Prabha Sridevan - (1.)THE petitioners are engaged in the manufacture and marketing of 'Pan Masala' containing tobacco under the brand name 'Pan Parag', 'Pan Zarda', 'Pan Parag Gutkha' and also 'Pan Masala' which does not contain tobacco. THE first respondent passed provisional assessment orders for the months of October, November and December, 2000, levying tax under Entry-II, Part-J of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 ('TNGST Act' in short). THE petitioners filed a revision before the Deputy Commissioner (C.T.). THE revisional authority confirmed the provisional assessment orders. Aggrieved by that, the petitioners approached the Tamil Nadu Taxation Special Tribunal. THE Tribunal dismissed all the original petitions filed by the petitioners. THE petitioners also filed original petitions seeking the substantial relief of declaration that the word "or tobacco" in Sl. No.2, Part-J of the First Schedule to the TNGST Act is ultra vires Sections 14 and 15 of the Central Sales Tax Act, 1956 ('CST Act' in short) and Article 286 of the Constitution of India and is repugnant to Sl. No.1 (iv) (d) of Part-A to the Third Schedule read with Section 8 of the TNGST Act and the general scheme of levy of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ('ADE Act' in short). Aggrieved by the orders passed in the the said petitions, these writ petitions have been preferred.
(2.)WE will briefly narrate the submissions of the writ petitioners which are dealt with elaborately in the written submissions filed by them. 'Gutkha', according to them, is a preparation which, apart from tobacco, contains betel nut, katechu, lime, flavours, permitted spices and saffron and tobacco is its essential character in relation to the dominant object of the user. The percentage of tobacco varies from 7% to 15%. They are aggrieved by the inclusion of the goods as 'Pan Masala' by whatever name called containing betel nuts, that is to say, nut of areca, catachu broken and perfumed and lime or menthol or sandal oils or cardamom or tobacco or any one or more of these ingredients at Sl. No.2 of Part-J of the First Schedule read with Section 3(2) of the TNGST Act.
It is admitted by the petitioners that the period of dispute is only from October, 2000 to February, 2001. According to them, if the goods fall within the description of Sl.No.1(iv)(d) of the Third Schedule of the TNGST Act, they are exempt from tax by virtue of Section 8. Once the goods are exempted by enumeration under the Third Schedule, Section 8 of the State Act operates, to exempt the goods from levy under the State Act. The subsequent specification of the goods in the First Schedule will have no effect in view of the above exemption. The exemption under Section 8 of the TNGST Act is not subject to any restriction or condition as far as Sl. No.1(iv)(d) of the Third Schedule is concerned. The definition under Sl. No.1(iv)(d) of the Third Schedule is not restricted to chewing tobacco, but includes preparations containing chewing tobacco and the word 'including' should be construed to enlarge the Entry to comprehend all preparations of chewing tobacco and not restricted to just chewing tobacco.

To support their case of inclusive definition, petitioners place reliance on (2008) 15 V.S.T. 256 (SC) [Ponds India Limited vs. Commissioner of Trade Tax, Lucknow] and A.I.R. 1972 S.C. 168 [The Commissioner of Income-Tax, Andhra Pradesh vs. Taj Mahal Hotel, Secunderabad]. It was submitted that the words 'that is to say' in Sl. No.1(iv) have been used so that no other kind of manufactured tobacco can be brought under Sl. No.1(iv), but that does not mean that the said words have any effect on the word 'including' in Sl. No.1(iv)(d) of the Third Schedule. That is, while the words 'that is to say' are restrictive, that cannot take away the effect of the inclusive definition in Sl. No.1(iv)(d).

(3.)ALTERNATIVELY, it was submitted on behalf of the petitioners that by virtue of Article 286(3) of the Constitution the State of Tamil Nadu is subjected to restrictions and conditions as specified by Parliamentary Legislation with regard to inter alia tax on sale or purchase of goods declared to be of special in interstate law and commerce. Section 14(ix) of the CST Act which deals with such goods of special importance refers, inter alia, to items of manufactured tobacco. Section 15 spells out the restriction. The description of goods in Section 14 was aligned by the Central Act 26 of 1988 with the product description in the CET Act with effect from 16.3.1988. By Finance Act 2 of 1996, Chapter Heading 2404 of the Central Excise Tariff Act was re-cast and substituted, and chewing tobacco preparations earlier covered by sub-heading 2404.41 were substituted as 2404.40. Therefore, according to the petitioners, since their product contain tobacco it falling within the description 'chewing tobacco and preparations containing chewing tobacco', they would be goods of special importance, and the restriction under Section 15 of the CST Act comes into operation. Therefore, the State can neither tax such goods beyond one stage nor over 4% of the sale price during the relevant period. Therefore, according to the petitioners, since Section 14(ix) of the CST Act covers the goods under sub-heading 2404.41, now re-cast as sub-heading 2404.40, including 'Pan Masala' in Sl. No.2 of Part-J of the First Schedule to the State Act and taxing the goods at 40% is ultra vires Sections 14 and 15 of the CST Act.
According to the petitioners, when the Finance Act, 1996 substituted the entire Heading 24.04 so that the substituted sub-heading reads as 'chewing tobacco and preparations containing chewing tobacco', these words should be read as if written in Sl. No.14(ix) of the CST Act and the enquiry has to be on the words written in Section 14(ix) of the CST Act as covered in sub-heading 2404.40. It is impermissible to refer to any other Heading such as Heading 21.06 on the ground it is more specific. According to them, when the Parliament by referential legislation assimilated sub-heading 2404.40, it is impermissible to engage oneself in an interpretative exercise of the entire Central Excise Tariff as to whether any other Heading excluded sub-heading 2404.40. According to the petitioners, the issue is covered by (2000) 119 S.T.C. 553 [Kothari Products Ltd. vs. Government of Andhra Pradesh]. According to them, since Gutkha consists of more than one material or substance, applying the General Rules for Interpretation of the Schedule to the CET Act ('Rules for Interpretation' in short) shall be applied, since the mixtures and composite goods are under issue, Heading 21.06 and sub-heading 2404.40 are equally specific. Alternatively, if Rule 3(a) is not attracted, then Rule 3(b) will be attracted as the essential character of Gutkha is that of chewing tobacco. Besides, since Rule 3(c) provides that the Heading which occurs last in numerical order should be preferred, Chapter Heading 2404 is to be preferred, since it occurs after Heading 21.06. The petitioners were originally paying excise duty on these goods as per the Central Excise Tariff Act, 1985 ('CET Act' in short) under Heading 21.06 upto 9.10.2000 and thereafter, they are paying central excise duty and additional excise duty under Sub-Heading 24.40, in accordance with the decision in 119 S.T.C. 553 (supra).