REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1888 OF 2009 [Arising out of S.L.P.(C)No.113 of 2008]

M/s. Godrej Sara Lee Ltd. .....Appellant

Versus

Asst. Commissioner (AA) & Anr. .....Respondents

O R D E R

1. Leave granted.

2. Appellant is manufacturer of coils, mats, aerosols, liquids/refills etc. which are used for

driving away and destroying mosquitoes.  Appellant is an assessee under the Kerala Value

Added Tax Act, 2003 (for short, 'the Act').  The assessment year in question is 2005-06.   

3. The State of Kerala, by Notification being SRO No.82/2006 dated 21st January 2006,

notified the list of goods specified therein to be taxable at the rate of 12.5%.  Item no.66 of the

said Notification reads as under :

_______________________________________________________ Sl.No. Description of Goods HSN Code   (1) (2)     (3) _______________________________________________________

66 Mosquito repellents, electric or 8516.79.20 electronic mosquito repellents, gadgets and insect repellents,  devices and parts and accessories thereof.

_______________________________________________________

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4. According to the appellant, in this case Section 6(1)(a) of the Act would be applicable,

the relevant portion whereof reads as under :

“6. Levy of tax on sale or purchase of goods.-(1) Every dealer whose total turnover for a year is not less than ten lakhs rupees and every importer or casual trader or agent of a non-resident dealer or dealer in jewellery of good, silver and platinum group metals or silver articles or contractor or any State Government, Central Government or Government of any Union Territory or any department thereof or any local authority or any autonomous body, whatever be his total turnover for the year, shall be liable to pay tax on his sales or purchases of goods as provided in this Act.  The liability to pay tax shall be on the taxable turnover,-

(a) in the case of goods specified in the Second and Third Schedules at the rates specified therein and at all points of sale of such goods within the State ....

... ... ...

(c) in the case of transfer of the right to use any goods for any purpose whether or not for a specified period, at the rate of four per cent at all points of such transfer.

5. The Revenue, however, contends that Section 6(1)(d) shall apply.  Clause (d) of sub-

section (1) of Section 6 reads thus :

“(d) in the case of goods not falling under clauses (a) or (c) at the rate of 12.5% at all points of sale of such goods within the State Government may notify a list of goods taxable at the rate of 12.5%;”

6. Our attention has also been drawn to Entry 3808 of Chapter 38 of   the   Customs

Tariff  Act   based  on  HSN  Code  which  was  

C.A.No.1888/09 @ S.L.P.(C)No.113 of 2008 .... (contd.)

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applicable during the said assessment year; relevant portion whereof reads as under :

“3808 Insecticides,  rodenticides,  fungicides,  herbicides,  anti-sprouting products  and  plant-growth  regulators,  disinfectants  and  similar products,  put  up  in  forms  or  packings  for  retail  sale  or  as

preparations or articles (for example, sulphur-treated bands, wicks and candles, and fly-papers)”

7. Indisputably,  the  Act  provides  for  the  Interpretative  Rules,  the  relevant  portion

whereof reads as under :

“The commodities in the schedules are allotted with Code Numbers, which  are  developed  by  the  International  Customs  Organization  as harmonised System of  Nomenclature  (HSN) and adopted by the  Customs Tariff  Act,  1975.  However,  there are certain  entries  in the schedules for which HSN Numbers are not given.  Those commodities which are given with HSN Number should be given the same meaning as given in the Customs Tariff  Act,  1975.   Those  commodities,  which  are  not  given  with  HSN Number, should be interpreted, as the case may be, in common parlance or commercial parlance.  While interpreting a commodity, if any inconsistency is observed between the meaning of a commodity without HSN Number and the meaning of a commodity with HSN Number, the commodity should be interpreted by including it in that entry which is having the HSN Number.

HSN Numbers are allotted in the Schedules either in four digits or in six digits or in eight digits.  The four digit numbers indicate the heading in the HSN classification, six digit  numbers indicate the sub-heading and the eight  digit  numbers  indicate  the  specific  commodity  number.   While interpreting the commodities in the Schedules, the following guidelines may be followed.

I. ... ... ... II. ... ... ...

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III.  The commodities which are given eight digit HSN Number shall mean that commodity which bears that HSN Number.”

8. However, so far as the Revenue is concerned, it relies on clause IV thereof which reads

as under :

“IV.  As  an  exception  to  the  above  rules,  there  are  certain  entries  in  the Schedules,  which  bear  eight  digit  numbers  but  the  four  digit  heading numbers  of  such  commodities  are  given  for  some  other  commodities mentioned elsewhere.  In such cases, the four digit heading shall include only

those commodities under that heading excluding that commodity for which the eight digit numbers are given.  Similar cases are available in the case of six digit numbers also.  In such cases the above principle shall apply mutatis mutandis.”

9. The appellant contends that if the said entry viz., 3808 of the Customs Tariff  Act is

read with Entry 66 of the Notification, it will be evident that the same is distinct and different

from the item which is at serial no.66 of the Notification being HSN Code 8516.79.20.

10. However, the contention of the Revenue,  on the other hand,  is that as the language

employed in the Notification itself is clear and unambiguous, it is not necessary to refer to the

HSN at all.

11. Appellant was assessed for the said assessment year for which value added tax at the

rate of 12.5% was levied on the products of the appellant in terms of the Notification dated

21st January 2006.

12. It filed a writ petition, inter alia, contending :

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“K.  If  SRO No.82/2006 seeks  to  amend and enhance  the  rate  of  Tax on Pesticides and Insecticides from 4% to 12.5%, it is ultra-vires the provisions of KVAT Act and void and illegal.  This is so, because by virtue of 6(1)(d), the Entry and rate of tax under Schedule-I & III cannot be altered.”

13. The reliefs prayed for in the said writ petition are as under :

“i) To issue a writ of Certiorari or other appropriate writ, order or direction to call  for records leading to Ext.P11 final  Assessment Order for 2005-06 under the KVAT Act and quash the same;

ii) To issue a Writ of Mandamus or any other appropriate Writ, order or direction, directing the respondents to refrain from enforcing the Assessment Order Ext.P11 and demand pursuant thereto against the petitioner, pending disposal of the writ petition;

iii)  To  declare  that  the  sales  turnover  of  products  falling  within  the description Insecticides and Pesticides which are manufactured under licence under the Insecticides Act and falling within the description of Entry 44(5) of III Schedule of KVAT Act is liable to be taxed only at 4% and levy of tax at 12.5% is illegal and unauthorised.

iv)  To  stay  the  operation  of  Ext.P11  final  Assessment  Order  for  the Assessment Year 2005-06, pending disposal of the W.P.(C);

And

v) To grant such other and further reliefs as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case, including the cost of this proceeding to the petitioner.”

14. By reason of the impugned judgment, the High Court, however, refused   to  entertain

the   said  writ  petition  opining  that  

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the  appellant  has  alternative  remedies  available  to  it  as  an  appeal  against  the  order  of

assessment was maintainable.

15. Mr. Tyagi, the learned counsel appearing on behalf of the appellant would submit that

the High Court committed a serious error in refusing to entertain the writ  petition as the

validity of  the  Notification was in question  which could  not have been determined by  the

Revenue authorities.

16. Mr. Varma, the learned senior counsel appearing on behalf of the respondents, on the

other hand, would support the impugned judgment, inter alia, contending that the appellant

did not pray for a declaration that the said Notification dated 21st January 2006 was invalid in

law or otherwise could not have been given a retrospective effect.

17. It is true that the appellant, in its writ petition, has not made a specific prayer that the

said Notification dated 21st January 2006 was ultra vires or otherwise illegal but, as indicated

hereinbefore,  a  specific  ground  in  that  behalf  had  been  taken  in  respect  thereof.   Even

otherwise,  in  our  opinion,  the  question  as  to  whether  the  said  Notification  could  have  a

retrospective  effect  or  retro-active  operation being  a  jurisdictional  fact,  should  have  been

determined by the High Court in exercise of its  writ  jurisdiction under Article 226 of  the

Constitution  of  India  as  it  is  well  known  that  when  an  order  of  a  statutory  authority  is

questioned on the ground that the same suffers from lack of jurisdiction,  alternative  remedy

may not be  a bar.  [See: Whirlpool Corporation   v. Registrar  Trade  Marks,  Mumbai  &

Ors.

C.A.No.1888/09 @ S.L.P.(C)No.113 of 2008 .... (contd.)

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(1998) 8 SCC 1] and Committee of Management & Anr. v. Vice Chancellor & Ors. 2008(16)

SCALE 310].

18. For the reasons aforementioned, we are of the opinion that it is a fit case where the

High  Court  should  have  entertained  the  writ  petition.   The  impugned  order  is  set  aside

accordingly and the appeal is allowed.   

19. The appellant may be permitted to amend the prayer portion of the writ petition.

20. We, however, make it clear that we have not gone into the merit of the matter and all

the contentions of the parties, both on facts and in law, shall remain open.

Sd/- ..........................J. [S.B. SINHA]

Sd/- ..........................J. [DR. MUKUNDAKAM SHARMA]

Sd/- ..........................J. [R.M. LODHA]

New Delhi. March 18, 2009.