2006 (8) TMI 537 – KERALA HIGH COURT – [2007] 8 VST 604 (Ker) – Writ Appeal No. 1035 of 2006 Dated:- 2-8-2006 – RADHAKRISHNAN K.S. AND RAMKUMAR V. , JJ. The judgment of the court was delivered by K.S. RADHAKRISHNAN J.-Malayala Manorama Company Limited, a company engaged in the business of printing and publishing of daily newspaper and other publications, is a registered dealer under the Kerala General Sales Tax Act, 1963 (for short, "the KGST Act") and the Central Sales Tax Act, 1956 (for short, "the CST Act"). The company has established printing units at different places in and outside the State of Kerala. Printing of newspaper is carried on by sophisticated and expensive machinery and facilities employing large number of employees in the several industrial units at nine places in the State of Kerala. The petitioner for the purpose of printing newspaper and other publications used to purchase printing ink, which is an essential industrial raw material. Section
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ear 2001-02. During the year 2002-03 the petitioner-company purchased printing ink for Rs. 84,69,603 from the same company by issuing form 18. During the year 2003-04 also the petitioner-company purchased printing ink for Rs. 87,79,103 from the same company by issuing form 18. The petitioner was however served with exhibits P1 and P2 notices dated January 16, 2006 and exhibit P3 notice dated January 17, 2006 by the first respondent stating that the petitioner had misused form 18 by using the goods purchased for printing of newspaper and weeklies which involves no manufacturing process and, if at all, the same can be treated as a manufacturing process, the proceeds sold are not taxable either under the KGST Act or the CST Act. Further it was also stated that the newspaper does not satisfy the definition of "goods" under section 2(xii) of the KGST Act. The petitioner was therefore informed that it has misused form 18 and hence committed an offence punishable under section 45A o
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ing of all the proceedings. The petitioner-company was later served with three orders dated January 19, 2006, exhibits P9 to P11, inflicting penalty under section 45A of the Act which are under challenge in this writ petition. It is stated in the orders that the petitioner is engaged in the printing of newspaper which involves no manufacturing process. Further it was stated that form 18 is prescribed under the KGST Act under section 5(3) for the purchase of raw materials for use in the manufacture of finished products. The department has taken the view that since no manufacturing process is involved in printing of newspaper the petitioner has misused form 18 which is an offence attracting penalty under section 45A of the KGST Act. Learned single judge did not entertain the writ petition and dismissed the same holding that the petitioner has got an effective alternate remedy by way of revision under the KGST Act. The judgment is Malayala Manorama Company Ltd. v. Assistant Commissioner (
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f tax as well as the imposition of penalty have to be tested in the light of the above-mentioned decisions. Counsel submitted that the levy and collection of tax was without authority of law, unconstitutional and is violative of article 265 of the Constitution of India. Counsel therefore submitted that the writ petition filed under article 226 of the Constitution is maintainable and the petitioner shall not be nonsuited on the ground of availability of a revisional remedy. Counsel also made reference to the decision of the apex court in Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191; AIR 1961 SC 372, Whirlpool Corporation v. Registrar of Trade Marks [1996] 8 SCC 1 and State of H.P. v. Gujarat Ambuja Cements Ltd. [2005] 142 STC 1 and Collector of Customs and Excise, Cochin v. A. S. Bava AIR 1968 SC 13 and submitted that the alternate remedy by way of revision will not take away the jurisdiction of this court in entertaining this petition under article 226 of the Cons
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he apex court in Printers (Mysore) Ltd.'s case [1994] 93 STC 95 and host of the other decisions of the apex court, there is no reason to reject the petition on the sole ground that the petitioner has got a remedy by way of a revision under the KGST Act. The apex court in A. S. Bava's case AIR 1968 SC 13 has held that it is settled that existence of remedy by way of revision does not bar the jurisdiction of the High Court under article 226 of the Constitution of India. The apex court in Whirlpool Corporation's case [1998] 8 SCC 1 and Gujarat Ambuja Cements' case [2005] 142 STC 1 has declared the law that even in cases where any statutory remedy is available, if the impugned order is without jurisdiction and without the authority of law or in violation of article 265 or in violation of the principles of natural justice, petition under article 226 of the Constitution is maintainable. The apex court in Harbanslal Sahnia v. Indian Oil Corporation Ltd. [2003] 2 SCC 107 held t
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ional remedy. We, therefore hold that the writ petition filed by the petitioner is maintainable under article 226 of the Constitution of India. We will now examine the questions of law raised before us by the petitioner. The question that is posed for consideration in this case is whether publishers of newspapers are entitled to the concessional rate of tax under sub-section (3) of section 5 of the KGST Act when they purchase printing ink by issuing form 18 prescribed as per rule 28 of the KGST Rules, 1963. For the purpose of its business the petitioner used to purchase printing ink and other photographic materials for the production and publication of newspapers. Section 5(3) provides for reduced rate of tax at three per cent so far as selling dealer is concerned on the purchase point by issuing a declaration in form 18 by the purchasing dealer. The main contention of the Revenue is that printing ink purchased by the company is not an industrial raw material and the finished product o
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935 there was a provision in entry 48 of List II of the Seventh Schedule which enabled the levy of sales tax on newspapers and advertisements. The United State of Travancore and Cochin General Sales Tax Act, 1125 (Act 11 of 1125) was enacted to provide for the levy of a general tax on the sale of goods in the United State of Travancore and Cochin. The word "goods" defined in section 2(e) of the KGST Act means all kinds of movable property and includes all materials, commodities and articles including those to be used in the construction, fitting out, improvement or repair of immovable property; or in the fitting out, improvement or repair of movable property and also includes all growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under a contract of sale, but does not include actionable claims, stocks and shares and securities. Thus "newspaper" was never excluded and dealt with as goods and taxed as
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rict or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law." Thus the State has got power to levy tax on the sale of newspaper until a provision to the contrary is made by the Parliament by law. Therefore even after the coming into force of the Constitution, State wielded the power to levy and collect sales tax on the sale of newspaper and till the Tax on Newspapers (Sales and Advertisements) Repeal Act, 1951, Act 28 of 1951 was enacted by the Parliament. The Act provided for the repeal of certain State laws in so far as they sanction the levy of taxes on the sale or purchase of newspapers and on advertisements published therein. Consequently from the date of passing of Act 28 of 1951 the State's power to levy sales tax on the sale of newspapers, etc., ceased. The Constitution (Sixth Amendment) Ac
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nder section 2(d) only in the second amendment to the CST Act. We may in this connection refer to the definition of "goods" in the CST Act which reads as follows: "'goods' includes all materials, articles, commodities and all other kinds of movable property, but does not include (newspapers), actionable claims, stocks, shares and securities." The above facts would indicate that in the definition of "goods" though originally "newspaper" was included the same was not included by the CST (Amendment) Act 31 of 1958. Therefore with effect from October 1, 1958 newspaper was excluded from the definition of "goods" in section 2(d) of the CST Act. We may in this connection point out that the petitioner had filed application dated July 19, 1957 for registration under sections 7(1) and 7(2) of the CST Act so as to avail of the concessional rate of tax in respect of purchase of various items of goods specified therein. Later the petitioner
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e petitioner was publishing weeklies and other periodicals which did not come under the definition of "newspaper", the petitioner had requested for incorporating certain additional items in the certificate. Noticing that the petitioner had purchased goods for use in printing newspaper issuing C form, show cause notice was issued for contravening the provisions of section 10(b) and (d) of the CST Act. Contention was raised by the petitioner that newspaper was also considered as goods irrespective of the definition excluding the same under section 2(d). It was not acceptable to the authorities who initiated penalty proceedings for the wrong use of the C form which led to the petitioner filing O.P. No. 143 of 1989 before this court. The question posed was whether petitioner-assessee is entitled to obtain certificate under section 7 read with section 8 so as to gain concessional rate of tax in respect of printing papers and allied articles including spare parts, type metal, machi
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" Giving a strict meaning to the word "goods" occurring in section 8 the court took the view that petitioner is entitled to obtain certificate under section 7 read with section 8 of the Act so as to avail the concessional rate of tax in respect of printing papers including printing ink. The court held that the object of section 8(1) read with section 8(3)(b) of the KGST Act is for providing a dealer a lower rate of tax under section 8(1)(b) for sales of goods described in section 8(3). The above-mentioned decision was taken up in appeal before the apex court. Similar is the view taken by the Madras High Court in Indian Express (Madurai) Ltd. v. Deputy Commercial Tax Officer [1972] 29 STC 88. Contrary view was taken by the Karnataka High Court in Printers (Mysore) Ltd. v. Assistant Commercial Tax Officer [1985] 59 STC 306. In the appeal filed against the judgment in Printers (Mysore) Ltd.'s case [1985] 59 STC 306, the apex court reversed the judgment of the Karnataka
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uot; occurring in the second half of section 8(3)(b) cannot be taken to exclude newspapers from its purview. The court took the view that the mere fact that "newspaper" is taken out from the definition of "goods" in the CST Act would not disentitle the petitioner from its entitlement to seek inclusion of "newspaper" as such in the certificate of registration sought for under section 7 read with section 8 of the CST Act. We have to examine the scope of section 5(3) and the allied provisions of the KGST Act in the light of the principle laid down by the apex court in Printers (Mysore) Ltd.'s case [1994] 93 STC 95 and decide whether the principle laid down therein would apply in understanding the scope of the above-mentioned provision in the settings under the State Sales Tax Act where it has been placed. We have already indicated in the pre-Constitution period and under the Government of India Act, 1935 that there was a provision in entry 48 of List II w
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retained such a power to tax a sale or purchase of newspapers and on advertisements published therein. Under article 277 of the Constitution of India State could however levy tax notwithstanding the fact that the power to levy or impose such a tax was included in the Union List till a provision to the contrary is made by Parliament by law. State had the power to levy tax on the sale of newspapers even after the Constitution was enacted, until Act 28 of 1951 was made by the Parliament. From the date of passing of the Act 28 of 1951 State's power to levy sales tax on the sale of newspapers, etc., ceased. The Constitution (Sixth Amendment) Act, 1956 came into force on September 11, 1956. By virtue of that Act both entry 54 in the State List and entry 92 in the Union List were amended and entry 92A was introduced in List I. After the amendment entry 54 and 92 read as follows: Entry 54, List II – Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of
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n the Central Government. Article 277 however provided that the power of the State to levy excise duty continues till a provision to the contrary is made by Parliament by law. Parliament enacted the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 which came into force on April 1, 1957. Therefore once the provision to the contrary is made, effect of the saving clause under article 277 ceases to exist and the State Government cannot continue to levy any duty. Section 21 of the Act, repealed the State law, consequently the Excise Acts of the States under which duty was being levied on medicinal and toilet preparations containing alcohol were deemed to have been repealed. On coming into force of the Central Act, the power vested in the State Government ceased to exist. Reference in this connection may be made to the decision of the apex court in Adhyaksha Mathur Babu's Sakti Oushadhalaya Dacca (P) Ltd.'s case AIR 1963 SC 622. Identical is the situation with regard to th
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definition clause specifically excluded newspapers from the expression "goods", the reason being that after the Constitution Amendment entry 48 of List II of the Government of India Act, 1935 has ceased to have effect and entry 54 of List II specifically excluded "newspapers" meaning thereby State has no power to tax sale or purchase of newspapers. It is in tune with this entry, in the KGST Act the expression "newspaper" has been specifically excluded from the definition of "goods" in section 2(xii) of the KGST Act. The context does not warrant any other interpretation unlike subclause (d) of section 2 of the CST Act. The apex court while interpreting the definition clause 2(d) in Printers (Mysore) Ltd.'s case [1994] 93 STC 95 took the view that so far as Central Sales Tax Act is concerned, the context warranted a different approach and held that the expression "goods" occurring in section 8(3)(b) of the CST Act does take in, that
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section 2(xii). As rightly pointed out by the Madras High Court in Indian Express (Madurai) Ltd.'s case [1972] 29 STC 88, it was unnecessary even to exclude the newspapers from the definition of "goods" from the Madras General Sales Tax Act, 1959; so also evidently under the KGST Act as well. The exclusion of newspaper in the definition clause was unnecessary. Even otherwise the State could not have legislated through the KGST Act to tax "newspapers" since under entry 54, List II of the Seventh Schedule State has no power to impose levy on newspaper. Since the definition clause specifically excludes newspaper from the expression "goods", sub-section (3) of section 5, would not take in newspaper, consequently no form 18 declaration could be issued for concessional rate of tax to the selling dealer. Resultantly the question as to whether the printing ink is an industrial raw material or not therefore calls for no examination. The further question as to w
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