SELVAM BROILERS P LTD Vs. ASSISTANT COMMISSIONER ASSMT

JUDGEMENT

(1.) CHICKEN has been on the tax table of this Court for quite some time for the main reason that the State had not been finding it easy to prepare and promote Kerala chicken. The State intends to support and promote poultry farmers in Kerala; but is unable to reach at them and that is the unfortunate story unfolded in these cases. To quote from the counter-affidavit of the respondents "it is respectfully submitted that from the year 1967-68 onwards the intention of the Government is to give special incentive to farmers in Kerala. Each time when notification is issued with the above intention clever dealers outside Kerala could take advantage of the notification by adopting skilful means. But the Government never intended to give any such benefit to outside Kerala people, because the clear intention ever since 1967 was to encourage poultry industry in Kerala". The last of such attempts to encourage poultry farmers in Kerala has given rise to the present litigation. The impugned notification is S. R. O. No. 7/2002 dated January 4, 2002, exhibit P4 in O. P. No. 2371 of 2002. Section 10 of the Kerala General Sales Tax Act, 1963 provides for exemptions. It reads as follows : 10. Power of Government to grant exemption and reduction in rate of tax.- (1) The Government may, if they consider it necessary in the public interest, by notification in the Gazette, make an exemption or reduction in rate, either prospectively or retrospectively in respect of any tax payable under this Act, - (i) on the sale or purchase of any specified goods or class of goods, at all points or at a specified point or points in the series of sales or purchases by successive dealers, or (ii) by any specified class of persons in regard to the whole or any part of their turnover. (2) Any exemption from tax, or reduction in the rate of tax, notified under sub-section (1), - (a) may extend to the whole State or to any specified area or areas therein, (b) may be subject to such restrictions and conditions as may be specified in the notification. (3) The Government may by notification in the Gazette, cancel or vary any notification issued under sub-section (1 ). "

(2.) IN exercise of the power under the said section the Government has been issuing notifications exempting poultry farming from taxation. For the purpose of the present case it is not necessary to refer to the entire earlier history; it is sufficient to start from S. R. O. No. 1090/1999 dated December 31, 1999 given effect from January 1, 2000. By the said notification (item No. 14 of Schedule I) "poultry farmers including hatcheries in the State" were totally exempted in the matter of "turnover of sale of chicks and chickens". It was amended by S. R. O. No. 291/2000 with effect from April 1, 2000 as follows : 14. (i) Hatcheries within Turnover of sale of poultry and their the State chicks hatched and reared by them within the State and meat obtained therefrom. (ii) Poultry farmers Turnover of sale of poultry reared by within the State them in their own farm, within the State, whether hatched by them or not, and the meat obtained therefrom. The notification was again amended as per S. R. O. No. 877/2000 with effect from September 23, 2000 as follows : 14. (i) Hatcheries within Turnover of sale of chicks hatched by the State them within the State. (ii) Poultry farmers Turnover of sale of poultry reared by within the State them in their own farm within the State whether hatched by them or not and the meat obtained therefrom. The latest in the procession in S. R. O. No. 7/2002 with retrospective effect from 1-4-2000, which reads as follows : 14. (i) Hatcheries within Turnover of the sale of poultry reared the State by them in their own farm within the State, whether hatched by them or not but run on land owned by them and the meat obtained therefrom. (ii) Poultry farmers Own farm does not include the farms within the State run on land taken on lease, mortgage, licence or any other arrangement. The effect of the latest and impugned amendment is that the exemption from tax could be available with effect from April 1, 2000 only to those who own and run a hatchery and poultry on land owned by them, specifically excluding land taken on lease, mortgage, licence or any other arrangement. The impugned notification is dated January 4, 2002 but given retrospective effect from April 1, 2000. The notification is challenged on all available grounds with particular reference to articles 14, 19 (1) (g) and 304 of the Constitution of INdia. There is also a serious challenge on the retrospective operation. Being a matter of exemption and amendment in between naturally there is a challenge on ground of estoppel also. The challenge on estoppel is based on the clarification issued by the Commissioner under section 59a of the Kerala General Sales Tax Act whereby it was clarified that the exemption would be extended to those who run poultry farm on leased land also. Section 59a (1), which alone is relevant for the purpose of these cases, reads as follows : " 59a. Power of Commissioner of Commercial Taxes to issue clarification.- (1) If any dispute arises, otherwise than in a proceedings before any appellate or revisional authority or in any court or Tribunal, as to whether, for the purpose of this Act, - (a) any person is a dealer; or (b) any transaction is a sale; or (c) any particular dealer is required to be registered; or (d) any tax is payable in respect of any sale or purchase, or if tax is payable, the point and the rate thereof; or (e) any activity carried out in any goods amounts to or results in the manufacture of goods; such dispute shall be decided by the Commissioner of Commercial Taxes on application by a dealer or any other person. "

(3.) THE State itself having understood the potential of the pre-amended notification of being interpreted as stated above, and intending now to limit the interpretation, it cannot be said that the present amendment is a clarification. It is an amendment introducing a new concept and therefore, as already stated above, the amendment cannot operate retrospectively cancelling the benefit already given by the pre-amended notification. In that view of the matter it is also not necessary to deal with in detail the contention raised by the additional 4th and 5th respondents that some of the petitioners themselves had understood the scope of the pre-amended notification as presently amended. THE law maker itself having understood the possibility of another interpretation in favour of the assessee, there is no justification in estopping those petitioners from banking on the said possibility. In the words of K. Venkataswami, J. in Commissioner of Income-tax, Bombay v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 (SC); AIR 1997 SC 2523. "there is no presumption as to a tax. Nothing is to be read in - nothing is to be implied. We can look only fairly at the language used. Nonetheless, the tax laws have to be interpreted reasonably and in consonance with justice".