Case Note & Summary
The appellant, Santhosh Maize & Industries Limited, a dealer in maize starch since 1975, was registered under the Tamil Nadu General Sales Tax Act, 1959. The Government of Tamil Nadu, by Notification No. 89 of 1970 dated 14th March, 1970, exempted from tax all sales of products of millets, including maize. In 1993, the Legislature amended Schedule I to include 'sago and starch of any kind' as a taxable entry, later moved to Entry No. 61 with a 4% tax rate. The appellant sought exemption for maize starch under the 1970 notification. The Commissioner, by Circular dated 14th December, 1993, clarified that the exemption would remain in effect as a specific notification prevails over a general entry, and that maize starch, being a product of maize, is covered by the exemption. Despite this, the revenue authorities sought to tax the appellant. The appellant filed a writ petition before the Madras High Court, which was dismissed by a Division Bench on 8th September, 2008, and a review application was also dismissed on 10th February, 2009. The Supreme Court, by special leave, heard the appeals. The court considered whether maize starch is a product of millet and whether the exemption notification prevails over the general taxing entry. The court held that maize starch is a product of maize, a millet, and thus covered by the exemption. The court further held that the specific exemption notification prevails over the general taxing entry, and the Commissioner's Circular was binding. The court allowed the appeals, set aside the High Court's orders, and directed that the appellant's sales of maize starch are exempt from tax under the 1970 notification.
Headnote
A) Sales Tax - Exemption Notification - Product of Millets - Maize Starch - The issue was whether maize starch, derived from maize (a millet), is exempt from tax under Notification No. 89 of 1970 issued under the Tamil Nadu General Sales Tax Act, 1959, which exempts 'products of millets' including maize. The court held that maize starch is a product of maize and thus covered by the exemption, and the subsequent inclusion of 'starch of any kind' in the Schedule does not override the specific exemption notification. (Paras 2-10) B) Interpretation of Statutes - Specific vs. General - Exemption Notification vs. Taxing Entry - The court held that a specific exemption notification prevails over a general taxing entry in the Schedule. The Commissioner's Circular dated 14th December, 1993, which clarified that the exemption remains in effect, was binding on the revenue authorities. (Paras 5-8) C) Sales Tax - Processing - Simple Processing - Maize Starch - The court held that the process of obtaining maize starch from maize involves simple processing and does not change the essential character of maize as a millet product. Therefore, maize starch continues to be a product of millet and eligible for exemption. (Para 6)
Issue of Consideration
Whether maize starch, being a product of maize (a millet), is exempt from sales tax under the Exemption Notification dated 14th March, 1970 issued under the Tamil Nadu General Sales Tax Act, 1959, despite the subsequent inclusion of 'starch of any kind' as a taxable entry in Schedule I.
Final Decision
The Supreme Court allowed the appeals, set aside the orders of the Madras High Court dated 8th September, 2008 and 10th February, 2009, and held that the appellant's sales of maize starch are exempt from tax under the Exemption Notification dated 14th March, 1970 issued under the Tamil Nadu General Sales Tax Act, 1959.
Law Points
- Exemption notification prevails over general taxing entry
- Maize starch is a product of millet
- Simple processing does not change character of product
- Circular binding on revenue authorities
