High Court · 2025

W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 05.03.2025CORAM :THE HONOURABLE DR.JUSTICE ANITA SUMANTHandTHE HONOURABLE MRS.JUSTICE R. HEMALATHAW.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 andM.P.Nos. 2,2,2,2,3,3,3 & 2 of 2014ITC Limited(Rep. by its Head of Finance - Education & Stationery Products Business)Mr.P.RamkumarITC Centre, 760 Anna Salai,Chennai – 600 002. .. Petitionerin all WPsvs1.The Deputy Commissioner (CT)-I Large Tax Payers Unit, Dugar Towers, 5th Floor, No.34, (Old No. 123), Marshall Road, Egmore, Chennai – 600 008.2.The State of Tamil Nadu Rep. by its Secretary CT & R Department (B2), Fort St.George, Chennai – 600 009. .. Respondentsin all WPsPrayer in W.P.No. 31586 of 2014: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari calling for the records on the files of the first respondent herein in TIN/33041100001/2006-07 dated 29.10.2014 and quash the same insofar it relates to assessment of turnover of Rs.2,90,59,467/- at 4% relating to sale of “Student Note Books” effected by the petitioner inside the State of Tamil Nadu. Prayer in W.P.No. 31587 of 2014: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari calling for the 1/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 records on the files of the first respondent herein in TIN/33041100001/2007-08 dated 30.10.2014 and quash the same insofar it relates to assessment of turnover of Rs.11,83,72,478/- at 4% relating to sale of “Student Note Books” effected by the petitioner inside the State of Tamil Nadu. Prayer in W.P.No. 31588 of 2014: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari calling for the records on the files of the first respondent herein in TIN/33041100001/2008-09 dated 31.10.2014 and quash the same insofar it relates to assessment of turnover of Rs.19,09,34,603/- at 4% relating to sale of “Student Note Books” effected by the petitioner inside the State of Tamil Nadu. Prayer in W.P.No. 32373 of 2014: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari calling for the records on the files of the first respondent herein in TIN/33041100001/2009-10 dated 19.11.2014 and quash the same insofar it relates to assessment of turnover of Rs.20,58,61,565/- at 4% relating to sale of “Student Note Books” effected by the petitioner inside the State of Tamil Nadu. Prayer in W.P.No. 32374 of 2014: Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari calling for the records on the files of the first respondent herein in TIN/33041100001/2010-11 dated 21.11.2014 and quash the same insofar it relates to assessment of turnover of Rs.20,01,31,088/- at 4% relating to sale of “Student Note Books” effected by the petitioner inside the State of Tamil Nadu. For Petitioner:Mr.C.ManishankarSenior Counselfor Mr.K.Krishnamoorthy(in all WPs)For Respondents:Mr.Haja NazirudeenAdditional Advocate Generalassisted byMr.TNC KaushikAdditional Government Pleader (Taxes)(in all WPs)COMMON ORDER(Order of the Court was made by Dr. ANITA SUMANTH.,J)2/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 The present writ petitions have been filed challenging assessments made under the provisions of the Tamil Nadu Value Added Tax Act, 2007 (in short, 'TNVAT Act') for the period 2006 – 07 to 2010 – 2011.2.The petitioner is a Company registered under the provisions of the Companies Act, 1956 and a dealer under the TNVAT Act. It is engaged in the business of marketing and selling of student notebooks and stationery products.3.Returns were filed by the petitioner under the applicable provisions of the Act seeking, inter alia an exemption in regard to the turnover from sales of student notebooks. Orders were initially passed under Section 22(2) of the Act accepting the returns and determining the refund of the tax paid in excess by the petitioner. 4.Thereafter, the Returns were taken up for detailed scrutiny in terms of Section 22(3) of the Act and pre-assessment proposals were issued to the petitioner. One of the issues identified in the proposals, relate to the denial of exemption claimed in respect of the student notebooks. 5.The assessing officer makes note of the relevant Government Orders and Entries in the schedules to the Act, that relate to student notebooks. He cites G.O.Ms. No. 79 Commercial Taxes Registration (B2) dated 23.03.2007 effective from 01.01.2007 ('GO'/ 'GO in question') as per which sale of graph and exercise notebooks stood exempt from tax. He goes on to refer to Schedule IV/Part B/Entry 55(f), which states that 3/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 student notebooks and copy books manufactured out of paper purchased from registered dealers liable to pay tax under this Act, are exempt from tax under the provisions of the Act. In all other circumstances, liability to tax would be at 4% in terms of Schedule I/Part B/ Entry 47 and Schedule I/Part B/Entry 132. 6.The assessing authority proposes denial of exemption claimed by the petitioner to which a detailed reply was filed by petitioner, overruling which orders of assessment have come to be passed on 29.10.2014 that are the subject matter of the present writ petitions. 7.Mr.C.Manishankar, learned Senior Counsel, appearing for Mr.K.Krishnamoorthy, for the petitioner, would assail the assessments on the ground that the assessing authority has erred in not applying the exemption that has been extended under G.O. 79 dated 29.03.2007. He draws attention to the Government Order, particularly Serial No.15 thereof, which is couched in wide terms to state that 'Graph and Exercise note books' bearing commodity code no.513, would be exempt from payment of tax by virtue of Section 30(1) of the Act. 8.The petitioner argues that this exemption was specifically brought to the note of the assessing authority, who has also referred to the same in the pre-assessment proposal. Hence, there is no justification whatsoever for the denial of the exemption. In the assessment order, the assessing authority has sought to make a distinction between different kinds of notebooks that are available in the market ultimately coming to the conclusion that the notebooks manufactured by the petitioner do not 4/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 satisfy the stipulation under the GO in question. The petitioner would argue that this distinction is completely unfounded as, according to it, the exercise notebooks manufactured by it would satisfy the stipulations of G.O on all counts. 9.Per contra, Mr.Haja Nazirudeen, learned Additional Advocate General appearing for Mr.TNC Kaushik, learned Additional Government Pleader (Taxes) would defend the impugned orders of assessment. Mr.Haja would take us through the relevant GO and schedules to the Act, pointing out that there are specific entries bringing to tax exercise books, graph books, laboratory notebooks, student notebooks and copy books in terms of Schedule I/ Part B / Entries 47 and 13. 10.The exemption extended under the GO is only to graph and exercise notebooks, which is specific in its connotation. The petitioner has not provided any details of the notebooks manufactured by it and our attention is drawn to an observation in the pre-assessment notice that the requisite particulars in relation to notebooks have not been supplied. At this juncture the petitioner would intervene drawing our attention to the detailed reply to the pre-assessment notice detailing the notebooks manufactured by it. 11.In fine, the attempt of the Commercial Taxes Department is to defend the findings of the assessing officer to the effect that the notebooks manufactured by the petitioner are distinguishable from the ones referred to under the schedules to the Act, and hence would not be entitled to the benefit of exemption either under the GO or the Act.5/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 12.We have heard both learned Senior Counsel carefully and perused the material particular records that are placed before us. 13.We have also devoted careful attention to the categories of notebooks that have been stipulated in the Entries under the Schedules to the Act. Entry 47/ Part B/ Schedule I refers to 'exercise books, graph book and laboratory book', Entry 132/ Part B/ Schedule I, to 'student notebooks and copy books' and Entry 55(f)/ Part B/ Schedule IV, to 'student notebooks and copy books'. In the interests of clarity and completeness, we extract the relevant entries below:-The First Schedule / Part BSl.No.Description of GoodsPercentage of Tax47Exercise book, graph book and laboratory note book, other than those specified in Fourth Schedule[VAT is exempted on “Graph and Excise Note Book” vide Notification II(1)/CTR/30(a-2)/2007, w.e.f1.1.2007]4% w.e.f 1.1.2007 by Act 32 of 2006.5% w.e.f.12.7.2011 by Act 30 of 2011.132Student note books and copy books other than those specified in the Fourth Schedule4% w.e.f 1.1.2007 by Act 32 of 2006.5% w.e.f.12.7.2011 by Act 30 of 2011.The Fourth Schedule / Part BSl.No.Description of Goods55(f)Student Note Books and Copy Books manufactured out of paper purchased from Registered dealers liable to pay under this Act.6/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 14.Student notebooks can, generally, largely fall into two broad categories, either ruled or unruled. Apart from the generic categoric of student notebooks, there are laboratory notebooks and graph notebooks that are different and distinct by their very design, appearance and sometimes the colour of the pages. 15.We had also sought a clarification in regard to a 'copybook' as referred to in Entry 55(f) and learned Additional Advocate General draws our attention to a wikipedia article that states that a copybook contains examples of hand writing and blank spaces, for learners to imitate / copy.16.Barring those notebooks that are for specified purposes such as laboratory use and graphs, cursive writing, copy books and notebooks used for calligraphy, other notebooks will largely come under the generic category of 'student notebooks'.17.While the aforesaid distinct categories of notebooks stand apart from the category of 'student notebooks', the notebooks manufactured by petitioners being regular notebooks either blank or ruled, for student exercises would, in our considered view, satisfy that definition. There is an allegation in the pre-assessment notice that the petitioner has not has furnished the break-up of the turnover, of graph, exercise and other notebooks. 18.In the replies filed, the petitioner has categorically confirmed that the notebooks sold by it are either ruled or unruled exercise notebooks only. Thus the allegation that notebooks, other than standard 7/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 ruled and unruled exercise note books, are sold by petitioners does not appear to be correct as the petitioner has answered the query raised in the pre-assessment notice. 19.Notwithstanding the objection filed and explanation tendered, the impugned assessment orders contain an allegation that details of sale of graph books, exercise books, practical notebooks, answer books, essay books and other notebooks have not been furnished. This observation is incorrect in light of the clarification in the objections filed to the pre-assessment proposals to the effect that only ruled and unruled notebooks are manufactured by it. 20.In light of the position that the position has clarified categorically that it manufactures only standard ruled and unruled exercise books, and no material has been provided at any stage to disturb or dislodge this position, we agree that the petitioner would be entitled to the exemption under G.O. 79 dated 23.03.2007. 21.We may in this regard make useful reference to two judgments. In Govindaswamy Binding Works v State of Andhra Pradesh [1971 SCC Online AP 241], the Andhra Pradesh High Court was concerned with the interpretation of the phrase 'all books and periodicals' that were exempted from tax in terms of the relevant provisions of the Andhra Pradesh General Sales Tax Act, 1957. 22.The Commercial Taxes Department of the State of Andhra Pradesh sought to interpret that phrase with a restricted meaning arguing that the term 'books' would apply only to books that are used for reading 8/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 and not to accounts books or other kinds of books. This argument was repelled, referring to the decision in Cape Brandy Syndicate v Inland Revenue Commissioners[(1921) 1 K.B. 64] locus classicus for the settled proposition that in a taxing statute, one has to only look at what is said without any room for intendment. 23. In the present case, the GO clearly uses the term 'exercise notebooks' and there can be no two views on the position that the notebooks manufactured by petitioners, used by students for the purposes of academic exercises, would satisfy that definition. 24.In Maharaja Book Depot v State of Gujarat, [(1979) 1 SCC 295], the Supreme Court considered the interpretation of the term 'paper' in juxtaposition with the term 'exercise book' holding that an exercise book was nothing but a collection of sheets of paper stitched together by a piece of string or pinned together and a substance used for writing. It would therefore, clearly fall within ambit of the term 'paper'. It does not, the Bench holds, lose the identity of 'paper' merely because it is stitched together as a notebook. In that context the Bench states as follows:-“ ....Since an exercise-book (which is nothing but a collection of sheets of paper intended to be used for writing) squarely falls within the dictionary meaning of the word "paper" there was no necessity to mention it in the inclusive part of the description. On a true and proper construction, therefore, we are clearly of the view that within its normal dictionary meaning the item "paper" as described in s. 2(a)(vii) of the Act and Item 13 in Schedule I to the Regulation order covers an exercise-book. Moreover, such a construction would be in consonance with and carry out effectively the object or purpose of the Act and the Regulation order.”9/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 25.The notebooks manufactured by the Petitioner being only notebooks (ruled and unruled) used for the purposes of student exercises, are entitled to the exemption sought. In light of discussion as aforesaid, we are of the considered view that the findings and conclusions of the assessing officer in the impugned assessment orders to the effect that notebooks manufactured by petitioners do not satisfy the requirement of 'student exercise book' is erroneous, as is the denial of exemption. 26.The impugned assessment orders are set aside and these writ petitions are allowed. No costs. Connected miscellaneous petitions are closed. [A.S.M., J] [R.H., J] 05.03.2025Index:YesNeutral Citation:YesssmTo1.The Deputy Commissioner (CT)-I Large Tax Payers Unit, Dugar Towers, 5th Floor, No.34, (Old No. 123), Marshall Road, Egmore, Chennai – 600 008.2.The Secretary CT & R Department (B2), Fort St.George, Chennai – 600 009.10/11 https://www.mhc.tn.gov.in/judis W.P.No. 31586, 31587, 31588, 32373 & 32374 of 2014 DR. ANITA SUMANTH.,J.andR. HEMALATHA.,J.ssmW.P.No. 31586, 31587, 31588, 32373 & 32374 of 201405.03.202511/11