w w w . L a w y e r S e r v i c e s . i n



Sodexo Food Solutions India Private Limited [formerly known as Radhakrishna Hospitality Services Pvt. Ltd) v/s State of Tamil Nadu, Rep. by the Deputy Commissioner (CT), Chennai (Central) Division

    Tax Case (Revision) Nos. 14 & 15 of 2013 & M.P.Nos. 1 & 1 of 2013

    Decided On, 30 April 2019

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE T.S. SIVAGNANAM & THE HONOURABLE MRS. JUSTICE V. BHAVANI SUBBAROYAN

    For the Petitioner: R. Raghavan Assisted by N. Murali, Advocates. For the Respondent: Mohammed Shaffiq, Special Government Pleader (Taxes).



Judgment Text

(Common Prayer: Tax Case (Revisions) filed under Section 38 of the Tamil Nadu General Sales Tax Act (TNGST Act), 1959 against the order of the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai dated 25.08.2012 in S.T.A.Nos.308/2007 and 309/2007 for the assessment years 2001-2002 and 2000-2001.(

Common Order: (T.S. Sivagnanam, J.)

These tax case revisions filed by the petitioner/assessee under Section 38 of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) are directed against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai in S.T.A.Nos.308/2007 and 309/2007 dated 25.08.2012.

2. These revisions were admitted on 28.03.2013 on the following substantial questions of law:

"1. Is not the Tribunal in error in assessing the petitioner as a caterer and therefore, are not covered by Section 3D before 01.04.2002?

2. Is the Tribunal not in error in not appreciating that the petitioner is one selling food and drinks at "any other eating house" as referred in Section 3D as the said expression "any other eating house" will include all eating houses other than those covered by item 20 Part-C First Schedule to TNGST Act, 1959?

3. Is not the Appellate Tribunal wrong in concluding that after 01.04.2002, as the caterer is specifically included, therefore, excluded prior to 01.04.2002 when apparently caterer has been included within Section 3-D ibid as a matter of abundant caution so that,caterer are not held to be outside the scope of expression "any other eating house"?

4. Is not amendment to Section 3D effective from 01.04.2003, clarificatory?

3. The assessment under the TNGST Act for the assessment years 2000-2001 and 2001-2002 was completed by the Assessing Officer vide order dated 31.12.2004. Aggrieved by the same, the assessee preferred appeals before the Appellate Assistant Commissioner (CT)-III, Chennai in A.P.Nos.110 and 111 of 2005. The appeals were partly allowed and certain issues were remanded to the Assessing Officer for fresh decision by an order dated 01.06.2005. Aggrieved by the same, the State preferred appeals before the Tribunal in S.T.A.Nos.308 and 309 of 2007 which were allowed by order dated 25.08.2012. Challenging the same, the assessee has filed these tax case revisions.

4. The assessee formerly known as M/s.Ramakrishna Hospitality Services Pvt. Ltd. rendering various types of hospitality services for establishments and during the relevant assessment years had dealt with foods and drinks. The assessments were completed by the Assessing Officer by levying tax at 8% on the taxable turnover. The reason assigned by the Assessing Officer was that the separation of taxable turnover and exempted turnover are only artificial bifurcation of the total receipts related to the supply of food and drinks and the full and complete set of audited statement having not been furnished, assessed the entire taxable turnover at 8%. The appellate authority had set aside the assessment orders on the ground that the assessee has engaged in catering sales in guest houses of various industrial establishments and they have not only done catering sales but also housekeeping, cleaning, etc. and therefore held that the assessment orders required to be modified. The State on appeal before the Tribunal contended that Section 3-D of the TNGST Act, 1959 covers the food and drinks served by the hotels, restaurants, sweet stalls and any other eating houses. The assessee had not run any hotels, restaurants or sweet stalls or any other eating houses and the activities of the assessee are not like the activities carried on in hotels, restaurants, sweet stalls and other eating houses. Further, it was contended that the assessee had supplied food and drinks to various establishments and the price was paid by the establishments only and not by the individual persons who consumed the food items. Further, it was contended that the assessee is a caterer and not running any hotels, restaurants or sweet stalls and hence, they are not eligible for assessment at 2% under Section 3-D of the TNGST Act. Further, it was contended that the clarification dated 20.02.2002 is not applicable to the assessee since it was issued to the assessee who had run chain of restaurants in the State. The point for determination as framed by the Tribunal is whether the appellate Tribunal is right in holding that the transactions done by the assessee are liable to tax at 2% under Section 3-D of the TNGST Act by treating those transactions as eating house transactions for the relevant assessment years. The Tribunal agreed with the submissions made on behalf of the State and allowed the appeals and set aside the order passed by the first appellate authority.

5. Mr.R.Raghavan, learned counsel assisted by Mr.N.Murali, learned counsel for the petitioner/assessee contended that the assessee is running a canteen in the hospital, various industrial establishments, defence establishments, shopping malls, etc. and the sale of food and drinks done by them would fall within the ambit of Section 3-D of the TNGST Act as they would fall within the scope of any other eating house as contained in Section 3-D(1) of the TNGST Act. The learned counsel referred to the clarification dated 12.05.2000 which was issued in favour of a catering agency wherein the Commissioner of Commercial taxes clarified that Catering Centres will not fall under the classification of hotels, restaurants, sweet stalls and any other eating houses specified in Section 3-D of the TNGST Act and hence they are liable to tax at 8%. It is submitted that this clarification clearly shows that the food and drinks supplied by a caterer is not being consumed by the person who pays for it. It is further submitted that the TNGST Act does not term the word "caterer" and for which purpose the assessee had referred to the definition of caterer as contained in the Tami Nadu Shops and Establishments Act, 1947 and the rules framed thereunder, Tamil Nadu Catering Establishments Act, 1958 and the rules framed thereunder and those enactments were held to be of no relevance by the Tribunal. Further it is submitted that Section 3-D(1) of the TNGST Act was amended with effect from 01.04.2002 and a perusal of the said amendment would show that the caterers were specifically included as well as the indoor and outdoor catering. Further, it is submitted that the crucial word in Section 3-D(1) of the TNGST Act as it stood prior to the amendment and also after the amendment is "any other eating house". It is argued that the expression "other" should mean other than hotels, restaurants, sweet stalls, clubs and the sales effected by the assessee would fall within the ambit of sale in a place other than eating houses because the word "other" is prefixed by the word "any". It is further submitted that Section 3-D(1) of the TNGST Act stood amended with effect from 01.04.2002 by Act 20/2002. If the amending Act is perused it shows that sub-sections (1) and (2) of Section 3-D were substituted by virtue of the amendment. It is submitted that if an amendment is made by way of a substitution it dates back to the date on which the original Section was enacted and such amendment will apply to the case of the assessee. In support of his contention, the learned counsel placed reliance on the decision of the Division Bench in the case of Mehler Engineered Products India Pvt. Ltd. vs. Union of India [2018 (364) E.L.T. 27(Mad.)].

6. It is further submitted that during the earlier years, i.e. 1996 to 2000, the appellate authority had accepted the assessee's case and held that the clause "any other eating house" is an inclusive one which brings almost all commercial eating joints into its ambit and the Department has not preferred any appeal against the said order. Further, it is submitted that several clarifications were issued by the Department stating that hospital cafeterias, canteen token sales, industrial canteens, food served at customer's place would fall within "sale in ... any other eating place" and therefore, sales would fall under Section 3-D of the TNGST Act. It is submitted that the Tribunal in the impugned order had held that the assessee is a caterer and would be liable for the benefit of Section 3-D only with effect from 01.04.2002 when the word "caterer" was inserted in Section 3-D(1) of the TNGST Act. It is further submitted that if a subsequent Act amends an earlier one in such a way as it incorporates itself or a part of itself into the earlier, the Act must be construed as 'retrospective'. Further, it is submitted that a careful reading of the amended provision makes it amply clear that the amendment was carried out only to clarify certain ambiguities and uncertainty in Section 3-D of the TNGST Act and to state the pre-existing position. On the above ground, the learned counsel prayed for setting aside the order passed by the Tribunal and restoring the order of the appellate authority.

7. Mr.Mohammed Shaffiq, learned Special Government Pleader (Taxes) appearing for the respondent submitted that three questions arise for consideration in these tax case revisions, namely, what is the scope of Section 3-D of the TNGST Act; what is the effect of the amendment made to Section 3-D of the TNGST Act with effect from 01.04.2002 whether it is clarificatory and if it by way of substitution what is its effect and thirdly, the effect of the clarifications issued by the Commissioner in respect of other assessees. It is submitted that on a plain reading of Section 3-D of the TNGST Act as it originally stood will show that the emphasis is on the place of sale i.e. in a hotel, in a restaurant, in a sweet stall or a sale in any other eating houses. Therefore, it is submitted that the interpretation given by the assessee is wholly incorrect because what is important is the place where the sale is effected and in the assessee's case the sale not being effected in any of these places mentioned in Section 3-D of the TNGST Act, they are not entitled for concessional rate at 2%. With regard to the effect of the amended Section 3-D of the TNGST Act, it is submitted that the amendment cannot be understood as clarificatory as the amended provision brings a new concept and though the amended Act says that Sub-Sections (1) and (2) of Section 3-D will stand substituted, it cannot be taken as a clarificatory amendment. Further, it is submitted that the amendment was notified in the official gazette on 03.06.2002, however given retrospective effect from 01.04.2002 which clearly shows that the amendment is not clarificatory. Furthermore, the amended Section 3-D of the TNGST Act is a substantive amendment and therefore it can be only prospective. Further, it is submitted that all clarifications are prior to the amendment and therefore can be of no assistance to the case of the assessee. Further, it is submitted that merely because the order passed by the appellate authority for the assessment year 1996 was not challenged is not a bar for the Department to agitate the substantial questions of law which were arisen for consideration and the Tribunal was entitled to examine the same.

8. In support of such contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Catholic Syrian Bank Limited vs. Commissioner of Income Tax, Thirssur [(2012)3 SCC 784]. To explain the effect of substitution, the learned Special Government Pleader placed reliance on the decision of the Hon'ble Supreme Court in Maharaja Chintamani saran Nath Shahdeo vs. State of Bihar and others [(1999) 8 SCC 16] and Bhagat Ram Sharma vs. Union of India and others [1988 (Supp.) SCC 30]. To support the stand that the amendment is prospective, the learned Special Government Pleader placed reliance on the decision of the Hon'ble Supreme Court in the case of Government of Andhra Pradesh and another vs. Corporation Bank [(2007) 9 SCC 55], Commissioner of Wealth Tax, Gujarat-III, Ahmedabad vs. Ellis Bridge Gymkhana [(1998) 1 SCC 384] and Union of India and others vs. Martin Lottery Agencies Ltd. [(2009) 12 SCC 209]. It was further argued that the circulars are not binding on Courts and in support of such contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Bolpur vs. Ratan Melting & Wire Industries [(2008) 13 SCC 1], Commissioner of Central Excise, Mumbai vs. Hindoostan Spinning and Weaving Mills Ltd. and another [(2009) 14 SCC 231] and State of Madhya Pradesh and another vs. M/s.G.S.Dall and Flour Mills [1992 Supp(1) SCC 150]. It is further submitted that the definition of a word in a particular enactment cannot be transplanted into another enactment and therefore, the Tribunal was right in rejecting the contention raised by the assessee. In support of such contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Chander Sain and others vs. J.B.Garments [2009 SCC online Del 905], P.C.Cherian vs. Mst.Barfi Devi [(1980) 2 SCC 461] and the decision of the Delhi High Court in the case of Chang Foods Pvt. Ltd. vs. State of Tamil Nadu [(2014) 72 VST 143 (Mad)]. With the above submission, the learned Special Government Pleader sought to sustain the order passed by the Tribunal.

9. Heard both sides.

10. To answer the substantial questions of law which have been framed for consideration, as rightly pointed out by the learned Special Government Pleader, we need to consider only three aspects. First of which being the scope of Section 3-D of the TNGST Act. For better appreciation, we quote the provision as it stood prior to the amendment, which reads as follows:

"Section 3-D.Payment of tax by hotels, restaurants and sweet-stalls.-(1) Notwithstanding anything contained in sub-section (1) of Section 3, every dealer whose total turnover is not less than twenty five lakhs of rupees for the year on the first point of sale of food and drinks in hotels, restaurants, sweet-stalls and any other eating houses other than those falling under item 20 of PART-C of the First Schedule, shall pay tax at the rate of 2 percent of the taxable turnover.

Explanation:-........."

11. The above provision commences with a non obstante clause stating that notwithstanding anything contained in sub-section (1) of Section 3, every dealer whose total turnover is not less than twenty five lakhs of rupees for the year on the first point of sale of food and drinks in hotels, restaurants, sweet-stalls and any other eating houses other than those falling under item 20 of PART-C of the First Schedule, shall pay tax at the rate of 2 percent of the taxable turnover. The assessee is admittedly not a hotel or a restaurant or a sweet stall. The assessee have admittedly dealt with food and drinks during the relevant assessment years. The argument of the assessee is that they are entitled to be charged at 2% because their sale of food and drinks is in "any other eating house". In other words, it is contended that the assessee is catering to industrial canteens, defence establishments, shopping malls, hospitals and these are all places which will fall within the scope "any other eating house". As noted above, Section 3-D of the TNGST Act is a stand alone provision, as it commences with a non obstante clause and would apply to case of every dealer whose total turnover is not less than twenty five lakhs of rupees notwithstanding anything contained in Sub-Section (1) of Section 3-D. Therefore, the provision needs to be strictly construed and what is crucial is the manner in which the provision is to be interpreted. Section 3-D of the TNGST Act forms part of a fiscal statute and there is no room for adding words or phrases in the statutory provision. The first requirement for Section 3-D(1) of the TNGST Act to apply is the total turnover of the dealer should not be less than twenty five lakhs of rupees. The second aspect is that the provision stands attracted on the first point of sale. Now we have to examine as to what are the items to which this concessional rate would be applicable because Section 3-D of the TNGST Act exclusively deals with payment of tax by hotels, restaurants and sweet stalls. Sub-Section (1) of Section 3-D of the TNGST Act makes it clear that in case of a dealer whose turnover is less than twenty five lakhs of rupees for the year on the first point of sale of food and drinks is liable to pay tax at the rate of 2%. The statute adds a further condition on the place of first point of sale of food and drinks, namely, in hotels, restaurants, sweet-stalls and any other eating houses other than those falling under item 20 of PART-C of the First Schedule. The word "in" is very crucial and this should be read in conjunction with words "first point of sale". Therefore, for being entitled to the concessional rate of tax at 2%, the first point of sale of food and drinks should be in a hotel or in a restaurant or in a sweet stall orany other eating houses. Therefore, what is contemplated is sale of food and drinks in these named establishments and “any other eating houses” cannot be read disjunctively, but to be read conjunctively along with hotels, restaurants and sweet stalls. This is more so because Section 3-D of the TNGST Act deals with payment of tax by hotels, restaurants and sweet stalls. Section 3-D of the TNGST Act does not state any other eating house but this is found in Sub-section (1) of Section 3-D. Therefore, necessarily the interpretation for the words "any other eating houses" should be tandem with with a hotel, a restaurant or a sweet stall.

12. The underlying principle is that a sale takes place in those three establishments and similarly sale should take place in any other eating houses which may not be a hotel or may not be a restaurant or may not be a sweet stall. Therefore, the contentions of the petitioner that the word "other" in the cluster of words "any other eating houses" should mean other than hotels, restaurants and sweet stalls though may be right but what has been lost sight by the petitioner is that it should be a point of first sale. Admittedly, the sale of food and drinks does not take place in an industrial canteen and does not take place in a staff canteen run by an establishment or a defence canteen. The point of first sale is to the establishment which has set up the facility for its employees or the people who visit the establishment such as shopping malls. Therefore, the petitioner would not stand qualified for concessional rate of tax under Section 3-D(1) of the TNGST Act.

13. The second limb of argument is based upon the amended Section 3-D of the TNGST Act which came into effect from 01.04.2002. Admittedly, the assessment years under consideration in these cases are 2002-2001 and 2001-2002. Therefore, the amended Section 3-D of the TNGST Act would have no application to the cases on hand.

14. The argument of Mr.R.Raghavan, learned counsel for the petitioner is that Section 3-D of the TNGST Act has included "caterers" and the benefit of the concessional rate of tax in terms of Section 3-D of the TNGST Act as amended should be extended to the petitioner since the amendment is by way of substitution. In this regard, the learned counsel referred to the Tamil Nadu General Sales Tax (Sixth Amendment) Act. 2002 (Act No.20/2002). In Section 3 of the Amendment Act, it is stated that in Section 3-D of the Principal Act for the Sub-Sections (1) and (2), the following Sub-Sections shall be substituted. Fort better appreciation, we quote the amended Section 3-D of the Act:

"Section 3-D. Payment of tax by hotels, restaurants and sweet stalls:- (1) Notwithstanding anything contained in sub-section (1) of Section 3, every dealer whose total turnover is not less than ten lakhs of rupees for the year shall pay tax at the rate of two per cent on the first point of sale of ready to eat unbranded foods including sweets, savouries, unbranded non-alcoholic drinks and beverages served in or catered indoors or outdoors by hotels, restaurants, sweet stalls, clubs, caterers and any other eating houses other than those falling under item 29 of Part-C of the First Schedule"

15. It is the argument of Mr.R.Raghavan, learned counsel that there is a gross difference between the substitution and insertion. A substitution is by way of clarification which will date back to the date on which the original provision existed, whereas an insertion is always prospective unless specifically made retrospective.

16. To examine the correctness of this submission, we refer to few decisions which were relied on by Mr.Mohammed Shaffiq, learned Special Government Pleader (Taxes). First of which is in the case of Maharaja chintamani Saran Nath Shahdeo (supra), wherein similar argument was advanced by the learned counsel for the respondent before the Hon'ble Supreme Court that the amending Act being substituted legislation would have retrospective effect. This argument was rejected by holding that under the relevant provisions of the Bihar Land Reforms Act, 1950 as amended, it was mentioned that the Act would be prospective and if such interpretation is given, it would go against the intention of the legislation. Thus, the Court held that the golden rule of construction should be applied and when there is intention to show that the Act would be prospective, no other interpretation can be given against the intention of the legislation. Admittedly, Section 3-D of the TNGST Act which was amended by Act 20/2002 did not state that it will take effect from the date on which the original provision stood. However, what is important to note is that the amending Act was published in the official gazette on 03.06.2002 and under normal circumstances that would be the date on which the amended Act would come into force. But, however the legislature gave effect to the amended Section 3-D of the TNGST Act retrospectively from 01.04.2002. If such is the position and the legislative intend, we cannot be asked to hold that the Act is retrospective much prior to 01.04.2002. In this regard, it is relevant to refer to the decision of the Hon'ble Supreme Court in the case of Corporation Bank (supra). In the said case also, the legislature had stated that the provision shall come into force with effect from 01.08.1996 which was held to be one of the circumstances to show that the amending Act was not to operate before 01.08.1996. The case on hand is also identical. The legislature while enacting the amending Act gave effect to it retrospectively from 01.04.2002 though it was published in the Government gazette on 03.06.2002. We cannot therefore be called upon to fix an anterior date ahead on 01.04.2002.

17. Having held so, we need to examine the import or the meaning to be given to the word "substitution" since admittedly the Act 20/2002 uses the word "substituted". This came up for consideration before the Hon'ble Supreme Court in the case of Bhagat Ram Sharma (supra). It was pointed out that in the case of executive instructions, the bare issue of a fresh instrument on the same subject would replace a previous instrument. But in the case of a legislative enactment, there would be no repeal of an existing law unless the substituting act or provision has been validly enacted with all the required formalities. After referring to several earlier decisions it was held that mere use of the word "substituted" does no ipso facto or automatically repeal a provision until the provision which is to take its place is constitutionally permissible and legally effective. The legal position has been succinctly set out in the aforementioned decision and this is a straight answer to the argument of Mr.R.Raghavan and consequently such argument should fail.

18. In the preceding paragraph we have quoted the amended Section 3-D of the TNGST Act. If we have compared Section 3-D as it stood prior to 01.04.2002 and post 01.04.2002, we find that there is sea of change in the new provision. The amended Section 3-D(1) of the TNGST Act is not in parimateria with Section 3-D as it originally stood. There are several features which have been added in the amended Section 3-D, as it originally stood related only to the sale of food and drinks in the establishments named therein. Whereas the amended Section 3-D deals with sale of ready to eat unbranded foods including sweets, savouries, unbranded non-alcoholic drinks and beverages. The amended provision also includes serving in or catered indoors or outdoors by hotels, restaurants, sweet stalls, clubs, caterers and any other eating houses other than those falling under item 29 of Part C of the First Schedule. Thus there is entire change in the scheme as provided under the amended Section 3-D(1) of the TNGST Act and this is one more reason to hold that the amended provision cannot be retrospective or retroactive prior to 01.04.2002.

19. The above conclusion arrived by us is supported by the decision of the Hon'ble Supreme Court in the case of Ellis Bridge Gymkhana (supra) where the assessment under the provisions of the Wealth Tax Act was for the assessment years 1970-71 to 1977-78 and the question was whether Section 21AA of the said Act could be made applicable to the Association because Section 21AA was not in force during the relevant assessment period and there is no way that a club would be assessed as an association of persons in those assessment years.

20. In the case of Martin Lottery Agencies Ltd. (supra), the question which fell for consideration is as to whether the explanation appended to Sub-clause (ii) of Section 65(19) of the Finance Act is clarificatory or declaratory in nature so as to construe having retrospective effect and retroactive operation. The Hon'ble Supreme Court pointed out that the explanation appended to the said provision cannot be said to be a simple clarification as it introduces a new concept stating that organising of the lottery is a form of entertainment; introduction of a new concept itself would have a constitutional implication. Further it was held that the question as to whether a subordinate legislation or a parliamentary statute would be held to be clarificatory or directory or not would undisputably depend upon the nature thereof are also the object it seeks to achieve. Further, in the case of Co-operative Company Ltd. vs. Commissioner of Trade Tax, U.P. [(2007) 4 SCC 480], the Hon'ble Supreme Court pointed out that the Act having been brought into force from a particular date, no retrospective operation thereof can be contemplated prior thereto. For all the above reasons, we hold that the amended Section 3-D of the TNGST Act would have no application to the case of the petitioner and the said provision is not retrospective i.e. it cannot be made applicable prior to 01.04.2002.

21. We have pointed out about the new concept which was introduced in Section 3-D of the TNGST Act and therefore it can never be deemed to be a clarificatory amendment to the pre-existing Section 3-D. At this juncture, we should bear in mind the components which enter into the concept of tax. this was explained by the Hon'ble Supreme Court in the case of Govind Saran Ganga Saran vs. Commissioner of Sales Tax and others [1985 (Supp) SCC 205]. It was explained that first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed and the fourth is the measure or value to which the rate will be applied for computing the tax liability. Thus the crucial aspect to be fulfilled for being entitled to the benefit of Section 3-D(1) of the TNGST Act as it stood prior to the amendment and even thereafter is the taxable event and the taxable event is the point of first sale in a hotel or in a restaurant or in a sweet stall or any other eating houses.

22. The next contention advanced by Mr.R.Raghavan, learned counsel is based on clarifications/circulars issued by the Department. Admittedly, the clarifications were sought by different assessees and in the given factual situation, the Commissioner had issue clarifications. Therefore, we are of the prima facie view that such a clarification cannot be uniformly applied to ever assessee without examining the nature of the transactions. The clarification is issued based upon the material placed by the assessee. By reading the clarification which is generally a four line order Courts cannot readily apply those clarifications to every case. The question would be as to what would be the effect of such clarifications. Undisputably such clarifications cannot bind the Court. The argument is that it binds the authorities. However, when the Court of law sets down the legal position, the authority cannot state that he will go by the clarification issued by his superior and not follow the law laid down by the Courts. In the case of Ratan Melting and Wire Industries (supra), the Union of India submitted before the Constitutional Bench of the Hon'ble Supreme Court that the law declared by the Court is the supreme law of the land under Article 141 of the Constitution of India, the circulars cannot be given primacy over the decisions. It was pointed out that the consequence of issuing a circular are that the authorities cannot act contrary. Once the circular is brought to the notice of the Court the challenge to the revenue should be turned out and the revenue cannot lodge an appeal taking the ground which is contrary to the circular.

23. Following the decision in the case of Ratan Melting and Wire Industries (supra) in the case of Hindoostan Spinning and Weaving Mills Ltd. (supra), it was held that the law laid down by Supreme Court or High Court prevails over circulars or instructions of Board. In the case of G.S.Dall and Flour Mills (supra), it was held that executive instructions can supplement a statute or cover areas to which the statute does not extend, but they cannot run contrary to statutory provisions or whittle down their effect.

24. In the light of the above reasoning, the petitioner cannot rest his case based on the clarifications which were issued much prior to the amendment and those clarifications were assessee specific and does not bind the Court. Thus, the three main issues which we had taken up for consideration have to be decided against the petitioner for the reasons set out by us. Consequently, the questions of law framed for consideration have to be answered against the petitioner/assessee.

25. Mr.R.Raghavan, learned counsel submitted that the term "caterer" has not been defined under the TNGST Act and therefore, necessarily the assessee had to refer to other enactment to cull out the meaning of the word "caterer". The Tribunal had outrightly rejected such contention. The question is whether the definition in any other enactment other than the TNGST Act could be applied or read into the provisions of this Act.

26. In the case of P.C.Cherian (supra), the question was whether lease of premises for carrying on business of retreading of tyres is a lease for "manufacturing purposes" within the contemplation of Section 106 of the Transfer of Property Act, 1882. It was held that the expression "manufacturing purposes" has no

Please Login To View The Full Judgment!

t been defined in the Transfer of Property Act. It has therefore to be construed in its popular sense. According to the dictionary, 'manufacture' implies a change but every change is not a manufacture. Further it was pointed out that the definitions of manufacture given in other enactments such as Factories Act or Excise Act should not be blindly applied while interpreting the expression "manufacturing purposes" in Section 106 of the Transfer of Property Act as in the Excise Act the term "manufacture" has been given extended meaning by including in it repairs also. In the case of J.B.Garments (supra), the Delhi High Court pointed out that the definition of one particular enactment cannot be transplanted into another Act. The above two decisions are sufficient to hold that the contention of the petitioner that the definition in the other enactments should have been considered does not merit acceptance. 27. The last submission was by referring to the orders passed by the First Appellate Authority in the assessee's own case for the earlier assessment years i.e. from 1996 onwards. Similar question arose in the case of Catholic Syrian Bank Limited (supra). In the said case for the assessment years 1991-1992 to 1993-1994, the Income Tax Appellate Tribunal decided certain issues in favour of the said Bank which had not been challenged by the Department and the issue attained finality. It was argued that the said issue cannot be disturbed in the subsequent years. This argument of the Bank was rejected by the Hon'ble Supreme Court holding that merely because the orders of the Tribunal were not assailed in appeal by the Department itself, would not take away the right of the revenue to question the correctness of the orders of assessment particularly when a question of law is involved. Further, it was pointed out that the question raised before the Hon'ble Supreme Court goes to the root of the matter and a question of law in relation to introduction of the provision of Income Tax Act and accordingly rejected the contention of the Bank that the findings recorded in the earlier assessment years would be binding on the Department for subsequent years as well. 28. In the instant case we are deciding substantial questions of law which have been framed for consideration. Therefore, any order passed by the First Appellate Authority in the assessee's case in the earlier assessment years cannot operate as a bar for the Court to consider the substantial questions of law which goes to the root of the matter. Before we close, we take note of the decision in the case of Chang Foods Pvt. Ltd. (supra), to which one of us is a party (T.S.SIVAGNANAM, J.). The decision is wholly in favour of the respondent revenue. The assessee therein prepare raw puffs in its kitchen and sold it to a supermarket. The assessee contented that the puffs were sold in a retail outlet to consumers and whenever there was a demand, the raw puff was fried by the staff of the assessee in the outlet and the customer is given ready to eat puff. Thus the contention of the assessee was the sale in the outlet would be a sale in the eating house which was rejected by the Division Bench as it was an admitted fact that the price for the puff is collected only from the supermarket and not from the assessee. 29. For the above reasons, the tax case revisions are dismissed and the substantial questions of law framed for consideration are answered against the petitioner/assessee. No costs.
O R