCORE v.C.I.T., [1986] 158 ITR 102 held that even though theclarifications issued by the revenue being executive incharacter cannot alter the provisions of the Act, sincethey are in the nature of concessions, they can always beprospectively withdrawn. In the instant case, even thoughthe clarification dated 9.11.1989 is executive in nature,the concessions given to the assessee could be withdrawnonly prospectively, but not retrospectively because, suchexecutive circulars are binding on the authorities, as held https://hcservices.ecourts.gov.in/hcservices/ by the Apex Court in KESHAVJI RAVJI & CO. v. COMMISSIONER OFINCOME TAX, [1990] 183 ITR 1. In KESHAVJI RAVJI & CO. v.COMMISSIONER OF INCOME TAX, referred supra, while dealingwith Section 119 of the Income Tax Act, which is parimateria to Section 28-A of the Tamil Nadu General Sales TaxAct, the Apex Court held that the benefits of such circularsto assessees have been held to be permissible even thoughthe circulars might have departed from the strict tenor ofthe statutory provision and mitigated the rigour of the law.That apart, the clarification dated 27.12.2000 gains astatutory force in view of Section 28-A of the Act, whichwas inserted by the Tamil Nadu Act 60 of 1997, which cameinto force with effect from 6.11.1997. 8.6.3. In COLLECTOR OF CENTRAL EXCISE, PATNA v. USHAMARTIN INDUSTRIES, [1998] 111 STC 254, three Judges of theApex Court, held that when the Central Board of Excise andCustoms made all others to understand a notification in aparticular manner and when the latter have actedaccordingly, it is not open to the revenue to turn againstsuch persons on a premise contrary to such instructions, andsuch circulars would be binding on the department.8.6.4. The Apex Court in PAPER PRODUCTS LTD. v.COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT 765, whileinterpreting Section 37-B of the Central Excise Act, 1944which is pari materia to Section 28-A of the Tamil NaduGeneral Sales Tax Act held that circulars issued by theCentral Board of Excise and Customs are binding on thedepartmental authorities and they cannot take a contrarystand, and that the department cannot repudiate a circularissued by the Board on the basis that it was inconsistentwith a statutory provision and further held that theassessee can contest the validity or legality of suchDepartmental Circulars or Instructions; the Department donot have a right to file an appeal against the correctnessor binding nature of a circular; the Department's actionshave to be consistent with the circulars; and thatconsistency and discipline are of far greater importancethan winning or losing Court proceedings.8.6.5. In UCO BANK v. C.I.T., [1999] 237 ITR 889, theApex Court held that the circular issued by the revenueunder Section 119 of the Income Tax Act are binding on therevenue and such circulars are meant for ensuring properadministration of the statute and they are designed tomitigate the rigours of the application of a particularprovision of the statute in certain situations by applying abeneficial interpretation to the provision in question. https://hcservices.ecourts.gov.in/hcservices/

8.6.6. In COMMISSIONER OF SALES TAX, U.P. v. INDRAINDUSTRIES, [2001] 122 STC 100, the Apex Court held that acircular issued by the Sales Tax authorities is binding onthe taxing authorities and the taxing authority cannot beheard to advance an argument that is contrary to thatinterpretation.8.6.7. In COMMISSIONER OF INCOME TAX v. KELVINATOR OFINDIA LTD., [2002] 256 ITR 1, it was held that the Board haspower to issue circulars under Section 119 of the Income TaxAct and it is trite that circulars which are issued by theCentral Board of Direct Taxes are legally binding on therevenue.8.6.8. The Constitution Bench of the Apex Court inCOLLECTOR OF CENTRAL EXCISE, VADODRA v. DHIREN CHEMICALINDUSTRIES, [2002] 126 STC 122, held that if there arecirculars which have been issued by the Central Board ofExcise and Customs which place a different interpretationupon the said phrase, that interpretation will be bindingupon the revenue. Similar view was taken by the Apex Courtin COLLECTOR OF CENTRAL EXCISE, VADODARA v. DHIREN CHEMICALINDUSTRIES, [2002] 143 ELT 19. 8.6.9. In COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIANOIL CORPORATION LTD., [2004] 165 ELT 257, the Apex Courtheld that the circulars issued by the revenue under Section37-B of the Central Excise Act, 1944 (which is pari materiato Section 28-A of the Act) are binding primarily on basisof language of statutory provisions buttressed by need ofadjudicating officers to maintain uniformity in levy oftax/duty throughout the country and not on the basis ofpromissory estoppel, and that when a circular remains inoperation, the revenue is bound by it and cannot be allowedto plea that it is not valid nor that it is contrary to theterms of statute.8.6.10. It is, therefore, clear that even though theclarification dated 9.11.1989 is executive in nature, thesame is binding on the authorities till the concessionsgiven to the petitioner under the clarification werewithdrawn, which could be done only prospectively, viz., inthe instance case, with effect from 28.1.2002, and therevenue could not refuse the benefit of the clarificationsdated 9.11.1989 and 27.12.2000 in respect of levy ofpurchase tax under Section 7-A of the Act for the impugnedassessment year 1996-97. https://hcservices.ecourts.gov.in/hcservices/

8.7. For all these reasons, we are convinced that eventhough the purchase turnover with respect to the purchase ofempty bottles from the unregistered dealers under boughtnote can be charged for purchase tax under Section 7-A ofthe Act, the petitioner is entitled for the benefit of theclarifications dated 9.11.1989 and 27.12.2000 till the sameis withdrawn prospectively by the clarification dated28.1.2002 and therefore, the impugned levy of purchase taxon the purchase turnover for the purchase of empty bottlesfrom unregistered dealers under Section 7-A of the Act isillegal."The decision in Mohan Breweries & Distilleries Ltd.Case, cited supra, has been followed by the I Bench of thisCourt in an unreported judgment dated 19.9.2006 inW.A.No.1101 of 2006 and another (between Om Plastics and TheDeputy Commercial Tax Officer) wherein it is held that thecircular issued under section 28A of the TNGST Act wouldhave prospective application."(emphasis supplied)14. We are, therefore, of the firm opinion that the CircularD.Dis.Acts Cell II/75893/99, dated 24.12.1999, as amended by theclarification No.91/2000, D.Dis.Acts Cell II/52300/2000, dated4.10.2000, whether issued under Section 8 or 28A of the Act, isbinding on the Revenue. This finding leads us to the next questionwhether the circular is applicable to the facts and circumstancesof the case of the dealers.15. Of course, it is trite law that the show cause notice anddemand contrary to the existing circulars of the Board are abinitio void as held in COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIANOIL CORPORATION LTD., [2004] 165 ELT 257 and PAPER PRODUCTS LTD. v.COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT 765, whereunder thecircular relied upon was directly applicable to the case of thedealers therein. But, in these batch of cases, the applicability ofthe Circular D.Dis.Acts Cell II/75893/99, dated 24.12.1999, asamended by the clarification No.91/2000, D.Dis.Acts CellII/52300/2000, dated 4.10.2000 itself is disputed by the Revenue,and as the applicability of the circular and clarification referredto above depends on the facts of each case, we are unable to applythe ratio laid down in COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIANOIL CORPORATION LTD., [2004] 165 ELT 257 and PAPER PRODUCTS LTD. v.COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT 765. 16. It is true that a dealer, who deals with the goodsspecified under the Third Schedule of the Act shall not be liableto pay any tax under the Act and the words "any tax" used inSection 8 of the Act includes 'purchase tax'. But, such power to https://hcservices.ecourts.gov.in/hcservices/ exempt is subject to the restrictions and conditions that may beprescribed. Entry 16 of Part-B of Third Schedule, according to theRevenue is only applicable in the case of sale tax and not purchasetax in view of the word "sold" used in Entry 16 of Part-B of theThird Schedule. On the other hand, the focal point of expressionused in the Circular D.Dis.Acts Cell II/75893/99, dated24.12.1999, as amended by the clarification No.91/2000, D.Dis.ActsCell II/52300/2000, dated 4.10.2000, refers only to purchase tax.Since it is a settled law that the circular is binding and theRevenue is empowered to exempt any tax subject to the restrictionsand conditions under Section 8 of the Act and also to issuenecessary clarifications not only with reference to the rate oftax, but also as to the procedure relating to the assessment andcollection of tax under Section 28-A(2) of the Act, as discussedabove, unless the Revenue appreciates the merits of each case andrenders a finding in this regard, it may not be proper for thisCourt to decide as to the applicability of the Circular D.Dis.ActsCell II/75893/99, dated 24.12.1999, as amended by the clarificationNo.91/2000, D.Dis.Acts Cell II/52300/2000, dated 4.10.2000 to thedealers at the stage of show cause notice itself.17. Since the dealers, in these batch of cases, except a few,who, unfortunately, failed to place reliance on the CircularD.Dis.Acts Cell II/75893/99, dated 24.12.1999, as amended by theclarification No.91/2000, D.Dis.Acts Cell II/52300/2000, dated4.10.2000, approached this Court challenging the show causenotices, taking into consideration the scope of Section 7-A of theAct referred to above, suffice it to pass the following order:(1)the assessment orders passed without reference to theCircular D.Dis.Acts Cell II/75893/99, dated 24.12.1999, asamended by the clarification No.91/2000, D.Dis.Acts CellII/52300/2000, dated 4.10.2000 stand set aside;(2)all the dealers are permitted to submit their objectionsto the impugned show cause notices, supported withmaterials they propose to rely upon, of course placingreliance on Circular D.Dis.Acts Cell II/75893/99, dated24.12.1999, as amended by the clarification No.91/2000,D.Dis.Acts Cell II/52300/2000, dated 4.10.2000, withinthirty days from the date of receipt of copy of this orderand the same shall be forwarded by the respectiveAssessing Authority to the Commissioner of CommercialTaxes; and(3)to direct the Government to authorise the Commissioner ofCommercial Taxes to decide:a) as to the applicability of the Circular D.Dis.ActsCell II/75893/99, dated 24.12.1999, as amended by the https://hcservices.ecourts.gov.in/hcservices/ clarification No.91/2000, D.Dis.Acts CellII/52300/2000, dated 4.10.2000 to the case of thedealers, depending upon the facts of each case; andb) to pass such other further orders, as the case maybe, in accordance with law.The writ appeals and writ petitions are disposed ofaccordingly. No costs. Consequently, the connected miscellaneouspetitions are closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.SasiTo1. The Secretary to the Governmentof TamilnaduDepartment of Commercial Taxes and ReligiousEndowment Fort St. George, Chennai-9.2. The Commercial Tax Officer Brough Road Circle,Erode.3. The Commercial Tax Officer (FAC)R.S.Puram East Circle,Coimbatore.4. The Commercial Tax OfficerMettupalayam.5. The Commercial Tax OfficerPerundurai Assessment CirclePerundurai, Erode District. https://hcservices.ecourts.gov.in/hcservices/

6. The Commissioner and SpecialCommissioner of Commercial TaxesExhilagam, Chennai.7. The Commercial Tax Officer Chithode Assessment Circle,Erode.8. The Secretary to the Government of TamilnaduCommercial Taxes Department,Fort st. GeorgeChennai-9.9. The Commercial Tax OfficerPark Road Circle, Erode.10. The Deputy Commercial Tax Officer Park Road Circle, Erode.11. The Commercial Tax OfficerSathy Road CircleErode.12. The Commercial Tax Officer(FAC) Chithode Circle, Erode.13. The Commercial Tax Officer (FAC)Park Road CircleErode.1 cc to mr.R.S. Narendhiran, Advocate, Sr. 278453 ccs to Mr.N. Inbarajan, Advocate, Sr. 278771 cc to Mr.R.S. Ramanathan, Advocate, sr. 279471 cc to Spl. Government Pleader High Court, Madras, Sr. 278944 ccs to M/s. Pushya Sitaraman, Advocate, Sr. 27985 to 279882 ccs to Mr.R. Saravanakumar, Advocate, sr. 28574 , 285752 ccs to M/s. R. Hemalatha, Advocate, sr. 28283 & 28284W.A.Nos.465 of 2007 and batch casesBK & KLT (CO)kk 21/6