DISTRICT: JORHAT

IN THE GAUHATI HIGH COURT

(THE HIGH COURT OF ASSAM, NAGALAND, MEGHALAYA, MANIPUR, TRIPURA,

MIZORAM & ARUNACHAL PRADESH)

(CIVIL EXTRA ORDINARY WRIT JURISDICTION)

W. P. (C) NO. /2011

Category of Code:

To,

The Hon’ble Mr. Madan Bhimarao Lokur, B.A (Hons)LL.B., the Chief Justice

of Hon’ble Gauhati High Court and his Lordships other companion Justices of the

said Hon’ble Court.

IN THE MATTER OF:

An Application under Section 226 of the Constitution

of India for issue of Writ in the nature of Mandamus

or any other appropriate writ, order or direction as

may deem to be fit and proper.

-AND-

IN THE MATTER OF:

Enforcement of petitioner’s legal and fundamental

rights.

-AND-

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IN THE MATTER OF:

Order passed by the Commissioner of Taxes dated

8th December,2009 and 6th May,2010 under section

105 of the Assam Value Added Tax Act, 2003

regarding taxability of item namely PVC granules,

resim under the provisions of the Assam Entry Tax

Act, 2008.

-AND-

IN THE MATTER OF:

Notice bearing No.1394 dated 31.07.2010, issued by

Assistant commissioner of Taxes, Jorhat, Assam

wherein while observing therein that the petitioner

failed to pay the Entry Tax on plant and machinery,

chemicals, i.e. PP Granules and Master Batch

imported by it for the year 2005-06 to 2009-10

directed the petitioner to produce the record.

-AND-

IN THE MATTER OF:

Notice bearing No. 2520 dated 09.09.2010 issued by

Assistant commissioner of Taxes, Jorhat, Assam

wherein while stating that PP Granules, Master

Batch and Resins are all included in the description

of “chemicals” at Serial No.51 of the Schedule of

Assam Entry Tax Act and enclosing the copies of the

order passed by the Commissioner of Taxes dated 8th

December,2009 and 6th May,2010 under section 105

of the Assam Value Added Tax Act, 2003, directed

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the petitioner to produce the figure of the said items

imported by it.

-AND-

IN THE MATTER OF:

Show Cause Notice bearing No. 3073 dated

08.10.2010 issued by the Assistant Commissioner of

Taxes, Jorhat asking the petitioner to appear and

show cause as to why best judgment assessment

should not be made.

AND

IN THE MATTER OF:

Judgment and order dated 9-12-2010 passed by this

Hon’ble Court in W.P.(C) No. 6444/2010 whereby

this Hon’ble COurt was pleased to direct the

Assistant Commissioner of Taxes, Jorhat to consider

the plea raised by the petitioner by a speaking order.

AND

IN THE MATTER OF:-

Impugned Order dated 10-2-2011 passed by the

Assistant Commissioner of Taxes, Jorhat holding that

the items “ PP Granules” and “Master Batch” fall

under the expression “Chemical” in entry 51 of the

Assam Entry Tax Act, 2008 and consequently, the

dealer(petitioner herein), being importer of

specified goods, is liable to pay entry tax on the

import value of such goods and further vide same

order determined/assessed the tax liability of the

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petitioner for the assessment year 2005-06 to 2009-

10.

AND

IN THE MATTER OF:-

Impugned Notice of Demand for tax dated 10-2-

2011 issued by the Assistant Commissioner of Taxes,

Jorhat for the assessment year 2005-06 to 2009-10.

AND

IN THE MATTER OF:-

Contravention of the provisions of the Assam Entry

Tax Act, 2008.

-AND-

IN THE MATTER OF:

Gattani Polymers, a partnership firm Represented

by one of its duly authorized partner Shri Murlidhar

Gattani, resident of Ganga Bishan Murlidhar

Premises,Marwari Patty, Dist; Jorhat, Assam

-----PETITIONER

-VERSES-

1. The State of Assam, represented by the Principal

Secretary to the Government of Assam, Finance

Department, Dispur, Guwahati

2. The Commissioner of Taxes,

Kar Bhawan, Dispur, Guwahati, Assam

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3. The Assistant Commissioner of Taxes, Jorhat,

Assam

----RESPONDENTS

The humble petition of the petitioner above

named:

MOST RESPECTFULLY SHEWETH:

1. That the petitioner is a partnership firm having its factory in the G.B.

Gattani Industrial Complex, Mariani Road, Cinnamara, Jorhat. The partners of the

petitioner are citizen of India and as such is entitled for all the rights and privileges

guaranteed under the Constitution of India and the laws framed there under.

2. That the petitioner states that the present application involves the

determination of classification of “PP granules i.e. Plastic Granules and Master

Batch” under the provisions of the Assam Entry Tax Act, 2008. The question is

whether “PP granules” and “Master Batch” merit classification under the heading

covering “Chemicals” as appearing in entry 51 of the schedule appended to the

Assam Entry Tax Act, 2008, as sought to be classified by the Respondent No.3.

3. That the petitioner is engaged in the business of manufacture of plastic

materials and products since the year --------- and in this regard, the raw materials

required for the manufacturing purpose are procured by the petitioner from outside

the State of Assam. Amongst the various raw materials utilized by the petitioner in

the manufacturing, two of the items are namely “PP granules” (i.e Plastic Granules)

and “Master Batch”.

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4. That in this context, the petitioner begs to refer to the relevant entry as

regard “PP granules” (i.e Plastic Granules) and “Master Batch” under the provision

of the Assam Value Added Tax Act, 2003. Entry 76 of Schedule II Part A relates to

“Plastic Granules”, while Entry 114 of Schedule II Part C relates to “Master Batch”. It

may be stated herein that for the purpose of interpretation of the entries in Schedule

II Part C, certain notes are appended to Schedule II Part C of Assam Value Added

Tax Act, 2003, which are quoted herein below for easy of reference:-

Note 1 Micronutrients and plant growth promoter or regulators are not covered by the

scope of this Part.

Note 2. The Rules for the interpretation of the Central Excise Tariff Act, 1985, read

with the Explanatory Notes as updated from time to time published by the Customs Co-

operation Council, Brussels, shall apply for the interpretation of this part.

Note 3. Where any commodities are described against any heading or, as the case may,

sub-heading, and the aforesaid description is different in any manner than the

corresponding description in the Central Excise Tariff Act, 1989, then only those

commodities described as aforesaid will be covered by the scope of this part and other

commodities, though covered by the corresponding description in the Central Excise

Tariff, will not be covered by the scope of this Part.

Note 4. Subject to Note 3, for the purpose of any entry contained in this Part, where the

description against any heading or, as the case may be, sub-heading, matches fully

with the corresponding description in the Central Excise Tariff Act, 1985, then all the

commodities covered for the purposes of the said tariff under that heading or sub-

heading will be covered by the scope of this Part.

Note 5. Where the description against any heading or sub-heading is shown as “other”

then the interpretation as provided in Note 2 shall apply.

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5. That the petitioner states that the Assam Entry Tax was introduced and

promulgated in the year 2001. Section 3 (1) of the Assam Entry Tax Act, 2001

stipulated that there shall be levied and collected an entry tax on the entry of goods

specified in the Schedule into any local area for consumption, use or sale therein at

such rate, not exceeding twenty per centum, as the State Government may, by

notification, fix in this behalf and different rates may be fixed for different class or

classes of specified goods and such tax shall be paid by every importer of such

goods, whether he imports such goods on his own account or on account of his

principal or any other person or takes delivery or is entitled to take delivery of such

goods on such entry. Section 2(K) of the Assam Entry Tax Act, 2001 defines

“Specified goods” to mean goods specified in the schedule. Entry 51 of the Schedule

appended to the Assam Entry Tax Act,2001 relates to “Chemicals”. It may be stated

herein that the raw material for the manufacture of plastic namely “PP granules” (i.e

Plastic Granules) and “Master Batch” are not goods specified in the Schedule

appended to the Assam Entry Tax Act,2001, the same were not taxable under the

provisions of the Assam Entry Tax Act. The petitioner begs to state herein that for

bringing in the raw materials namely “PP granules” (i.e Plastic Granules) and

“Master Batch”, the petitioner had to declare the goods for obtaining the Road

permit, which were accordingly issued by the concern authorities and Central Sales

Tax was accordingly assessed on the said raw materials namely “PP granules” (i.e

Plastic Granules) and “Master Batch”. The petitioner states that at the said point of

time, no objection was ever raised and/or the authorities concern sought to

assessed the raw materials namely “PP granules” (i.e Plastic Granules) and “Master

Batch” as one of the specified goods listed in the Schedule appended to the Assam

Entry Tax Act,2001

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6. That the petitioner begs to state herein that that several writ petitions were

filed before this Hon’ble Court challenging the Assam Entry Tax, 2001 as well as

subsequent amendment and the said writ petition were allowed vide judgment and

order dated 17.11.2006 declaring the levy and collection of tax under Assam Entry

Tax, 2001 to be violative of Article 301 with a direction to refund the tax. It may be

stated herein that as the petitioner was not bringing in any specified goods within

the taxable territories for sale or use, no tax was either demanded and/or levied

under the provisions of the Entry Tax Act, 2001.

The State of Assam thereafter enacted the Assam Entry Tax Act 2008

(hereinafter referred to as the “2008 Act”) which received the assent of the

Governor on 13.4.2008. By a Notification dated 29.5.2008 issued under Section 1 (3)

of the said Act, 1.06.2008 was appointed to be the date for commencement of the

said Act. Entry 51 of the Schedule appended to the Assam Entry Tax Act,2008 relates

to “Chemicals”. It may be stated herein that the raw material for the manufacture of

plastic namely “PP granules” (i.e Plastic Granules) and “Master Batch” are not goods

specified in the Schedule appended to the Assam Entry Tax Act,2008, the same were

not taxable under the provisions of the Assam Entry Tax Act, 2008.The petitioner

submits that from a perusal of the 2009 Act it would be evident that the said

enactment was prospective except with regard to Section 12 thereof validating the

entry tax levied or collected or purported to have been levied or collected under the

erstwhile Assam Entry Tax Act, 2001. The petitioner states that there could not be

any levy or collection of tax under the 2001 Act, inter alia, during the period

17.11.2006 to 31.03.2007 in view of invalidity of the Assam Entry Tax Act, 2001

declared by the Ld. Single Judge by his order dated 17.11.2006 which order was not

stayed by the Division Bench before the same was upheld by its final order dated

30.08.2007.

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That by the Assam Ordinance No. II of 2008 promulgated by the Governor of

Assam which was published in the Assam Gazette, Extra Ordinary dated 12.09.2008,

the 2008 Act was sought to be enforced with effect from 1.1.2001 by amending

Section 1(3) of the said Act. The petitioner states that various writ petitions were

filed by other persons in this Hon’ble Court challenging the legality and

constitutional validity of the 2008 Act as being violative of Article 301, including the

retrospective operation thereof given under the aforesaid Ordinance II of 2008

which was subsequently replaced by Act. That by its judgment and order dated

09.01.2009 [(2009) 1 GLT 427], the Division Bench of this Hon’ble High Court was

pleased to dismiss all such writ petitions and uphold the legality and validity of the

levy and collection of the tax under the said 2008 Act w.e.f. 01.10.2001. The Division

Bench of this Hon’ble Court in its aforesaid judgment and order dated 09.01.2009

[(2009) 1 GLT 427] has held that by creating the Assam Trade Development Fund to

which the net proceeds of the entry tax shall be credited and appropriated for

utilization thereof exclusively for the development of trade, commerce and inter

course, the levy of tax under the 2008 Act has become compensatory in nature. It

was accordingly held that the defects and/or lacuna pointed out earlier by the

Division Bench of this Hon’ble Court in its judgment and order dated 30.8.3007

while declaring earlier entry tax enactment of 2001 to be unconstitutional has been

removed in the 2008 Act, and that the same has been validly made retrospective

w.e.f 01.10.2001 by the Ordinance No.II of 2008.

7. The Petitioner states that for the Assessment Years, 2005-2006, 2006-2007

and 2007-2008, the Respondent authorities had never initiated any proceedings

against the Petitioner for assessment, levy or collection of Entry Tax under the

Assam Entry Tax Act, 2001 in respect of the raw materials namely “PP granules” (i.e

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Plastic Granules) and “Master Batch” nor for the assessment year 2008-2009 under

the Assam Entry Tax Act, 2008. Consequently, the Petitioner also did not have the

occasion to pay or deposit any Entry Tax under the Assam Entry Tax Act, 2001 in

respect of the raw materials namely “PP granules” (i.e Plastic Granules) and “Master

Batch” for the Assessment Years 2005-2006, 2006-2007 and 2007-2008 under the

Assam Entry Tax Act, 2001 in respect of the raw materials namely “PP granules” (i.e

Plastic Granules) and “Master Batch” nor for the assessment year 2008-2009 under

the Assam Entry Tax Act, 2008. However, to the utter shock and surprise of the

petitioner, the petitioner received a notice dated on 31/07/2010 issued by the

Assistant Commissioner of Taxes, Jorhat stating therein that the petitioner failed to

make payment of Entry Tax on specified goods i.e. plant & machinery, chemicals i.e.

PP Granules, master batch etc which was imported from outside the State from the

year 2005-06 to 2009-10 under Assam Entry Tax Act, 2008 (herein after referred as

the Act)and thereby asked the petitioner to produce the records to purchase of such

goods and other incidental cost incurred in importing those goods into local area of

Assam. It may be stated herein that on receiving the aforesaid notice, the petitioner

vide its representation dated 5-8-2010, requested for grant of some time to enable it

to furnish a detail reply.

A copy of the notice dated 31.07.2010 No.1394 and the

letter dated 05.08.2010 are annexed hereto and marked

as ANNEXURE-I, IA respectively.

8. That the petitioner accordingly vide its letter dated 20.08.2010 submitted a

detail reply wherein it disputed the correctness of seeking to classify the raw

materials namely “PP granules” (i.e Plastic Granules) and “Master Batch” as

chemicals and in support of its contention that “PP granules” (i.e Plastic Granules)

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and “Master Batch” cannot be classified as “chemicals” in view of the fact that the

said items have never been known in the commercial sense to be chemical and on

the contrary the said items are known in the common parlance as plastic materials,

cited some recent Supreme Court decisions.

A copy of the letter dated 20.08.2010 has been annexed

here with and marked as ANNEXURE-II.

9. That the petitioner states that thereafter, the Respondent No.3 namely the

Assistant Commissioner of Taxes, Jorhat again issued a Notice bearing No. 2520

dated 9-9-2010 stating therein that the items PP granules, master batch and resins

are all included in the description of “chemicals” at S.L. No.51 of the Schedule

attached to the Assam Entry Act,2008. The Respondent No.3 further stated that the

Commissioner of Taxes, Assam vide his orders dated 8-12-2009 and 6-5-2010

clarified that the items PP granules, master batch are covered by the description

“Chemicals” as appended in the Schedule attached to the Assam Entry Act,2008 and

enclosed the copies of the same. Vide the aforesaid letter, the Respondent No.3

asked the petitioner to furnish the figures of PP Granules, master batch etc imported

by the petitioner from outside the State so as to enable respondent No.3 to serve

assessments for the concern financial years 2005-06 to 2010-11.

That the petitioner humbly states that a the perusal of the order dated 8-12-

2009 passed by the Commissioner of Taxes, Assam under the provisions of section

105 of the Assam Value Added Taxes, Act, 2003 would reveal that the purported

conclusion arrived at to the effect that the disputed items in question squarely fall

under description of “chemicals” as contained in entry 51 of the Assam Entry Tax

Act schedule was solely based on the judgment of the Hon’ble Gujrat High Court in

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the case of Qaulity Chemical vs State of Gujrat (1994) 94 STC 450 (Gujrat). The

petitioner humbly submit that the observations of the Hon’ble Gujrat High Court in

the case of Qaulity Chemical vs State of Gujrat (supra) was misunderstood, read

divorced of the context in which such observation was made, ignoring the question

which was posed before the Hon’ble Gujrat High Court and misapplied. The

petitioner further submits that the Respondent No.3 included resins in the list of

disputed items for the first time and there by arbitrarily included PP Granules and

Master Batch in the list of “Chemicals”.

Disputing the aforesaid, the petitioner submitted a detail reply vide its letter

dated 20.09.2010 stating the reasons in detail as to why the disputed items in

question i.e. PP Granules and Master Batch cannot be construed to be within the

description of “Chemicals”.

Copies of the letter dated 09.09.2010 and reply dated

20.09.2010 are annexed here with and marked as

ANNEXURE-III , IV respectively .

10. That the petitioner states that the Respondents were bent on levying tax

without proper authority and legal backing, which is fortified by the fact that the

Respondent No.3 without considering the detail reply submitted by the petitioner,

most arbitrarily issued a show cause notice bearing No. 3073 dated 08.10.2010

where it was stated that the “import value of Chemicals” to a total of Rs

27,41,08,921 for PP Granules and a total of Rs 2,75,89,327 for Master Batch during

the years 2005-2010 and was directed to appear before the Respondent No.3 office

on 28.10.2010 to show cause as to why best judgment assessment should not be

made and later re fixed the dated to 17.11.2010 vide letter/notice dated 27.10.2010,

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which was thereafter fixed on 5.12.2010 vide letter/notice bearing Memo No.3266

dated 26.11.2010 .

Copies of the reply dated 08.10.2010, letter/notice

dated 27.10.2010 and 26.11.2010 are annexed herewith

and marked as ANNEXURE-V, VI, VII respectively.

11. That the petitioner being aggrieved by the aforesaid, preferred an application

under Article 226 of the Constitution of India before this Hon’ble Court being W.P.

(C) No. 6444/2010 and this Hon’ble Court upon hearing the parties, vide its

judgment and order dated 9-12-2010 was pleased to disposed of the said writ

petition directing that the Assistant Commissioner of Taxes, Jorhat shall by a

speaking order deal with the plea of the petitioner raised in the Annexure II

representation dated 20-8-2010 or any other representation which the petitioner

may make to the said authority.

The petitioner craves the leave of this Hon’ble COurt to produce, refer and

rely upon the W.P.(C) No. 6444/2010 and the annexure annexed thereto at the time

of hearing, if need be. The petitioner further begs to state herein that the petitioner

in said W.P.(C) No. 6444/2010 annexed various literature and documents to

establish that P.P. granules and master batch cannot be construed to come within

the definition of “chemicals”

Copy of the judgment and order dated 9-

12-2010 passed in W.P.(C) No.

6444/2010 is annexed hereto and

marked as ANNEXURE:-VIII

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12. That the petitioner states that in pursuance of the judgment and order dated

9-12-2010 passed in W.P.(C) No. 6444/2010, the petitioner preferred a detail

representation dated 20-12-2010 before the Respondent No.3 and thereafter in

pursuance to the letter No. 3657 dated 29-1-2011 issued by the Respondent No.3,

the petitioner appeared before the Respondent No.3 wherein the petitioner

submitted that it had no further submissions to make other than those which have

already been submitted/made earlier.

Copy of the representation dated 20-12-

2010 is annexed hereto and marked as

ANNEXURE:- IX

13. That thereafter, the Respondent No.3 passed the impugned order dated 10-2-

2011 interalia holding therein that in his considered view the items “ PP Granules”

and Master Batch” fall under the expression “Chemicals” in entry 51 of the Assam

Entry Tax Act, 2008 and consequently, the dealer, being importer of specified goods,

is liable to pay entry tax on the import value of such goods. Vide the said impugned

order, the Respondent No.3 further determined/assessed the tax liability for the

year 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. The petitioner states that in

pursuance of the aforesaid impugned order dated 10-2-2011, demand notices dated

10-2-2011 were also served upon the petitioner for the assessment year 2005-06,

2006-07, 2007-08, 2008-09 and 2009-10.

Copies of the impugned order dated 10-2-2011

and impugned demand notices dated 10-2-2011 for the

assessment year 2005-06, 2006-07, 2007-08, 2008-09

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and 2009-10 are annexed hereto and marked as

ANNEXURE;- X and XI SERIES respectively

14. That being aggrieved by the impugned order dated 10-2-2011 passed by the

Respondent No.3 and impugned demand notices dated 10-2-2011 for the

assessment year 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 and the

proposed coercive steps being proposed by the Respondent No. 3, the Petitioner is

filing the instant application, on the following amongst other grounds which are

without prejudice to each other.

GROUNDS

A. For that the impugned order dated 10-2-2011 passed by the Respondent

No.3 interalia holding therein that the items “ PP Granules” and Master

Batch” fall under the expression “Chemicals” in entry 51 of the Assam Entry

Tax Act, 2008, being bad in law, the same is liable to be interfered with.

B. For that the petitioner humbly submit that the Assistant Commissioner of

Taxes, Jorhat acted in a predetermined manner thereby prejudicing the

entire adjudication process, which is fortified by the following observation of

the Assistant Commissioner of Taxes, Jorhat, which interalia reads as

hereunder:-

“ At this stage, it is remarkable that Section 105 of the Assam VAT Act,

2003 has empowered/authorized the Commissioner of Taxes, Assam to

determine certain questions, which interalia includes taxability of an item. It is

equally important to note that any order passed by the Commissioner of Taxes

is binding on the sub-ordinate/prescribed authorities as per provisions of sub-

section (5) of Section 105 of the AVAT Act.

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In the instant case, the order determining/holding that PVC Resin,

LLDPE, PVC granules etc fell under entry relating to ‘chemicals’ was issued by

the Commissioner of Taxes, Assam in exercise of powers conferred by Section

105 of the AVAT Act, 2003. Such an order of the Commissioner of Taxes, Assam

was binding on the undersigned in view of specific provision contained in

Section 105(5) of the AVAT Act whereas the Hon’ble Court directed the

undersigned to dispose the representation of the dealer.”(emphasis added)

The petitioner humbly submit that the Assistant Commissioner of

Taxes, Jorhat totally erred and misconstrued the provision of Section 105(5)

of the AVAT Act inasmuch as the Assistant Commissioner of Taxes, Jorhat

was called upon to discharge judicial function, and hence cannot be held to be

bound by the order of the Commissioner in view of the fact that to take a

contrary view would mean interference by the executive in a judicial

function. It is humbly submitted that under the AVAT Act, when the

authorities decides a case, he is functioning in a judicial capacity, even though

he may be a authority under the AVAT Act, and as such, he is acting in a

judicial capacity and he should not feel bound by any clarification/order

issued by the Commissioner, as such clarification/order are not binding upon

the Assistant Commissioner of Taxes, Jorhat when he is functioning in a

judicial capacity, and they are only binding when he is functioning in an

administrative capacity.

C. For that the Respondent No.3 ought to have appreciated that by a

catena of decisions, the Hon’ble Supreme Court has held that the onus to

classify a particular product under a particular entry is on the department.

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The Apex Court has held that classification of goods is a matter relating to

chargeability and the burden of proof is squarely upon the Revenue. If the

Department intents to classify the goods under a particular heading or sub-

heading different from the claimed by the assessee, the Department has to

adduce proper evidence and discharge the burden of proof. Mere assertion in

that regard is of no avail. There should be materials to enter appropriate

finding in that regard and the materials may be either oral or documentary.

In the present case, not an iota of evidence was led by the department and

thus there was no attempt to discharge the onus cast on it by law and

without discharging the said onus, the Respondent No.3 arrived at the

purported conclusion that the items “ PP Granules” and Master Batch” fall

under the expression “Chemicals” in entry 51 of the Assam Entry Tax Act,

2008 and in this view of the matter, the impugned order dated 10-2-2011 is

liable to be interfered with.

D. For that even though no onus is cast on the petitioner, the petitioner

presented before the Respondent No.3 all the evidence as to how the

products are classified under excise law, how they are classified under HSN,

how it been classified under the Assam Value Added Tax and above all, how

the goods has been treated by the people conversant with the trade. The

Respondent No.3 not only ignored the evidence on record but proceeded to

classify the products without any basis whatsoever. It is humbly submitted

where the claim of the petitioner is borne out by the relevant document and

trade enquires, a heavy burden lay upon the Revenue to disprove the said

materials by adducing proper evidence, which the Respondent No.3 failed to

discharge and in this view of the matter, the impugned order dated 10-2-

2011 is liable to be interfered with.

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Copies of some literature downloaded from the Internet

and manufacturing of plastic raw materials are annexed

herewith and marked as ANNEXURE-XII series.

E. That the Respondent No.2 failed to appreciate and apply the ratio of

the judgment of the Hon’ble Apex Court in the case of Commissioner of

Sales Tax, Madhya Pradesh, Indore Vs. Jaswant Singh Charan Singh [19

STC 469 (SC)]. The Apex Court while explaining the expression ‘popular

sense’ held as under: -

“ If a statute uses the ordinary words in every day use, such words should be

construed according to their popular sense ……….This rule was stated as early

as 1831 by Lord Tenterden in Attorney-General v. Winstanley(1). Similarly, in

Grenfell v. Inland Revenue Commissioners(2), Pollock, B., observed, "that if a

statute contains language which is capable of being construed in a popular

sense such statute is not to be construed according to the strict or technical

meaning of the language contained in it, but is to be construed in its popular

sense, meaning of course, by the words 'popular sense', that sense which people

conversant with the subject-matter with which the statute is dealing would

attribute to it. "But "if a word in its popular sense and read in an ordinary way

is capable of two constructions, it is wise to adopt such a construction as is

based on the assumption that Parliament merely intended to give so much

power as was necessary for carrying out the objects of the Act and not to give

any unnecessary powers.

F. For that the Respondent No.3 failed to appreciate that the Hon'ble

Supreme Court has time and again reiterated that, a word or an expression,

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used in a statute, must be understood in the context in which such word

occurs and must be interpreted and construed in the sense in which people

conversant with the subject matter understand it. If a special type of goods is

sought to be made the subject matter of a fiscal entry, then that entry must be

understood in the context of that particular trade, bearing in mind that

particular word. The ratio in the following decision delineate the point:

Collector of Central Excise, Kanpur Vs. Krishna Carbon Paper Co

[1989] 072 STC 0280-(SC).

It is well-settled, as mentioned before, that where no definition is

provided in the statute itself, as in this case, for ascertaining the correct

meaning of a fiscal entry, reference to a dictionary is not always safe.

The correct guide, it appears in such a case, is the context and the trade

meaning. In this connection reference may be made to the observations

of this Court in Commissioner of Sales Tax, U.P. v. S.N. Brothers, Kanpur,

[1973] 31 STC 302; AIR 1973 SC 78 at page 80 para 5.

The trade meaning is one which is prevalent in that particular trade

where those goods are known or traded. If special type of goods is

subject matter of a fiscal entry, then that entry must be understood in

the context of that particular trade, bearing in mind that particular

word. Where, however, there is no evidence either way then the

definition given and the meaning following from the particular statute

at the particular time would be the decisive test.

………

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It is a well-settled principle of construction, as mentioned before, that

where the word has a scientific or technical meaning and also an

ordinary meaning according to common parlance, it is in the latter

sense that in a taxing statute the word must be held to have been used,

unless contrary intention is clearly expressed by the legislature. This

principle is well-settled by a long line of decisions of Canadian,

American, Australian and Indian cases. Pollock, J., pointed out in Grenfell

v. Inland Revenue Commissioners (1876) 1 Ex D 242 at 248 that if a

statute contains language which is capable of being construed in a

popular sense, such a statute is not to be construed according to the

strict or technical meaning of the language contained in it, but is to be

construed in its popular sense, meaning of course, by the words "popular

sense" that sense which people conversant with the subject-matter with

which the statute is dealing would attribute to it.”

…………..

But there is a word of caution that has to be borne in mind in this

connection, the words must be understood in popular sense, that is to

say, these must be confined to the words used in a particular statute and

then if in respect of that particular items, an artificial definition is given

in the sense that a special meaning is attached to particular words in

the statute then the ordinary sense or dictionary meaning would not be

applicable but the meaning of that type of goods dealt with by that type

of goods in that type of market, should be searched. …………. If there is a

market meaning or trade meaning of that kind of paper that should be

adhered to.”

[emphasis supplied]

20

G. For that the Respondent No. 3 ignored the well-settled principle of

construction that an expression used in an entry must be understood in its

ordinary sense or what is known as common parlance. However, if the

expression used is not in the common or ordinary sense but such word or

expression in a statute has a scientific or technical meaning then the latter

sense will prevail over the ordinary or common parlance sense. In a catena of

judgments of various courts including the Hon’ble Apex Court, it has been

specifically and categorically held that caution has to be borne in mind,

particularly when contrary intention to common parlance ordinary sense is

clearly expressed by the Legislature itself i.e. the statutory context. For

instance, when an artificial definition is given in a statute, in a sense that a

special meaning is attached to a particular word, or a special type of good is

subject matter of a fiscal entry, then the ordinary sense or dictionary

meaning would not be applicable. In such circumstances, the entry or the

word must be understood in the context of that particular trade i.e. if there is

a market meaning or trade meaning of that kind of good that should be

adhered to.

H. For that the observations of the Hon’ble Apex Court in Mauri Yeast

India Pvt Ltd V State of U.P. and another (2008) 5 SCC 680 sought to be relied

upon by the Respondent No.3 was misunderstood, read divorced of the

context in which such observation was made, ignoring the question which

was posed before the Hon’ble Apex Court and misapplied.

21

H. For that the observations of the Hon’ble Apex Court in Mauri Yeast

India Pvt Ltd V State of U.P. and another (2008) 5 SCC 680 relied upon by the

Respondent No.3 to the effect that the “Court observed that no test laid down

by this court, i.e., common parlance test or user test or any other test can be

said to be decisive in a situation of this nature” being misunderstood, read

divorced of the context in which such observation was made by the Apex

Court, the impugned order dated 10-2-2011 is liable to be interfered with.

I. For that it is humbly submitted that the judgment of the Supreme

Court in Mayuri Yeast India Pvt. Ltd. –Vs- State of Uttar Pradesh and others,

(2008) 5 SCC 680, which has been relied upon by the Respondent No.3, is not

applicable in the instant case in as much as the Hon’ble Supreme Court found

‘Yeast’ has all trappings of a chemical and the trade or commercial meaning

or the end user context would, thus, be a relevant factor and that yeast used

for producing certain chemical effect viz. in baking process for bringing about

fermentation and all along the same was treated as chemical and as such the

Supreme Court held ‘Yeast’ as a chemical whereas in the instant case P.P.

Granules and Master Batch were never treated as chemical and road permits

were issued, CST assessed on that basis and those items has no chemical

effect and they are not capable of a chemical operation or cannot be used for

producing any chemical effect and as such the impugned order dated 10-2-

2011 is liable to be interfered with.

J. For that the Hon’ble Apex Court in Mayuri Yeast India Pvt. Ltd. –Vs-

State of Uttar Pradesh and others, (2008) 5 SCC 680 although held that it may

not be decisive in that peculiar situation but in paragraph 48 of the judgment,

held that the trade or commercial meaning or the end-user context would,

22

thus, be a relevant factor. Being so, it is humbly submitted that P.P. Granules

and Master Batch are always treated as plastics in the commercial sense and

the end use is also for producing plastic materials by using heat to melt the

said items and as such the impugned order is totally perverse besides being

erroneous and illegal and is liable to be set aside and quashed.

K. For that the finding of the Respondent No.3 to the effect that “the

items “PP Granules” and “masterbatch” are the items, which do not have clear –

cut and unequivocal understanding in the market parlance and hence I am

unable to subscribe to the contention of the dealer that such items are to be

interpreted taking recourse to common parlance” is totally incorrect and

misconceived. It is humbly submitted that petitioner presented before the

Respondent No.3 all the evidence to establish that the goods in question has

been treated by the people conversant with the trade as raw materials and

not as chemicals and further submitted that the properties of “chemicals” are

lost while PP Granules and Master Batch are being manufactured and PP

Granules and Master Batch are itself considered as finished product having a

commercial identity of its own and it is commercially dealt with by particular

industry, which are again utilized by various other industries for the purpose

of making various items, and as such, the finding of the Respondent No.3 to

the effect that the “the items “PP Granules” and “masterbatch” are the items,

which do not have clear –cut and unequivocal understanding in the market

parlance” is patently incorrect and erroneous.

L. For that even though Respondent No. 3 observed to the effect that

“chemical is a substance obtained by a chemical process and used for

23

producing chemical effect”, the Respondent No.3 totally failed to consider

that even if P.P. granules and master batch are obtained through a chemical

process, the same is not used for producing chemical effect and on the

contrary, P.P. granules and master batch are being consumed as a filler in the

manufacture of Plastic and same is sold as “P.P.Granules and master blaces”

and are known to the consumers by this name only and not by the chemical

composition and/or the technical name. Furthermore, the end use of the

products is not used in the form of a chemical but rather as raw material.

M. For that the Respondent No.3 erred in arriving at the conclusion that

the entry 51 of the schedule appended to the Assam Entry Tax Act, 2008 i.e.

“Chemicals” is of wide import, taking within its purview chemicals of all

kinds. It is humbly submitted that the Respondent No.3 erred in expanding

the term “Chemicals” by interpretating the same to mean “Chemicals of all

Kind”, even though the legislature in its wisdom choice not to stipulate

“Chemicals of all Kind” in entry 51 of the schedule appended to the Assam

Entry Tax Act, 2008. It is further humbly submitted that the term “Chemical”

ought not to have been construed by resorting to the scientific or the

technical meaning of such terms but to their popular meaning or the meaning

attached to them by those dealing in them, that is to say, to their commercial

sense. In any view of the matter, it is humbly submitted that it is settled

principle of law that while interpretating items in statutes like the Sales Tax

Acts, resort should be had not to the scientific or the technical meaning of

such terms but to their popular meaning or the meaning attached to them by

those dealing in them, that is to say, to their commercial sense. In other

words, the test that would apply is what would be the meaning which

persons dealing with P.P. granules and master batch and consumers

24

purchasing it for manufacture of Plastic would give it to the word and this

aspect of the matter having being failed to be considered by the Respondent

No.3 in its proper perspective, the impugned order is liable to be set aside

and quashed.

N. For that it is well settled principle of construction that where the

word has a scientific or technical meaning and also an ordinary meaning

according to common parlance, it is in the latter sense that in a taxing statute

the word must be held to have been used, unless contrary intention is clearly

expressed by the legislature and this aspect of the matter having being failed

to be considered by the Respondent No.3 in its proper perspective, the

impugned order is liable to be set aside and quashed.

O. For that the Respondent No.3 only by taking into considering the

process of polymerization for manufacturing P.P. Granules and Master batch,

purportedly came to the finding that they have all trappings of a chemical

without considering the fact as to how these two items has all trappings of

chemical, inasmuch as mere manufacturing process or composition is not

relevant and the same must be capable of using for producing certain

chemical effect or chemical operation to describe it as having all trappings of

a chemical, but those two items can never be used to produce any chemical

effect or capable of a chemical operation and as such the impugned order is

illegal, void, discriminatory and biased and is liable to be set aside and

quashed.

P. For that even though Respondent No. 3 observed to the effect that

“chemical is a substance obtained by a chemical process and used for

25

producing chemical effect”, the Respondent No.3 erred in arriving at the

purported conclusion that P.P. Granules and Master batch has all the

trappings of a chemical solely taking into consideration the chemical

composition of P.P. Granules and Master batch and erred in not taking into

consideration whether P.P. Granules and Master batch are used for

producing chemical effect and in this view of the matter, the impugned order

is liable to be interfered with.

Q. For that it is humbly submitted that the Respondent No.3 was bend

upon taxing the products P.P. Granules and Master batch, which is fortified by

his observation to the effect that “ under the Assam Entry Tax Act, 2008,

there is broad and specific entry for “Chemicals”, and there is no residuary

entry and therefore the items “PP granules and master batch” would be

squarely covered by such specific/basic entry”. In other words, merely

because there was is no residuary entry in the Assam Entry Tax, 2008,

Respondent No.3 have sought to classify P.P. Granules and Master batch as

“chemicals”.

R. For that the Respondent No.3 failed to appreciate and consider the

decision cited by the petitioner in its proper perspective and in this view of

the matter, the impugned order is liable to be interfered with.

S. For that the Respondent No.3 failed to consider the decision of the

Supreme Court in Chemical and Fibres of India –Vs- Union of India (1997) 2

SCC 664 in its proper perspective and erred in arriving at the conclusion that

the same is distinguishable although the said decision is very much relevant

26

in the instant case and as such the impugned order is liable to be set aside

and quashed.

T. For that the Respondent No.3 ought to have appreciated that it is a

long standing principle of law that where a product was covered specifically

under a particular Central Excise Tariff entry (as demonstrated above), there

was no reason why a classification different from that under the Central

Excise Law should be made by the Revenue for the purposes of levy of sales

tax on the goods in question. As held by the Andhra Pradesh High Court in

the matter of Ravi Agencies v. State of Andhra Pradesh [74 STC 187]. It is

thus, unfathomable that the P.P.Granules and Master Batch could be

classified and taxed as “chemicals”, in light of its accepted and existing

classification for the purpose of excise duty payable under the Central excise

law.

U. For that it is humbly submitted that what constitutes a “ Chemical”

within the meaning of Excise Tax Act is what would ordinarily in matters of

commerce in India be included therein and not what would be a chemist’s

conception of the subject matter and/or the chemical composition of the

product and this aspect of the matter, having being failed to considered by

the Respondent No.3 in its proper perspective, the impugned order is liable

to be interfered with.

V. For that the Respondent No.3 besides wrongly interpretating the

decisions of the Apex court and various High Courts, erred in refusing to

consider the entries in the Central Excise Tariff Act, as well as Assam Value

Added Tax Act, merely saying that the legislature intends to classify the same

27

as separate item for taxation for being taxed at a particular Act and cannot be

relevant, although ‘plastic granules’ finds place in item No. 76 of Part A of II

Schedule of the AVAT Act, whereas Part C of the II Schedule contains

chemicals and the same has been prepared following act the Central Excise

Tariff Act and as such the impugned order is liable to be set aside and

quashed.

W. For that Respondent No.3 failed to consider the items No. 139 to 147

of Schedule II C of AVAT Act in as much as the same contain various polymers

but the same must be in primary form as polymer of ethylene propylene in

primary form is used for producing chemical effect or capable of a chemical

operation, but P.P. Granules and Master Batch are not in a primary form and

they cannot be used for producing chemical effect or is capable of a chemical

operation and as such the impugned order is liable to be set aside and

quashed.

X. For that the plastic is one of the most flexible material. All these kinds

of Plastics needs different plastic raw materials and proceedings to get a

usable form. As per standard industrial requirement, these plastics are

formed through various plastic raw materials such as moulding compounds,

Abrasives, Poly carbonate resins, Polyurethane Resins, Deforming Agents,

surface active agents, Colorant and pigments, Plastic Granules and lubricant

etc. It is pertinent to state herein that the plastic raw materials as stated here

in above, including plastic granules which is one of the subject of the instant

adjudication process. By itself P.P.Granules is a finished product having a

commercial value attached to it, which is also recognized under the provision

of the Assam Value Added Tax. A perusal of the manufactural process of the

28

plastic granules would clearly reveal that plastic granules are formulated into

a finished product by using polyblends of modified thermoplastic

homopolymer-polyvinyl chloride and a set of chemically reacted special

purpose co-polymers. As such plastic granules being a finished product by

itself, the same cannot be construed to be in any manner a chemical and as

such cannot be permitted to be classified as a chemical under item no.51 of

the schedule of Assam Entry Tax Act.

Y. For that the Central Excise Tariff Act has defined the very basic rule as

to interpretation and classification of the goods in the chapters under the act.

The first and foremost rule is “When an appropriate heading for the goods

themselves is available in the tariff, the question of invoking the

interpretation rule does not arise.” Any goods in case of dispute for

classification must follow the rules given under the new Central Excise Tariff

Act.

These rules are:

The rules for interpretation will come into play, and can be

involved, if and only if the classification cannot be determined

according to the terms of the headings and any relative section or

chapter notes and, provided, such headings or notes do not

otherwise require.

(a) The first part of the rule extends the scope of any headings

which refers to a particular article to cover not only the

complete article but also that article incomplete or unfinished,

provided that, as presented, it has the essential character of the

complete or finished article.

29

(b) The provision of this Rule also apply to blank unless

these are specified in a particular heading. It concerns mixtures

and combinations of materials or substances, and goods

consisting of two or more materials or substances.

(a) The first method of classification which provides the

most specific description of the goods is to be preferred to a

headings which provides a more general description. A

description by name is more specific than a description by

class and not in headings.

(b)The provision applies only when the above principle

does not apply. It relates to mixtures, composite goods

consisting of different materials, composite goods

consisting of different components, goods put up in set for

retail sale.

It is the rule which applies when all the three above

rules does not apply. It is necessary to compare the

presented goods with similar goods in order to

determine the goods to which the presented goods are

most akin.

When considering the relative merits of two or more one-

dash sub-headings within a single heading in the context of

Rule 3(a), their specificity or kinship in relation to a given

article is to be assessed solely on the basis of the texts of

the competing one-dash sub-headings.

30

Besides these rules, general principle of the

classification of goods was interpretation according to the

commercial/popular sense. The most apt and common

principle is that the goods should be classified according to

their popular meaning or as they are understood in their

commercial sense and not as per the scientific or technical

meaning.

Z. For that the Respondent No.3 failed to consider the Chapter 28, 29

and 38 of the Excise Tariff. The very first notes of both of these chapter starts

with the sentence “1(a): Separate chemically defined organic compounds”

which is used to a very descriptive sense. Any element found in this universe

has chemical and physical properties just like the present disputed items, but

that does not make every element “chemical” neither do the Respondents

have a proper definition of such “Chemical” which the Respondents have

decided upon. One of the most important aspects of Central Excise Tariff Act

is that the “separate chemically defined compounds” is used as a terminology

to include a maximum number of compounds and not to define some specific

compounds which the Respondent have not regarded and thus pronounced

an order which is bad in law. It is humbly submitted that the Central Excise

Tarrif having Chapters specifically dealing with “Chemicals”, items other than

those in Chapter 28, 29 and 38 cannot be construed as Chemicals and this

aspect of the matter having been failed to be considered in the proper

perspective, the impugned order is liable to be interfered with.

31

AA For that the common rules of interpretation and classification is well

settled and given in the statute itself and apart from it, the general principle

of classification is also available. The petitioner begs to state that the

disputed articles i.e. PP Granules and Master Batch are never used in the

market as Chemicals but only used as Plastics. Nowhere in the Chemical

Market the disputed items are found, it is only found in the Plastic Markets.

The commercial name of such items are “plastics” and as it is true of any

compound in this universe, the plastics also have a chemical properties with

CAS number, molecular formula, density and melting point. The disputed

items form a part of the commercially known plastics and not any chemicals

and the general rule of interpretation says to classify the item in common

parlance with their real meaning in popular/commercial sense. A thorough

reading of the rules regarding classification would make clear that the

“generic” meaning prevails over any other interpretation of the meaning of

the items. The term chemical as to be precise is a material with a specific

chemical composition. Water is also a chemical substance. A chemical

substance can either be a pure chemical element or a pure chemical

compound. Having mentioned that, there cannot be a pure single definition of

“chemical” which the Commissioner of Taxes has sought for and regarded a

non availability of a specific definition of the word “chemical” as a deciding

factor for his decision. In fact the word “chemical” is itself descriptive and not

conclusive. The schedule under Central Excise Tariff Act also does not

provide any chapter on “chemicals”. The Chapter 28 deals with “inorganic

chemicals; organic or inorganic compounds of precious metals, or rare-earth

metals, of radio-active elements or of isotopes” where as Chapter 29 deals

with “ Organic chemicals”. The Central Excise Tariff Act does not provide any

chapter specifically for “Chemicals”. The reason for such is that chemicals are

32

descriptive. The term “chemical”, or “chemical substance” means any organic

or inorganic substances of a particular molecular identity, including any

combination of such substances occurring in whole or in parts as a result of a

chemical reaction or occurring in nature. This aspect of the matter, having

being failed to be considered in its proper perspective, the impugned order is

liable to be interfered with.

BB For that under the Value Added Tax Act, 2003 various chemicals are

mentioned in schedules IIC of the Act which contains various polymers in

their primary form. Plastic Granules even though is manufactured through a

process of Polymerization is a finished product and loses the

characterization of polymer in its primary form and therefore plastic

granules being not a chemical has been specifically placed in Schedule IIA

Item No.76. As such it is apparent that the classification now sought to be

assigned by the Respondent Authorities by the impugned notices/letter is

patently erroneous and liable to be interfered with.

CC. For that for the Assessment Years, 2005-2006, 2006-2007 and 2007-

2008, the Respondent authorities had never initiated any proceedings

against the Petitioner for assessment, levy or collection of Entry Tax under

the Assam Entry Tax Act, 2001 in respect of the raw materials namely “PP

granules” (i.e Plastic Granules) and “Master Batch”. The Assam Entry Tax Act,

2001 being repealed, the respondent authorities cannot be permitted to

asses the raw materials namely “PP granules” (i.e Plastic Granules) and

“Master Batch” for the Assessment Years, 2005-2006, 2006-2007 and 2007-

2008.

33

DD For that Sub-section (c) of Section 12 of the Assam Entry Tax Act,

2008 cannot be any saving for inaction or for actions that could have been

taken but were not taken.  In the ‘Repeals and Saving’ clause, there could be

saving for action taken but there cannot be any saving for action not taken,

more so, because by Section 13 of the Assam Entry Tax Act, 2008, the Assam

Entry Tax Act, 2001 has been repealed.  Consequently, any action that could

have been taken under the Assam Entry Tax Act, 2001 but had not been

taken until its repeal, could not be taken thereafter.  The impugned

assessment orders and the Notices of demand which have been issued for

the Assessment Years 2005-2006, 2006-2007 and 2007-2008have therefore

been issued without the authority of law as the Assam Entry Tax Act, 2001

had earlier been struck down by this Hon'ble Court and had since been

repealed by the Respondent No. 1 itself with effect from 1.06.2008.

EE. For that in any view of the matter, the impugned order and the

demand notices are liable to interfered with.

15. That the Petitioner craves the leave of this Hon’ble Court to raise further

ground or grounds at the time of hearing.

16. That the Petitioner states and submits that there is prima facie merits in the

Petitioner’s contentions that “PP granules” (i.e Plastic Granules) and “Master Batch”

are not classifiable as “Chemicals” under Entry 51 of the schedule appended to the

Entry Tax Act, 2008. The impugned order passed by the Respondent No. 3 is

erroneous, arbitrary, unreasonable, illegal and unsustainable and is consequently

liable to be struck down. The Petitioner would therefore submit that during the

pendency of the instant application, Your Lordship may be pleased to restrain the

34

Respondent authorities from recovering Entry Tax in pursuance of the impugned

demand notices dated 2=10-2-2011 and further stay the operation of the impugned

order dated 10-2-2011 issued by the Respondent No. 3, the Petitioner shall suffer

irreparable loss and injury.

17. That the petition is made bona-fide and in the interest of justice.

18. That the petitioner has no other alternate and efficacious remedy and the

remedy sought for by way of the present writ petition is just, proper and adequate.

19. That the petitioner demanded justice but the same has been denied.

In the premise aforesaid, your petitioner prays

that Your Lordships would be pleased to cancel, recall

or other wise forbear from giving effect to the impugned

Order issued under memo No. 3694-95 dated 10-2-

2011 passed by the Assistant Commissioner of Taxes,

Jorhat namely the Respondent No.3 and demand notices

dated 10-2-2011 issued by the Assistant Commissioner

of Taxes, Jorhat (Respondent No.3) for the assessment

year 2005-06 to 2009-10 and/or show cause as to why

a Writ of Certiorari should not be issued quashing and

setting aside the impugned Order issued under memo

No. 3694-95 dated 10-2-2011 passed by the Assistant

Commissioner of Taxes, Jorhat namely the Respondent

No.3 and demand notices dated 10-2-2011 issued by the

35

Assistant Commissioner of Taxes, Jorhat (Respondent

No.3) for the assessment year 2005-06 to 2009-10 and

on cause or cause being shown and after hearing the

parties be pleased to make the rule absolute and/or

pass such other orders as Your Lordships shall deem fit

and proper.

-AND-

During the pendency of the Rule Your Lordships

may be pleased to restrain the Respondent authorities

from recovering Entry Tax in pursuance of the

impugned demand notices dated 2=10-2-2011 and

further be pleased to stay the operation of the the

impugned Order issued under memo No. 3694-95 dated

10-2-2011 passed by the Assistant Commissioner of

Taxes, Jorhat namely the Respondent No.3 and demand

notices dated 10-2-2011 issued by the Assistant

Commissioner of Taxes, Jorhat (Respondent No.3) for

the assessment year 2005-06 to 2009-10 and/or pass

such other further orders as Your Lordships shall deem

fit and proper.

And for this act of kindness, the petitioner as in duty bound shall ever pray.

36