LODHA, J. - (1.) M/s. Rajasthan Gramodyog Sansthan (for short, `the assessee') is a registered dealer recognised by the Rajasthan Khadi and Village Industries Commission Act, 1956 (for short, `the Central Act LXI of 1956' ). The assessee is engaged in the production and sale of Masalas. In the year 1979-80, the assessee is said to have made inter-state sale of processed Masalas for an amount of Rs. 28,971. 88. Again during the year 1980-81, the assessee is said to have made inter-state sale of processed Masalas for an amount of Rs. 16,139. 35. The assessee showed the sale for both the years as exempt.
(2.) THE assessing authority, however, did not accept the stand of the assessee that the sale effected in the year 1979-80 and 1980-81 were exempted. THE assessing authority, accordingly, imposed the Sales Tax @ 10% and also imposed the penalty under Section 9 read with Section 16 (1) (e) and 7aa of the Rajasthan Sales Tax Act, 1954. THE assessing authority also imposed interest under Section 11-B of that Act. The assessee challenged the order of assessment by filing an appeal before the Deputy Commissioner of Appeals-III, Commercial Taxes, Jaipur. The appellate authority maintained imposition of tax, interest and penalty under Section 7aa but set aside the penalty imposed under Section 16 (1) (e ). The assessee then approached the Rajasthan Sales Tax Board by filing second appeal against the order of the Deputy Commissioner of Appeals. Rajasthan Tax Board held that the assessee was entitled to exemption from the Sales Tax and, accordingly, quashed the imposition thereof. The interest under Section 11-B was also quashed. Aggrieved by the order dated September 8, 1987, passed by the Rajasthan Tax Board, the Assistant Commercial Taxation Officer, filed Sales Tax Revision before the Rajasthan Taxation Tribunal. By the order dated 30th June, 1998, the Rajasthan Taxation Tribunal dismissed the revision application preferred by the assessing authority. It is this order which is impugned in the present writ petition. Central Act LXI of 1956 was enacted with a view to promote and develop Khadi and Village Industries. By the said Act, Khadi and Village Commissions were sought to be established. Section 2 (h) of that Act defines `village industries' which means all or any of the industries specified in the Schedule and includes any other industry deemed to be specified in the Schedule by reason of a notification under Section 3. Item 10 of the Schedule appended to the Central Act of 1956 under Sections 2 (h) and 3 (1) thereof related to the industries of processing of cereals and pulses. The said Item 10 was substituted in the Schedule by the notification dated 6th August, 1979 published in the Gazette of India dated 1st September, 1979. Upon substitution in the year 1979, item 10 of the Schedule appended to the Central Act of 1956 reads thus: " Processing, packaging and marketing of cerals, pulses, spices, codiments, masalas, etc. " In exercise of the powers conferred upon the State Government under Section 8 (5) of the Central Act LXI of 1956, the State Government issued notification of exemption inter-alia in respect of sale in the course of inter-state trade or commerce of the produce of the village industries as set out in the Schedule. The notification dated 6th March, 1978 issued by the State Government under Section 8 (5) of the Central Act LXI of 1956 is reproduced by us as it is: " S. O. 192- In exercise of the powers conferred by S. 8 (5) CST Act, 1956, the State Government hereby directs that no tax under the said Act shall be payable by any dealer having his place of business in the State who holds an exemption certificate without payment of any fee issued to him on the recommendation of the Khadi and Village and Industries Commission constituted under the Khadi and Village Industries Commission Act, 1956 (Central Act 61 of 1956) or Rajasthan Khadi and Village Industries Board constituted under the Rajasthan Khadi and Village Industries Board Act, 1955 (Rajasthan Act 5 of 1955), in respect of the sale by him from any such place of business in the course of inter- State trade or commerce of the goods specified in the list appended hereto:- (1) Hand-spun and hand woven Khadi and yarns made of Cotton, Wool, silk or any other natural fibres of animal hair or of mixture of any two or all of them; (2) Ready-made garments, and other articles made of Khadi including razais, gaddas, pillows and handbags and jerseys, sweaters, socks and handgloves made of hand-spun and hand-woven woollen yarn; (3) The products of the village industries as defined in the Khadi and Village Industries Commission Act, 1956 (Central Act 61 of 1956) listed in the Schedule appended hereto. @cent = SCHEDULe 1. Beekeeping 2. Cottage Match Industry 3. Cottage Pottery Industry 4. Cottage Soap Industry 5. Flaying, curing and tanning of hides and skins and ancillary industries connected with the same and cottage leather industry 6. Ghani Oil Industry; 7. Handmade paper 8. Manufacture of cane-gur and Khandsari 9. Palm-gur making and other palm products industry. 10. Processing cereals and pulses 11. Manufacture and use of manure and methane gas from cowdung and other waste products (such as flesh of dead animals, night soil etc.) 12. Lime manufacturing Industry 13. Manufacture of Shellac 14. Collection of forest plants and fruits for medicinal purposes 15. Fruit processing and fruit preservation 16. Bamboo and cane work 17. Blacksmithy 18. Carpentry 19 Fibre other than coir 20. Manufacture of household utensils in aluminium 21. Manufacture of Katha; and 22. Manufacture of Gum resins. Explanation:- For the purpose of this notification, "khadi" means any cloth woven on handloom in India from Cotton, Silk or Woollen or natural fibre of animal hair yarn hand-spun in India or from the mixture of any two or all of such yarns. This shall have immediate effect. "
(3.) IT would be seen that the produce of the village industries in the notification dated 6th March, 1978 from exemption of Sales Tax has been lifted from the Schedule appended to the Central Act LXI of 1956. ITem 10 of the Schedule appended to the Central Act of 1956 was substituted by the notification published in the Gazette of Government of India on 1st September, 1979 w. e. f. 6th August, 1979 by bringing in the processing, packaging and marketing of Masalas as village industry. Admittedly, no consequential amendment in the notification issued by the State Government on 6th March, 1978 in exercise of the powers conferred by Section 8 (5) of the Central Sales Tax Act, 1956 was made. The question that falls for our consideration and determination in the writ petition is: Whether Item 10 of the Schedule appended to the Central Act LXI of 1956 w. e. f. 6th August, 1979 published in the Gazette of Government of India on 1st September, 1979 can be read in item 10 of the notification dated 6th March, 1978 issued by the State Government in exercise of its powers conferred under Section 8 (5) of the Central Act LXI of 1956? The counsel for the revenue strenuously urged that the notification dated 6th March, 1978 providing for exemption from the Sales Tax is clear and unambiguous and since item 10 of the Schedule appended thereto relates to the processing of cereals and pulses, the said produce of the village industries are exempted only. According to him, since the State Government did not amend the notification dated 6th March, 1978, the amended item 10 of the Schedule appended to the Central Act LXI of 1956 cannot be read therein. In support of his submission that the exemption notification must be construed strictly and that the benefit of doubt or ambiguity, if any, must go to the State, the counsel relied upon the decision of the Supreme Court in the case of Novopan India Ltd. , Hyderabad vs. Collector of Central Excise and Customs, Hyderabad - 1994 Supp (3) SCC 606. ;