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Friday, December 18, 2015

The “settled law” spoken of would refer to a CBEC circular No.268/85-CX.8 dated 29.9.1994 which deals with valuation of goods manufactured by units working under the 100% EOU scheme. The said circular refers to Rule 8 of the Customs Valuation Rules and not the Central Excise Valuation Rules. The four factors laid down in the said circular have relevance only qua goods that are cleared in the DTA and how their valuation is to be arrived at. We have already seen that the manner of valuation of such goods would not be relevant for the simple reason that what has to be determined in the facts of the present case is the valuation of the duty of excise leviable under Section 3 of the Central Excise Act on like goods produced or manufactured in India by undertakings other than 100% EOUs. The application of this circular and consequently any FOB export price would be wholly irrelevant for the purpose of this case and as has been held above, is only for arriving at the duty of excise leviable under Section 3(1) Proviso (ii) of the Central Excise Act. On the facts of the present case, it is clear that the said duty of excise arrived at based on Section 3(1) Proviso (ii) is more than the duty determinable for like goods produced or manufactured in India in other than 100% EOUs. Since the notification exempts anything that is in excess of what is determined as excise duty on such like goods, and considering that for the entire period under question the duty arrived at under Section 3(1) proviso (ii) is in excess of the duty arrived at on like goods manufactured in India by non 100% EOUs, it is clear that the whole basis of the show cause notice is indeed flawed. Further, the show cause notice is based on one solitary circumstance – the fact that goods captively consumed by the two sister units of the unit in question are not “sold”. We are afraid this approach flies in the face of the language of the notification dated 1.3.1997. The test to be applied under the said notification is whether the goods in question are “allowed to be sold” in India. The aforesaid expression is obviously different from the expression “sold” and does not require any actual sale for the notification to be attracted. In fact revenue’s case is also that even though the said notification is attracted, yet because there is no sale somehow the FOB export price of like goods alone is to be looked at. If this were to be so, not only would the object of the notification not be sub-served but even its plain language would be violated. It is clear that the said notification has been framed by the Central Government, in its wisdom, to levy only what is levied by way of excise duty on similar goods manufactured in India, on goods produced and sold by 100% EOUs in the domestic tariff area if they are produced from indigenous raw materials. If the revenue were right, logically they ought to have contended that the notification does not apply, in which event the test laid down under Section 3(1) proviso (ii) would then apply. This not being the case, we are of the view that the Tribunal’s judgment is correct and requires no interference. The appeal is, accordingly, dismissed.

                                 REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                         CIVIL APPEAL NO.951 of 2008


COMMISSIONER OF CENTRAL EXCISE    …APPELLANT

                             VERSUS

M/S NESTLE INDIA LIMITED                …RESPONDENT




                           J  U  D  G  M  E  N  T



R.F. Nariman, J.



The respondent herein is a 100% EOU engaged in the  manufacture  of  instant
tea falling under Chapter 2101.20 of schedule to the Central  Excise  Tariff
Act, 1985.  The present   appeal  is  concerned  with  clearances  of  their
product to two sister units on payment of  duty  in  terms  of  Notification
No.8/97 - CE dated 1.3.1997 and Notification No.23/2003 CE dated  31.3.2003.
 The first notification would cover the period 1.11.2000  to  30.3.2003  and
the second notification would  cover  the  period  31.3.2003  to  31.5.2005.
Inasmuch as the instant tea was manufactured wholly out  of  indigenous  raw
materials, the notifications aforesaid applied and whatever  was  in  excess
of what is chargeable by way of excise duty on the said tea is exempted.  It
is not in dispute that the said notifications applied in the  facts  of  the
instant case.



A show cause notice dated 23.9.2005 was issued  by  the  Department  stating
that ordinarily Rule 8 of the Central  Excise  Valuation  (Determination  of
Price of Excisable Goods) Rules, 2000 would apply and  that  the  tea  being
captively consumed and not sold should be valued at  115%  of  the  cost  of
production or manufacture of such goods.  However,  the  show  cause  notice
then goes on to say that as the said tea is transferred only to  two  sister
concerns and no sale is  involved,  the  assessable  value  of  instant  tea
removed to the respondent’s own units would be determined on  the  basis  of
the export price of similar goods and not 115% of the cost of production.



The order in original dated 31.5.2006 passed by the Additional  Commissioner
upheld the show cause notice and confirmed the duty  amount,  interest,  and
penalty as follows:-

                                   “ORDER

 I confirm the duty amount of  Rs.  42,86,079/-  (Rupees  Forty  two  lakhs,
eighty six thousand and seventy  nine  only)  (Centvat:  Rs.42,62,545/-  and
Education Cess Rs.23,534/-) under Section 11A  (1)  of  the  Central  Excise
Act, 1944.

I demand appropriate interest on the above amount  confirmed  under  Section
11AB(1) of the Central Excise Act, 1944.

I impose a penalty of Rs.42,86,079/- (Rupees Forty  two  lakhs,  eighty  six
thousand and seventy nine only) under Section 11A (1) of the Central  Excise
Act, 1944.

As I have imposed penalty on them under Section 11AC of Central Excise  Act,
1944, I do not  impose  a  separate  penalty  under  Rule  173Q  or  209  of
erstwhile Central Excise Rules 1944 and Rule 25 of erstwhile Central  Excise
(No2) Rules, 2001 read with Section 38A of  Central  Excise  Act,  1944  and
Rule 25 of Central Excise Rules, 2002.”



4.    The appeal by the assessee  was  also  dismissed  by  an  order  dated
26.9.2006 passed by the Commissioner  (Appeals)  upholding  the  show  cause
notice and stating that Section 3 (1) Proviso (ii)  of  the  Central  Excise
Act would apply to the facts of the case and that  being  so,  it  is  clear
that the basis for valuation had to  be  on  the  FOB  value  of  export  of
similar goods and not on the basis of cost of production  under  Rule  8  of
the Central Excise Rules.

5.    By the  impugned  judgment  dated  16.5.2007,  CESTAT  set  aside  the
judgment  of  the  Commissioner  (Appeals)  by  reasoning  that  since   the
exemption notifications would apply and since  what  has  to  be  determined
under the said notifications is excise duty  payable  in  India,  such  duty
could only be arrived at by applying Rule 8 in cases of captive  consumption
and that therefore the basis of the show cause notice and the  decisions  by
the original and appellate authorities was incorrect.   It  accordingly  set
aside the order of the Commissioner (Appeals).

6.    Shri A.K. Sanghi, argued before us that since the case was covered  by
Section 3 (1) Proviso (ii) of the Central Excise Act, the Customs Act  alone
was to be looked at and if the Customs Act was so looked at, the test as  to
value of goods would be the test of similar goods of a like value  that  are
exported.   Hence,  according  to  him,  the  original  authority  and   the
appellate authority were correct  in  applying  the  said  Section  and  the
Tribunal was wrong in ignoring  the  said  Section  and  applying  exemption
notifications to the facts of the case instead.



7.    Ms. L. Charnaya, learned counsel appearing on behalf of  the  assessee
on the other hand, supported the decision of the tribunal and read to us  in
some detail not only  the  Central  Excise  Valuation  Rules  but  also  the
notifications aforementioned.  It is her case that  the  show  cause  notice
itself was flawed in that the basis of the said  notice  is  that  since  no
sale had taken place on the facts of the present  case,  the  FOB  value  of
export of similar goods has to  be  taken  into  account.   She  laid  great
stress on the fact that in the  notification  dated  1.3.1997  the  language
used is not “sold” but “allowed to be sold” and that if this  were  kept  in
mind it is clear that  the  very  basis  of  the  show  cause  notice  being
incorrect would lead to incorrect orders that were passed  by  the  original
and first appellate authority.



8.    Having heard learned counsel for the parties we think it is  necessary
to first extract the relevant statutory  provisions  and  the  notifications
insofar as they have a bearing on the facts of the present case.



9.    Section 3(1) proviso as it stood at the  relevant  time  is  extracted
hereinbelow:-



“SECTION 3.  Duties specified in First Schedule and the Second  Schedule  to
the Central Excise Tariff Act, 1985 to be levied.



Provided that the duties of excise which shall be levied  and  collected  on
any excisable goods which are produced or manufactured, -

 In a free trade zone or a special economic zone and brought  to  any  other
place in India; or

By a hundred per cent export-oriented undertaking and brought to  any  other
place in India,

shall be an amount equal to the aggregate of the  duties  of  customs  which
would be leviable under the Customs Act, 1962 (52 of 1962) or any other  law
for the time being in force, on like goods produced or manufactured  outside
India if imported into India, and where  the  said  duties  of  customs  are
chargeable by reference to their value; the value of  such  excisable  goods
shall, notwithstanding anything contained in any  other  provision  of  this
Act, be determined in accordance with the provisions  of  the  Customs  Act,
1963 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975).”



10.   Section 5A being the Section under which the two notifications in  the
present case were issued is also of some relevance and reads as follows:-

“SECTION 5A.     Power to grant exemption from duty of excise. -

(1)   If the Central Government is satisfied that it  is  necessary  in  the
public interest so to do, it may, by notification in  the  Official  Gazette
exempt generally either absolutely or subject  to  such  conditions  (to  be
fulfilled before or after removal) as may be specified in the  notification,
excisable goods of any specified description from the whole or any  part  of
the duty of excise leviable thereon :

      Provided that, unless specifically provided in such  notification,  no
exemption therein shall apply to  excisable  goods  which  are  produced  or
manufactured-

In a free trade zone or a special economic zone and  brought  to  any  other
place in India; or

By a hundred per cent export-oriented undertakings and brought to any  place
in India.”



11.   Rule 8 of the Central Excise Rules, 2000 as it stood at  the  relevant
time reads as follows:-

“RULE 8.    Where the excisable goods are not sold by the assessee  but  are
used for  consumption  by  him  or  on  his  behalf  in  the  production  or
manufacture of other articles, the value shall be one  hundred  and  fifteen
per cent of the cost of production or manufacture of such goods.”



12.   Inasmuch as a great deal turns on the two notifications  that  we  are
concerned with on the facts of the present case, it is  necessary  to  quote
in full the first of the two notifications.



“Notification:  8/97-CE dated 01-Mar-1997

Exemption to finished products, rejects and waste or  scrap  produced  in  a
100% EOU or FTZ In exercise of the powers conferred by  sub-section  (1)  of
section 5A of the  Central  Excise  Act,  1944  (1  of  1944),  the  Central
Government, being satisfied that it is necessary in the public  interest  so
to do, hereby exempts the finished products,  rejects  and  waste  or  scrap
specified in the Schedule to the Central  Excise  Tariff  Act,  1985  (5  of
1986) and produced or manufactured, in a hundred  per  cent  export-oriented
undertaking or a free trade zone wholly from the raw materials  produced  or
manufactured in India, and  allowed  to  be  sold  in  India  under  and  in
accordance with the provisions of paragraphs 102 and 114 of the  Export  and
Import Policy 1 April 1992 – 31 March 1997, from so  much  of  the  duty  of
excise leviable thereon under section 3 of the Central Excise Act,  1944  (1
of 1944), as is in excess of an amount equal to the duty of excise  leviable
under the said section 3 of the Central Excise Act, on like goods,  produced
or manufactured in India other than in a hundred  per  cent  export-oriented
undertaking or a free trade zone, if sold in India.”



13.   To similar effect for the subsequent period is the notification  No.23
of 2003 dated 31.3.2003.





14.   The first thing to be noticed is  that  Section  5A  under  which  the
exemption notifications are issued states in the proviso that  no  exemption
shall apply to excisable goods which are produced or manufactured by a  100%
Export Oriented Undertaking  and  brought  to  any  place  in  India  unless
specifically provided in such exemption notification.  When we turn  to  the
notification dated 1.3.1997, we find that there is  specific  provision  for
exemption of certain goods produced in a 100% EOU wholly from raw  materials
produced or manufactured in India.  It is not disputed by the  revenue  that
the instant tea manufactured by the respondent  would  be  covered  being  a
finished product specified in the schedule  to  the  Central  Excise  Tariff
Act.  Further, the notification goes on to state that the  said  tea  should
be “allowed to be sold” in India  in  accordance  with  the  relevant   EXIM
policy.  It further goes on to state that the exemption from payment of  the
duty of excise that is leviable  thereunder  under  Section  3  is  what  is
payable in  excess of an amount equal to the  duty  of  excise  leviable  on
like goods produced or manufactured in  India  produced  in  an  undertaking
other than in a 100% Export Oriented Undertaking, if sold in India.





15.   It is clear that the object of the notification is that so far as  the
product in question is concerned, so long as it is manufactured  by  a  100%
EOU out of wholly indigenous raw materials and so long as it is  allowed  to
be sold in India, the duty payable should only be the duty  of  excise  that
is payable on like goods manufactured or  produced  and  sold  in  India  by
undertakings which are not 100% EOUs.





16.   There is no doubt whatsoever that the duty of  excise  leviable  under
Section 3 would be on the basis of the  value  of  like  goods  produced  or
manufactured  outside  India  as  determinable  in   accordance   with   the
provisions of the Customs Act,  1962  and  the  Customs  Tariff  act,  1975.
However, the notification states that duty  calculated  on  the  said  basis
would only be payable to the extent of like goods manufactured in  India  by
persons other than 100% EOUs.  This being the case, it is clear that in  the
absence of actual sales in the wholesale market, when  goods  are  captively
consumed and not sold, Rule 8 of the Central Excise Rules would have  to  be
followed to determine what would be the amount equal to the duty  of  excise
leviable on like goods.  This being so, it is  clear  that  learned  counsel
for the assessee is right in her contention  that  the  basis  of  the  show
cause notice is itself flawed. The show cause notice in  the  present  case,
as has been  noticed  above,  refers  to  Rule  8  of  the   Central  Excise
Valuation (Determination of Price of Excisable Goods) Rules, 2000, but  then
goes on to state that:



“It is settled law that the value shall be determined keeping  in  view  the
following factors:

sale price of goods under assessment

sale price of other consignments of identical/ similar goods

export price of identical/similar goods

nature of sale transactions etc.”







The “settled law” spoken of would refer to a  CBEC  circular  No.268/85-CX.8
dated 29.9.1994 which deals with valuation of goods  manufactured  by  units
working under the 100% EOU scheme.  The said circular refers to  Rule  8  of
the Customs Valuation Rules and not  the  Central  Excise  Valuation  Rules.
The four factors laid down in the said  circular  have  relevance  only  qua
goods that are cleared in the DTA and how their valuation is to  be  arrived
at.  We have already seen that the manner of valuation of such  goods  would
not be relevant for the simple reason that what has to be determined in  the
facts of the present case is the valuation of the duty  of  excise  leviable
under Section 3 of  the  Central  Excise  Act  on  like  goods  produced  or
manufactured  in  India  by  undertakings  other  than   100%   EOUs.    The
application of this circular and consequently any FOB export price would  be
wholly irrelevant for the purpose of this case and as has been  held  above,
is only for arriving at the duty  of  excise  leviable  under  Section  3(1)
Proviso (ii) of the Central Excise Act.  On the facts of the  present  case,
it is clear that the said duty of excise arrived at based  on  Section  3(1)
Proviso (ii) is more than the duty determinable for like goods  produced  or
manufactured in India in other  than  100%  EOUs.   Since  the  notification
exempts anything that is in excess of what is determined as excise  duty  on
such like goods, and considering that for the entire period  under  question
the duty arrived at under Section 3(1) proviso (ii)  is  in  excess  of  the
duty arrived at on like goods manufactured in India by non 100% EOUs, it  is
clear that the whole basis of  the  show  cause  notice  is  indeed  flawed.
Further, the show cause notice is based on one solitary circumstance  –  the
fact that goods captively consumed by the two sister units of  the  unit  in
question are not “sold”.  We are afraid this approach flies in the  face  of
the language of the notification dated 1.3.1997.  The  test  to  be  applied
under the said notification is whether the goods in  question  are  “allowed
to be sold” in India. The aforesaid expression is obviously  different  from
the expression  “sold”  and  does  not  require  any  actual  sale  for  the
notification to be attracted.  In fact revenue’s  case  is  also  that  even
though the said notification is attracted, yet  because  there  is  no  sale
somehow the FOB export price of like goods alone is  to  be  looked  at.  If
this were to be so, not only would the object of  the  notification  not  be
sub-served but even its plain language would be violated.  It is clear  that
the said notification has been framed by  the  Central  Government,  in  its
wisdom, to levy only what is levied by way of excise duty on  similar  goods
manufactured in India, on goods produced  and  sold  by  100%  EOUs  in  the
domestic tariff area if they are produced from indigenous raw materials.  If
the revenue were right, logically they ought  to  have  contended  that  the
notification does not apply,  in  which  event  the  test  laid  down  under
Section 3(1) proviso (ii) would then apply.  This not  being  the  case,  we
are of the view that the Tribunal’s judgment  is  correct  and  requires  no
interference.  The appeal is, accordingly, dismissed.





                                        ……………………J.

                                        (A.K. Sikri)





                                        ……………………J.

New Delhi;                              (R.F. Nariman)

November 24, 2015.



the respondent though covered by exemption notification under Section 8(3) of the Act could be at a disadvantage because finally when the subsequent sale is made by a non-exempted dealer or tax stands paid on the non-exempted transfer, the goods, i.e., asbestos cement sheet, would suffer the tax on the entire sale consideration. This would place an exempted manufacturer-dealer at a disadvantageous position and make his products uncompetitive inspite of the exemption notifications under Section 8(3) of the Act.=where the appellant wanted to restrict the benefit of ITC when a particular dealer or transaction was exempted, it was so stipulated in the exemption notification issued under Sections 8(3) and 8(4) of the Act. Such notifications admittedly do exist and were issued by the appellant. They are also right in drawing support from the note sheets relating to Finance Bill 2007 as also the communications issued by Commissioner of Commercial Taxes. The note sheets and the communication of the Commissioner draw a clear distinction between exemptions when the goods were not taxable as they do fall under the First Schedule and when an exemption was granted under the Second Schedule, which relates to specified transaction of sale or exempted dealers even when the goods were taxable goods. In latter cases, subsequent dealers undertaking sale of goods would be liable to pay tax on sale of such products. There can be no shadow of doubt that subsequent dealers undertaking sale of goods manufactured and sold by the respondent company would be liable to pay tax on such products.

                                 Reportable

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 2806 OF 2015



Commercial Taxes Officer                     ...   Appellant

                                   Versus

A Infrastructure Ltd.                                ...    Respondent


                                    WITH
                        CIVIL APPEAL NO. 2807 OF 2015
                        CIVIL APPEAL NO. 2808 OF 2015
                        CIVIL APPEAL NO. 2809 OF 2015
                        CIVIL APPEAL NO. 2810 OF 2015


                               J U D G M E N T


Dipak Misra, J.


      This batch of appeals, by special leave, calls in question  the  legal
acceptability of the common order dated 19th December, 2013  passed  by  the
learned Single Judge of the High  Court  of  Judicature  for  Rajasthan,  at
Jodhpur in a batch of revision petitions filed  by  the  assessee-respondent
assailing the judgment dated 23.11.2011 passed by the Rajasthan  Tax  Board,
Ajmer (for short ‘the Board’) in Appeal No. 680 of 2009 and other  connected
appeals whereby it had affirmed the decision  rendered  in  appeals  by  the
Deputy Commissioner (Appeals) who had upheld the  assessment  orders  passed
by the Commercial Taxes Officer in respect of various quarters of the  years
2006-2007, 2007-2008 and  2008-2009  disallowing  the  claim  of  Input  Tax
Credit (ITC) and charging interest under Sections 18, 22 and  55(4)  of  the
Rajasthan Value Added Tax Act, 2003 (for brevity “the 2003Act”).
2.    The facts giving rise to this batch of appeals are that the  assessee-
company  is  engaged  in  the  business  of  manufacturing  Asbestos  Cement
Pressure Pipe and Asbestos Cement Sheets and  it  had  availed  ITC  on  the
purchase of raw material used  in  the  manufacture  of  A.C.  Sheets.   The
assessing authority issued  notice  to  the  assessee  for  the  purpose  of
disallowing ITC on purchase of  raw  material  used  in  manufacturing  A.C.
Sheets for the period mentioned hereinabove and pursuant to the  show  cause
notice the assessee filed a detailed  reply  and  eventually  the  assessing
authority passed orders under Section 22 of the Act disallowing the ITC  and
charged interest.  The  said  orders  were  assailed  before  the  Appellate
Authority which declined to interfere  with  the  orders  appealed  against,
compelling the assessee to  file  second  appeals  before  the  Board  which
placed reliance on ACTO v. M/s. Suncity Trade Agency[1]  and  dismissed  the
appeals. The Board while dismissing the appeals opined  that  the  assessee-
Company, a manufacturing unit, had not been charged  on  the  sales  of  its
product, as per the notification which squarely fall  under  the  definition
of exempted goods and hence, the final product was exempted, but it was  not
entitled to avail ITC  as  the  notification  clearly  postulated  that  the
units/institution was not exempted from the tax but the sales of  its  goods
were exempted from tax as per the definition of “Exempted Goods”.
3.    The grievance of  dismissal  constrained  the  assessee  to  file  the
revision petitions before the High Court, and seeking  interference  in  the
revision petition it was contended that the scheme of Section 8 of  the  Act
which deals with exemption of tax and  the  notification  issued  under  the
Rajasthan Sales Tax Act, 1994 (for short, ‘the 1994 Act’)  and  the  various
notifications issued under the said Act from time to  time  deal  with  A.C.
Sheets and in view of the postulates laid down  in  the  notification  dated
09.03.2007,  issued  under  sub-section  (3A)  of  Section  8  wherein   the
manufacturer of asbestos cement sheets and bricks have  been  exempted  and,
therefore, it could not  be  said  that  A.C.  Sheets  manufactured  by  the
assessee were exempted goods which is  the  pre-requisite  for  denying  ITC
under Section 18 of the Act.  Reliance was placed on the  judgment  of  ACTO
v. Abishek Granites Ltd.[2] to buttress the proposition  that  exemption  to
unit is different from the exemption to  the  transaction  of  sale  of  the
commodity.  It was also highlighted before the  High  Court  that  when  two
views are possible, the view in favour of the assessee  should  be  accepted
and for the  said  purpose  reliance  was  placed  on  CIT  v.  Kulu  Valley
Transport Co. (P) Ltd[3].  The  background  of  the  issue  of  notification
dated  09.03.2007  and  the  communication  issued  by   the   Commissioner,
Commercial Taxes, Rajasthan, Jodhpur were stressed upon to bolster the  plea
that assessee was exempted from tax and not the A.C. Sheets manufactured  by
it.
4.    The stand of the assessee was controverted by the revenue  contending,
inter alia, that vide notification S.O. 372, manufacturers of A.  C.  Sheets
and Bricks were included at S. No. 20 in  Schedule-II,  which  entitles  the
units  to  claim  exemption  on  the  sale  of  manufactured  goods  on  the
fulfillment of certain conditions and in view  of  the  specific  conditions
stipulated in Section 18(1)(A) of the Act, ITC was  not  allowed.   Reliance
was placed on notification S.O. 377, dated 09.03.2007 issued  under  Section
8(3) of the Act to harp that A.C. Sheets clearly fall  within  the  category
of exempted goods.  Reference  was  made  to  the  definition  of  ‘exempted
goods’ and ‘goods’ contained in Section 2(13) & (15) of  the  Act.   It  was
further submitted that irrespective of whether the notification  was  issued
under sub-Section (1) or (3) or (3A) or (4), the  goods  would  fall  within
the definition of exempted goods and consequently the assessee would not  be
entitled to ITC.  For the said purpose, reliance  was  placed  on  M/s.  Sun
City Trade Agency (supra).
5.    The High Court referred to the  dictionary  clause  as  enumerated  in
Section 2(13) which deals with “exempted goods”, Section 2(15) that  defines
the terms “goods”, Section 8 which  provides  for  “exemption  of  tax”  and
Section 18 which deals with “Input Tax Credit and  thereafter,  referred  to
the notification dated 16.03.2005 under the 1994 Act and  the  notifications
dated 01.06.2006, 05.07.2006,  09.03.2007  and  the  amendment  notification
issued on the same day  by  the  Finance  Department  (Tax  Division).   The
learned  Single  Judge  analysed  the  provisions  of  the   Act   and   the
notifications and took note of the fact that under the  1994  Act  exemption
granted  related  to  sale  of  A.C.  Sheets  and  Bricks,  subject  to  the
conditions indicated  therein.   The  High  Court  further  noted  that  the
notification dated 01.06.2006 which had been issued  in  exercise  of  power
under Section 8(2) and Schedule-I which was  amended  and  A.C.  Sheets  and
Bricks having contents of fly ash 25% more than by weight  was  inserted  as
entry 60A, and further adverted to the notification issued  under  the  same
provision, on 05.07.2006 vide which the Schedule-I  was  amended  and  entry
60A was substituted. After so stating, the learned Single Judge referred  to
the notifications issued on 09.03.2007 that deals with A.C. Sheets and  also
noted the fact that vide S.O. 371 issued under Section 8(2) of the Act,  the
existing entry 60A was deleted from  Schedule-I  and  further  by  S.O.  377
issued under Section 8(3A) of the Act which pertained to  “manufacturers  of
asbestos cement  sheets  and  bricks”  were  added  in  Schedule-II  and  it
provides the conditions for availing exemption for sale of A.C.  Sheets  and
Bricks manufactured in the state.
6.    On the aforesaid basis, the Court proceeded to  further  observe  that
by notification dated 16.03.2005 under the 1994 Act  and  the  notifications
dated 16.02.2006 and 05.07.2006  read  with  notification  dated  09.03.2007
A.C. Sheets and Bricks were exempted.  The goods, that is,  A.C. Sheets  and
Bricks were taken out by S.O. 371 and the manufacturers of A.C.  Sheets  and
Bricks were exempted by inclusion in Schedule-II by S.O. 372 and  conditions
for availing such exemption by the  manufacturers  were  indicated  by  S.O.
377. On the basis of the aforesaid analysis,  the  revisional  Court  opined
that it is significant that while S.O. 371 had  been  issued  under  Section
8(2) of the Act, S.O. 372 and 377 had been issued under  Section  8(3A)  and
(3) respectively, which provisions,  as  noticed  hereinbefore,  dealt  with
Schedule-I under Section 8(2) and Schedule-II under Sections 8(3) and  (3A),
which in turn related  to  exemption  of  goods  and  exemption  of  persons
respectively, therefore, it was apparent from the  notifications  issued  on
09.03.2007 that the intention of the State was to exempt  the  manufacturers
of A.C. Sheets and Bricks subject to fulfillment of conditions as  indicated
in S.O. 377 and to take away exemption available to A.C. Sheets  and  Bricks
as goods, as was available before the said date on account of its  inclusion
in Schedule-I.
7.    As the impugned order would show, the  High  Court  distinguished  the
judgment rendered in Sun City Trade Agency (supra), on the ground  that  the
said decision dealt with a  situation  wherein  the  exemption  notification
pertaining to stainless steel flats, ingots and billets were  exempted  from
tax on the conditions indicated in the notification and  it  had  been  held
therein that merely because the exemption is conditional  or  given  subject
to fulfillment of certain conditions it does not mean that such goods  would
fall outside the definition of exempted goods.
8.    The learned Single Judge  referred  to  the  definition  contained  in
Section 2(13) of the Act which  deals  with  exempted  goods  and  not  with
exemption of person or class as indicated in Section 8(3) of  the  Act,  and
observed that the intention of  the  legislature  in  incorporating  Section
18(1)(e) of the Act takes away the exempted goods from the  purview  of  the
ITC and not the person or class of persons exempted under Section  8(3)  and
the intention of the legislature was not to include exempted  goods  in  the
category of exempted persons as mentioned in Section 18(1)(e)  of  the  Act,
and hence, it was demonstrable  that  the  goods  and  dealers  are  treated
separately and the same was also evident from the provision of Section 5  of
the Act.
9.    As is evident, the High Court further  proceeded  to  opine  that  the
goods included in Schedule-II were entitled for ITC  inasmuch  as  the  said
conditions indicated for exemption related to  Self-Help  Groups  and  those
who had been registered with the Khadi and Village Industries Commission  or
Rajasthan Khadi and Village Industries Board by the notifications  S.O.  376
and S.O. 378 issued on 09.03.2007 wherein a specific  stipulation  had  been
made to the extent that no  input  tax  credit  shall  be  claimed  by  such
dealers in respect of purchase of raw  materials  used  for  manufacture  of
aforesaid goods.  Thereafter, the High Court proceeded to observe:-
“If the persons included in Schedule-II were  not  entitled  to  claim  ITC,
there was no reason to include the  said  conditions  for  the  above  noted
persons. Apparently, it is the sale of  goods  made  by  person  or  persons
included in Schedule-II, which is exempt and not the goods  manufactured  by
them, whereas, for  denying  ITC,  the  requirement  is  that  of  ‘exempted
goods’.”


10.   Being of this view the learned Single Judge held that:-
“In view of express language of Section 18(1)(e) of the  Act,  notifications
S.O. 371 and  S.O.  372  read  with  S.O.  377,  the  petitioner  who  is  a
manufacturer of A.C. Sheets is entitled to avail  ITC  and  the  authorities
below were not justified in denying  Input  Tax  Credit  to  the  petitioner
based on interpretation put by  them  on  inclusion  of  the  petitioner  in
Schedule-II under Section 8(3A) and notification S.O. 377  dated  09.03.2007
issued under Section 8(3) of the Act.”

11.   The expression of the said view and the ultimate setting aside of  the
orders of the Court below, as stated  earlier,  is  the  subject  matter  of
assail in these appeals.

12.  We have heard Mr. Shovan Mishra and Mr. Milind Kumar,  learned  counsel
for the appellant and Mr.  Paras  Kuhad,  learned  senior  counsel  for  the
respondent.

13.   To appreciate the controversy at hand, it is necessary  to  scrutinize
the various provisions of the Act  and  the  notifications  that  have  been
issued from time to time. Section 2(13) and 2(15)  define  “exempted  goods”
and “goods” respectively, and they are extracted below:-
“Section 2(13) “Exempted  goods”  means  any  goods  exempted  from  tax  in
accordance with the provisions of this Act;

      xxx        xxx         xxx
Section 2(15) “goods” means all kinds of movable property, whether  tangible
or intangible, other than  newspapers,  money,  actionable  claims,  stocks,
shares and securities, and  includes  materials,  articles  and  commodities
used in any form in the execution  of  works  contract,  livestock  and  all
other things attached to or forming part of the land which is agreed  to  be
served before sale or under the contract of sale.”

14.   Section 8 deals with exemption of tax and Section  18  lays  down  the
method, the manner and the conditions prescribed for availing the input  tax
credit. Section 8 and the relevant portion  of  Section  18  are  reproduced
below:-

“Section 8 – Exemption of tax –

(1)   The goods specified in  the  Schedule-I  shall  be  exempt  from  tax,
subject to such conditions as may be specified therein.

(2)   Subject to such conditions as it  may  impose,  the  State  Government
may, if it  considers  necessary  so  to  do  in  the  public  interest,  by
notification in the Official Gazette, add to  or  omit  from,  or  otherwise
amend or  modify  the  Schedule-I,  prospectively  or  retrospectively,  and
thereupon the Schedule shall be deemed to have been amended accordingly.

(3)   The State Government in the public interest, by  notification  in  the
Official Gazette, may exempt whether prospectively or  retrospectively  from
tax the sale or purchase by any person or class of persons as  mentioned  in
Schedule-II, without  any  condition  or  with  such  condition  as  may  be
specified in the notification.

(3A)  Subject to such conditions as it  may  impose,  the  State  Government
may, if it  considers  necessary  so  to  do  in  the  public  interest,  by
notification in the Official Gazette, add to  or  omit  from,  or  otherwise
amend or modify  the  Schedule-II,  prospectively  or  retrospectively,  and
thereupon the Schedule shall be deemed to have been amended accordingly.

(4)   The State Government may, if it  considers  necessary  in  the  public
interest so to do, notify grant of exemption from payment of  whole  of  tax
payable under this Act in respect of any class of  sales  or  purchases  for
the purpose of promoting the scheme of Special Economic Zones  or  promoting
exports,  subject  to  such  conditions  as  may  be  laid   down   in   the
notification.

(5)   Every notification issued under this section shall be  laid,  as  soon
as may be after it is so issued, before the House of the State  Legislature,
while it is in session for a period of not less  than  30  days,  which  may
comprised in one session or in two successive sessions  and  if  before  the
expiry of the sessions and if before the expiry of the sessions in which  it
is so laid or of the session immediately following the House  of  the  State
Legislature makes any modification in such  notification  or  resolves  that
any such notification should not be  issued,  such  notification  thereafter
have effect only in such modified form or be of no effect, as the  case  may
be, so however, that any such modification or  annulment  shall  be  without
prejudice to the validity of anything previously done thereunder.”

Section 18 – Input Tax Credit:-
(1)   Input tax credit shall be allowed, to registered dealers,  other  than
the dealers covered by sub-section  (2)  of  Section  3  or  Section  5,  in
respect  of purchase of any taxable goods  made  within  the  State  from  a
registered dealer to the extent and in such manner  as  may  be  prescribed,
for the purpose of :-

(a)   sale within the State of Rajasthan or;

(b)   sale in the course of Inter-State trade and commerce; or

(c)   sale in the course of export outside the territory of India; or

(d)   being used as packing material of goods, other  than  exempted  goods,
for sale; or

(e)   being used as raw material except those as  may  be  notified  by  the
State Government in the manufacture of goods other than exempted goods,  for
sale within the State or in the course of Inter-State trade or commerce; or

(f)   ........

(g)   ........”


15.   As has been stated earlier, the High Court  has  referred  to  various
notifications. The notification dated 16th  March,  2005  was  issued  under
Section 15 of the Rajasthan Sales Tax Act, 1994. It is as under:-
“Notification dated 16.03.2005 under the Act of 1994:-

S. No. 1874; F.4(78)FD/Tax/2004-168 dated 16.03.2005

      In exercise of the powers conferred by section  15  of  the  Rajasthan
Sales Tax Act 1994 (Rajasthan Act No. 22 of 1995)  and  in  supersession  of
this Department’s Notification No. F.4/(68)FD/Tax-Div/99-271  (S.No.  1147),
dated,  January  24,  2000  (as  amended  from  time  to  time),  the  State
Government being of the opinion that it is expedient in the public  interest
so to do, hereby exempts form tax the sale of  asbestos  cement  sheets  and
bricks, manufactured in the State by an industrial unit having  fly  ash  as
its main raw material on the following conditions, namely:-

that such fly ash shall constitute  twenty  five  percent  or  more  in  the
contents by weight of such asbestos cement sheets and bricks; and

that such unit commences commercial production by 31.12.2006.

This notification shall remain in force upto 23.1.2010.”

16.   The said notification as mentioned therein  was  to  remain  in  force
upto  23.1.2010.  When  the  said  notification   was   in   vogue   another
notification dated 1.6.2006 was issued under Section 8 of the 2003 Act.  The
said notification is as under:-
                       “Notification
                                                  Jaipur, Dated : 01.06.2006

In exercise of the powers conferred by sub-section (2) of Section 8  of  the
Rajasthan Value Added Tax Act, 2003 (Rajasthan  Act  No.  4  of  2003),  the
State Government being of the opinion that it is  expedient  in  the  public
interest so  to  do,  hereby  makes  the  following  further  amendments  is
SCHEDULE-I appended to the said Act; namely :-
                                 AMENDMENTS

After the existing S.No. 60 and before S.No. 61, the following  new  S.  No.
and entries thereto shall be inserted, namely :-







17.   On 05.07.2006 another notification  was  issued  in  exercise  of  the
powers conferred by sub-section (2)  of  Section  8  of  the  2003  Act.  On
09.03.2007, S.O. 371 was issued by the  Finance  Department  (Tax  Division)
vide which S. No. 68A from Schedule-I appended to the Act (2)  deleted.  May
it  be  noted  that  S.  No.  60A  was  substituted  by  notification  dated
05.07.2006 which has been referred to hereinbefore.

18.   The notification dated 09.03.2007, S.O. 372 was issued by the  Finance
Department (Tax Division)  and  the  said  department  also  issued  another
notification on the same day which is relevant. Both the  notifications  are
reproduced below:-

                  “Notification dated 09.03.2007 S.O. 372:-
                             FINANCE DEPARTMENT
                               (TAX DIVISION)

                       NOTIFICATION
                  Jaipur, March 9, 2007

S.O. 372 – In exercise of  the  powers  conferred  by  sub-section  (3A)  of
Section 8 of the Rajasthan Value Added Tax Act, 2003 (Rajasthan  Act  No.  4
of 2003), the State Government being of the opinion that it is expedient  in
the public interest so to do,  hereby  makes  the  following  amendments  is
Schedule-II appended to the said Act, namely :-

                                 AMENDMENTS

In Schedule-II appended to the said Act:-

(1)   ........
(2)   After the existing S.No.18  and  entries  thereto  the  following  new
S.Nos. and entries thereto shall be added; namely :-

|19  |Self Help Group                            |    |
|20  |Manufacturers of asbestos cement sheets and|    |
|    |bricks                                     |    |


                   Notification dated 09.03.2007, S.O. 377

                             “FINANCE DEPARTMENT
  (TAX DIVISION)

                                NOTIFICATION
                              Jaipur, March 9, 2007

S.O. 377 – In exercise  of  the  powers  conferred  by  sub-section  (3)  of
Section 8 of the Rajasthan Value Added Tax Act, 2003 (Rajasthan  Act  No.  4
of 2003), the State Government being of the opinion that it is expedient  in
the public interest so to do, hereby exempts from payment of tax,  the  sale
of asbestos cement sheets and  bricks  manufacturers  in  the  State  having
contents of fly ash  twenty  five  per  cent  or  more  by  weight,  on  the
following conditions, namely :-

(1)   that the goods shall be entered in  the  registration  certificate  of
the selling dealer;

(2)   that the exemption shall be for such goods manufactured by the  dealer
who commenced commercial production in the State by 31.12.2006; and

(3)   that the exemption shall be available up to 23.01.2010.”

19.   As we find the High Court in the impugned order has  referred  to  the
provisions of the Act and the notifications.   On a careful scrutiny of  the
order passed by the High Court, it is perceivable that it has  proceeded  on
the foundation that there is a distinction between the  exempted  units  and
exempted  sales,  and  finally  manufactured  sales  area,  or  to  put   it
differently, the final transactions of goods or a sale when it takes  place.
Thus, the distinction as laid down by the learned Single Judge is  based  on
exemption of unit and exemption on transaction or sale.
20.   On an analysis of the scheme of the Act, it is manifest that there  is
difference between exempted goods, i.e., goods on which no Value  Added  Tax
is payable  and  are,  therefore,  not  taxable  and  other  cases  where  a
particular transaction when it satisfies specific condition is not  taxable.
 In this regard reference to the authority in State of Tamil  Nadu  v.  M.K.
Kandaswami & others[4], would be seemly, for  this  Court  had  adverted  to
three distinct concepts; taxable persons, taxable goods and  taxable  events
and how they were distinguished.  It was observed in the said case  that  if
the said distinction  is  overlooked,  it  may  lead  to  serious  error  in
construction and application of a taxing provision  or  enactment.   In  the
case of taxable or non-taxable/exempted  goods,  the  focal  point  and  the
focus is  on  the  character  and  class  of  goods  in  relation  to  their
exigibility.  Referring to the provisions  of  Section  7-A  of  the  Madras
General Sales Tax, 1959, the expression in the Act “taxable goods”,  it  was
opined as regards the goods mentioned in the First Schedule of the Act  that
the sale and purchase was liable to  tax  at  the  rate  and  at  the  point
specified therein.  It was further held that the  goods  which  were  exempt
were not taxable goods and, therefore, could not be brought  to  charge  and
taxed.  However, notwithstanding the goods being taxable goods, there  could
be circumstances in a given case by reason of which  a  particular  sale  or
purchase would not attract sales tax.
21.   Be it noted, in the said decision, Section 7-A of the  Madras  General
Sales Tax Act, 1959, which reads as under, fell for consideration:-
“(1) Every dealer who in  the  course  of  his  business  purchases  from  a
registered dealer or from any other person, any goods (the sale or  purchase
of which is liable to tax under this Act) in circumstances in which  no  tax
is payable under Sections 3, 4 or 5, as the case may be, and either-

(a) consumes such goods in the  manufacture  of  other  goods  for  sale  or
otherwise; or

(b) disposes of such goods in any manner other than by way of  sale  in  the
State; or

(c) dispatches them to a place outside the State except as a  direct  result
of sale or purchase in the course of inter-State trade  or  commerce,  shall
pay tax on the turnover relating to  the  purchase  aforesaid  at  the  rate
mentioned in Sections 3, 4 or 5 as the case may be whatever be  the  quantum
of such turnover in a year:

Provided that a dealer (other than a  casual  trader  or  agent  of  a  non-
resident dealer) purchasing goods the sale of which is liable to  tax  under
sub-section (1) of Section 3 shall not be liable to pay tax under this  sub-
section, if his total turnover for a year is less than twenty-five  thousand
rupees.”

      Section 7-A, it was observed, provided for such situations  where  the
goods were taxable goods in the hands of the purchasing dealer,  if  any  of
the conditions (a), (b) and (c)  of  sub-section  (1)  of  Section  7-A  was
satisfied.  In the facts of the case, it  was  noticed  that  the  goods  in
question were chargeable to tax as they were taxable  goods  under  Schedule
I, but exemption had been granted.   Reversing  the  decision  of  the  High
Court, reference was made to an earlier decision of  the  Supreme  Court  in
Ganesh Prasad Dixit Vs. Commissioner of  Sales  Tax[5]  and  a  decision  of
Kerala High Court in Malabar Fruit  Products  Co.  Vs.  Sales  Tax  Officer,
Palai[6] (1972) 30 STC 537 (Ker).
22.   With reference to the decision in Ganesh Prasad Dixit (supra) and  the
language in Madhya Pradesh General Tax Act, 1959, it was observed:
“29. The impugned Section 7-A is based on Section 7 of  the  Madhya  Pradesh
Act.  Although the language  of  these  two  provisions  is  not  completely
identical, yet their substance and object are  the  same.   Instead  of  the
longish phrase, “the goods, the sale or purchase of which is liable  to  tax
under this Act” employed in Section 7-A of the Madras Act, Section 7 of  the
Madhya Pradesh Act conveys the very connotation  by  using  the  convenient,
terse expression, “taxable goods”.  The ratio  decidendi  of  Ganesh  Prasad
(supra)  is  therefore,  an  apposite  guide  for  construing  Section  7-A.
Unfortunately, that decision, it seems, was not brought  to  the  notice  of
the learned Judges of the High Court.”

23.   With reference to Kerala General Sales Tax,  1963,  this  Court  noted
the following reasoning given by the Single Judge of the Kerala  High  Court
:-
“32.  Holding that  Section  5-A,  was  valid  and  intra  vires  the  State
Legislature, the learned Judge explained the scheme of the section, thus:-

      Though normally a sale by a registered dealer or by a dealer  attracts
tax, there may be circumstances under which the seller  may  not  be  liable
as, for example, when his turnover is below the specified minimum.  In  such
cases the “goods” are liable to be taxed,  but  the  sales  takes  place  in
circumstances in which no tax is payable  at  the  point  in  which  tax  is
levied under the Act.  If the goods are  not  available  in  the  State  for
subsequent  taxation  by  reason  of  one  or  other  of  the  circumstances
mentioned in clauses (a), (b) and (c) of Section 5A(1) of the Act  then  the
purchaser is sought to be made liable under Section 5A.

                                   *  *  *

      Another instance I can conceive of is  a  case  of  a  dealer  selling
agricultural or horticultural produce grown by him or grown in any  land  in
which he has interested, whether as owner,  usufructuary  mortgagee,  tenant
or otherwise.  From the definition of “turnover” in  Section  2  (xxvii)  of
the Act it is evident that the proceeds of such sale would be excluded  from
the turnover of a person who sells goods produced  by  him  by  manufacture,
agriculture, horticulture or otherwise,  though  merely  by  such  sales  he
satisfies the definition of ‘dealer’  in  the  Act.   Thus,  such  a  person
selling such produce is treated as a dealer within the meaning  of  the  Act
and the sales are of goods which are taxable  under  the  Act  but  when  he
sells these goods, it is not part of his turnover.  Therefore, it is a  case
of a dealer selling goods liable to tax under the Act  in  circumstances  in
which no tax is payable under the Act.  In such a  case,  the  purchaser  is
sought to be taxed under Section 5A provided the conditions  are  satisfied.
The case of growers selling  goods  to  persons  to  whom  Section  5A  thus
applies is covered by this example.”

24.   In CST v. Pine Chemicals Limited[7], this Court  posed  the  following
question:-
“7.   The simple question before us is whether the Bench which decided  Pine
Chemicals is right in holding that the benefit of the  said  sub-section  is
available even where the goods are exempted  with  reference  to  industrial
unit and for a specified period, viz., period of five years  from  the  date
the relevant unit goes into production.  In other  words,  the  question  is
whether an exemption of the nature granted under Government  Order  No.  159
dated 26-03-1971 is an exemption available “only in specified  circumstances
or under specified conditions” within the  meaning  of  the  Explanation  to
Section 8(2-A), as contended by the State or is it a case  where  the  goods
are exempt from the tax ‘generally’ within the meaning  of  Section  8(2-A),
as contended by the respondents/dealers? We are  of  the  opinion  that  the
respondents/dealers’ contention cannot be accepted in view of the clear  and
unambiguous language of the sub-section.”

25.   Thus, the Court drew a distinction  between  goods,  generally  exempt
from tax after noticing that Section 8(2A) of  the  Central  Sales  Tax  Act
specifically uses the expression “exempt from tax generally  or  subject  to
tax generally at a rate which is lower than 4%”,  and  accordingly  observed
that when the goods are exempt under certain specified circumstances  alone,
the  exemption  is  not  a  general,  but  a  conditional  one.    In   such
circumstances, it cannot  be  said  that  the  goods  are  exempt  from  tax
generally for the exemption may vary from unit  to  unit  and  would  depend
upon date of commencement of production of each unit.   Reference  was  made
to  earlier  decision  in  Indian  Aluminium  Cables  Limited  v.  State  of
Haryana[8], wherein it has been held that exemption from tax when  conferred
by conditions or in certain circumstances, there was no exemption  from  tax
generally.
26.   At this juncture, we are required to  understand  the  effect  of  the
principles spelt out in above decisions especially in  K.N.  Kandaswami  and
Others (supra) on the facts of the present case.  There is no doubt  that  a
distinction has to be drawn between exempted  goods,  which  means  complete
exemption for the specified goods, and when the  goods  are  taxable  goods,
but a transaction or a person is granted  exemption.   When  the  goods  are
exempt, there would be no taxable transactions or  exemption  to  a  taxable
person.  In other cases, goods might be  taxable,  but  exemption  could  be
given  in  respect  of  a  taxable  event,  i.e.,  exemption  to   specified
transactions from liability of tax or exemption to a taxable person,  though
the goods are taxable.  Such exemptions operate in circumscribed  boundaries
and not as expansive as in the  case  of  taxable  goods.   Exemptions  with
reference to taxable events or taxable persons would not  exempt  the  goods
as such, for a  subsequent  transaction  or  when  the  goods  are  sold  or
purchased by a non-specified  person,  the  subsequent  transaction  or  the
taxable person would be liable to pay tax.  It is, in this context,  it  has
been  highlighted  by  the  respondent  and,  in  our  opinion,   absolutely
correctly that Section 4 of the Act provides for levy of tax in a  situation
where the goods,  which  were  not  exempted  but  could  otherwise  not  be
subjected to tax on account of  exemption  granted  to  a  person  or  to  a
transaction.  The  goods  remain  taxable  goods  through  exemption  stands
granted to a particular individual or a specified transaction.   That  being
so, all subsequent transactions in those goods, which are  not  specifically
exempt and not undertaken by  an  exempted  person  could  be  subjected  to
taxation.  Therefore, the appellant though exempted  from  payment  of  tax,
subsequent transactions of sale of asbestos cement sheets would be  taxable.
The transaction of sale by the manufacturer/dealer covered by the  exemption
notifications issued under Section 8(3) of the Act would be protected or  an
exempted transaction, but the  goods  not  being  exempted  goods  would  be
taxable and could be taxed on the happening of a taxable or charging  event.
 It is simply because the goods are not exempt from tax or  exempted  goods,
but are taxable.  As a logical corollary it follows  that  the  Value  Added
Tax would have to be paid on the taxable goods in a  subsequent  transaction
by the purchasing dealer.
27.   As a sequitur, we are obliged to observe that  if  the  contention  of
the appellant is to be accepted, the respondent though covered by  exemption
notification under Section 8(3) of  the  Act  could  be  at  a  disadvantage
because finally when the subsequent sale is made by  a  non-exempted  dealer
or tax stands paid on the non-exempted transfer, the goods,  i.e.,  asbestos
cement sheet, would suffer the tax on the entire sale  consideration.   This
would place an exempted manufacturer-dealer at  a  disadvantageous  position
and make his products uncompetitive inspite of the  exemption  notifications
under Section 8(3) of the Act.
28.   In the context of the issue in question, the respondents have  rightly
highlighted that where the appellant wanted to restrict the benefit  of  ITC
when a particular dealer or transaction was exempted, it was  so  stipulated
in the exemption notification issued under Sections 8(3)  and  8(4)  of  the
Act.  Such  notifications  admittedly  do  exist  and  were  issued  by  the
appellant.  They are also right in drawing  support  from  the  note  sheets
relating  to  Finance  Bill  2007  as  also  the  communications  issued  by
Commissioner of Commercial Taxes.  The note sheets and the communication  of
the Commissioner draw a clear distinction between exemptions when the  goods
were not taxable as they do fall  under  the  First  Schedule  and  when  an
exemption was granted under the Second Schedule, which relates to  specified
transaction of sale or exempted dealers even when  the  goods  were  taxable
goods.  In latter cases, subsequent dealers undertaking sale of goods  would
be liable to pay tax on sale of such products.  There can be  no  shadow  of
doubt that subsequent dealers undertaking sale  of  goods  manufactured  and
sold by the respondent company would be liable to pay tax on such products.
29.   In view of the aforesaid premised reasons, we do not  find  any  merit
in these appeals and accordingly they stand dismissed.  There  shall  be  no
order as to costs.



                                             .............................J.
                                                               [Dipak Misra]



                                             ..........................., J.
                                                          [Prafulla C. Pant]
New Delhi
November 24, 2015
-----------------------
[1]    (2006) 147 STC 405
[2]    23 Tax-world 285
[3]    (1970) 2 SCC 192
[4]    (1975) 4 SCC 745
[5]     (1969) 1 SCC 492
[6]     (1972) 30 STC 537 (Ker)
[7]    (1995) 1 SCC 58
[8]    (1976) 4 SCC 27

-----------------------
|“60A.   |Asbestos cement     |Subject to the condition|
|        |sheets and bricks   |of entry in Registration|
|        |having contents of  |Certificate of the      |
|        |fly ash 25% or more |selling dealer.”        |
|        |by weight.          |                        |





-----------------------
28


Thursday, December 17, 2015

whether retention of stridhan by the husband or any other family members is a continuing offence or not. There can be no dispute that wife can file a suit for realization of the stridhan but it does not debar her to lodge a criminal complaint for criminal breach of trust. We must state that was the situation before the 2005 Act came into force. In the 2005 Act, the definition of “aggrieved person” clearly postulates about the status of any woman who has been subjected to domestic violence as defined under Section 3 of the said Act. “Economic abuse” as it has been defined in Section 3(iv) of the said Act has a large canvass. Section 12, relevant portion of which have been reproduced hereinbefore, provides for procedure for obtaining orders of reliefs. It has been held in Inderjit Singh Grewal (supra) that Section 498 of the Code of Criminal Procedure applies to the said case under the 2005 Act as envisaged under Sections 28 and 32 of the said Act read with Rule 15(6) of the Protection of Women from Domestic Violence Rules, 2006. We need not advert to the same as we are of the considered opinion that as long as the status of the aggrieved person remains and stridhan remains in the custody of the husband, the wife can always put forth her claim under Section 12 of the 2005 Act. We are disposed to think so as the status between the parties is not severed because of the decree of dissolution of marriage. The concept of “continuing offence” gets attracted from the date of deprivation of stridhan, for neither the husband nor any other family members can have any right over the stridhan and they remain the custodians. For the purpose of the 2005 Act, she can submit an application to the Protection Officer for one or more of the reliefs under the 2005 Act. In the present case, the wife had submitted the application on 22.05.2010 and the said authority had forwarded the same on 01.06.2010. In the application, the wife had mentioned that the husband had stopped payment of monthly maintenance from January 2010 and, therefore, she had been compelled to file the application for stridhan. Regard being had to the said concept of “continuing offence” and the demands made, we are disposed to think that the application was not barred by limitation and the courts below as well as the High Court had fallen into a grave error by dismissing the application being barred by limitation. Consequently, the appeal is allowed and the orders passed by the High Court and the courts below are set aside. The matter is remitted to the learned Magistrate to proceed with the application under Section 12 of the 2005 Act on merits.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                  CRIMINAL APPEAL NO.    1545       OF 2015
                       (@ SLP(Crl) No. 10223 OF 2014)


Krishna Bhatacharjee                   ...   Appellant

                                Versus

Sarathi Choudhury and Anr.             ...   Respondents



                               J U D G M E N T


Dipak Misra, J.


      Leave granted.

2.    The appellant having lost the battle for  getting  her  Stridhan  back
from  her  husband,  the  first  respondent  herein,  before   the   learned
Magistrate on the ground that the claim preferred under Section  12  of  the
Protection of Women from Domestic Violence Act, 2005 (for short,  ‘the  2005
Act’) was not entertainable as she had ceased to be  an  “aggrieved  person”
under Section 2(a) of the 2005 Act and further that the claim as  put  forth
was barred by limitation; preferred an appeal before the learned  Additional
Sessions Judge  who  concurred  with  the  view  expressed  by  the  learned
Magistrate, and being determined to get her lawful claim, she,  despite  the
repeated non-success, approached the High  Court  of  Tripura,  Agartala  in
Criminal Revision No. 19 of 2014 with the hope that she will  be  victorious
in the war to get her own property, but the High Court, as  is  perceivable,
without much analysis, declined  to  interfere  by  passing  an  order  with
Spartan austerity possibly thinking lack of reasoning  is  equivalent  to  a
magnificent virtue and that had led  the  agonised  and  perturbed  wife  to
prefer the present appeal, by special leave.

3.    Prior to the narration of facts which are essential  for  adjudication
of this appeal, we may state that the 2005 Act has been legislated,  as  its
Preamble would reflect, to provide for  more  effective  protection  of  the
rights of the women guaranteed under the Constitution  who  are  victims  of
violence of any kind occurring within the family and for  matters  connected
therewith or incidental thereto.  The  2005  Act  is  a  detailed  Act.  The
dictionary clause of the 2005 Act, which we shall advert to  slightly  at  a
later  stage,  is  in  a  broader  spectrum.  The  definition  of  “domestic
violence” covers a range of violence which takes within its sweep  “economic
abuse” and the words “economic abuse”, as  the  provision  would  show,  has
many a facet.

4.    Regard being had to the nature of the legislation,  a  more  sensitive
approach is expected from the courts where under the 2005 Act no relief  can
be granted, it should never be conceived of but, before throwing a  petition
at the threshold on the ground  of  maintainability,  there  has  to  be  an
apposite discussion and thorough deliberation  on  the  issues  raised.   It
should be borne in mind that helpless and hapless “aggrieved  person”  under
the 2005 Act approaches the court under the compelling circumstances. It  is
the duty of the court to scrutinise the facts  from  all  angles  whether  a
plea advanced by the respondent to nullify the grievance  of  the  aggrieved
person is really legally sound and correct.  The principle “justice  to  the
cause is equivalent to the salt of ocean” should be kept in mind. The  court
of law is bound to uphold the truth which sparkles  when  justice  is  done.
Before throwing a petition at the threshold, it is obligatory  to  see  that
the person aggrieved under such a legislation is not faced with a  situation
of non-adjudication, for the 2005 Act as we have stated is a  beneficial  as
well as  assertively  affirmative  enactment  for  the  realisation  of  the
constitutional rights of women  and  to  ensure  that  they  do  not  become
victims of any kind of domestic violence.

5.    Presently to the narration of the  facts.  The  marriage  between  the
appellant and the respondent No. 1 was solemnised  on  27.11.2005  and  they
lived as husband and wife. As the allegations proceed, there was  demand  of
dowry by  the  husband  including  his  relatives  and,  demands  not  being
satisfied, the appellant was driven out from the matrimonial home.  However,
due to intervention of the elderly people of the locality,  there  was  some
kind of conciliation as a consequence of which  both  the  husband  and  the
wife stayed in a rented house for two months. With the efflux of  time,  the
husband filed a petition  seeking  judicial  separation  before  the  Family
Court and eventually the said prayer  was  granted  by  the  learned  Judge,
Family Court. After the judicial  separation,  on  22.5.2010  the  appellant
filed an application under Section 12 of  the  2005  Act  before  the  Child
Development Protection  Officer (CDPO), O/O the District  Inspector,  Social
Welfare & Social Education,  A.D.  Nagar,  Agartala,  Tripura  West  seeking
necessary help as per the provisions contained in the 2005 Act.  She  sought
seizure of Stridhan  articles  from  the  possession  of  the  husband.  The
application which was made  before  the  CDPO  was  forwarded  by  the  said
authority to the learned Chief Judicial  Magistrate,  Agartala  Sadar,  West
Tripura by letter dated 1.6.2010.  The learned Magistrate issued  notice  to
the respondent who filed his written objections on 14.2.2011.

6.    Before the learned Magistrate it was contended by the respondent  that
the application preferred by the wife was barred by limitation and that  she
could not have  raised  claim  as  regards  Stridhan  after  the  decree  of
judicial separation passed by the competent court.  The  learned  Magistrate
taking  into  consideration  the  admitted  fact  that  respondent  and  the
appellant had entered into wedlock treated her  as  an  “aggrieved  person”,
but opined that no “domestic relationship” as defined under Section 2(f)  of
the 2005 Act existed between  the  parties  and,  therefore,  wife  was  not
entitled to file the application under Section 12  of  the  2005  Act.   The
learned Magistrate came to  hold  that  though  the  parties  had  not  been
divorced but the decree of judicial separation would be  an  impediment  for
entertaining the application and being of  this  view,  he  opined  that  no
domestic relationship subsisted under the 2005  Act  and  hence,  no  relief
could be granted.  Be it stated here that  before  the  learned  Magistrate,
apart from herself, the appellant examined three witnesses and  the  husband
had examined himself as DW-1.  The learned  Magistrate  while  dealing  with
the maintainability of  the  petition  had  noted  the  contentions  of  the
parties as regards merits, but has really not recorded any finding  thereon.

7.    The aggrieved wife preferred criminal appeal No. 6(1)  of  2014  which
has  been  decided  by  the  learned  Additional  Sessions  Judge,  Agartala
holding, inter alia, that the object of the 2005 Act is  primarily  to  give
immediate relief to the victims; that as per the decision of this  Court  in
Inderjit Singh Grewal v. State of Punjab[1] that Section 468 of the Code  of
Criminal Procedure applies to  the  proceedings  under  the  2005  Act  and,
therefore, her application was barred by time.   Being  of  this  view,  the
appellate court dismissed the appeal.
8.    On a revision being preferred, the  High  Court,  as  is  demonstrable
from the impugned order, after referring to the decision in  Inderjit  Singh
Grewal (supra), has stated that the wife had filed  a  criminal  case  under
Section 498(A) IPC in the year 2006 and the husband had  obtained  a  decree
of judicial separation in 2008, and hence, the proceedings  under  the  2005
Act was barred by limitation.  That apart, it has also in  a  way  expressed
the view that the proceedings under the 2005 Act was not maintainable.
9.    In our prefatory note, we have stated  about  the  need  of  sensitive
approach to these kinds of cases. There can be erroneous perception of  law,
but as we find, neither the learned Magistrate nor the appellate  court  nor
the High Court has made any effort to understand and  appreciate  the  stand
of the appellant. Such type of cases and at such stage should not travel  to
this Court. We are compelled to say so as we are of the  considered  opinion
that had the appellate court and the High Court been more vigilant,  in  all
possibility, there could have been adjudication on merits.  Be  that  as  it
may.
10.   The facts that we have  enumerated  as  regards  the  “status  of  the
parties”, “judicial separation” and “the claim  for  Stridhan”  are  not  in
dispute.  Regard being had to the  undisputed  facts,  it  is  necessary  to
appreciate the scheme of the 2005  Act.   Section  2(a)  defines  “aggrieved
person”  which  means  any  woman  who  is,  or  has  been,  in  a  domestic
relationship with the respondent and who alleges to have been  subjected  to
any act of domestic  violence  by  the  respondent.   Section  2(f)  defines
“domestic relationship” which means a relationship between two  persons  who
live or have, at any point of time, lived together in  a  shared  household,
when they are related by consanguinity, marriage, or through a  relationship
in the nature of marriage, adoption or are family  members  living  together
as a joint family.  Section 2(g) defines the term “domestic violence”  which
has been assigned and given the  same  meaning  as  in  Section  3.     Sub-
section (iv) of Section 3 deals with “economic abuse”.  As in the  facts  at
hand, we are concerned with  the  “economic  abuse”,  we  reproduce  Section
3(iv) which reads as follows:-
“Section 3. Definition of domestic violence.
(iv) "economic abuse" includes-

(a) deprivation of all or any economic or financial resources to  which  the
aggrieved person is entitled under any law or custom whether  payable  under
an order of a court or otherwise or which the aggrieved person requires  out
of necessity including, but not limited to, household  necessities  for  the
aggrieved person and her children, if any, stridhan,  property,  jointly  or
separately owned by the aggrieved person, payment of rental related  to  the
shared household and maintenance;

(b) disposal of household effects, any alienation of assets whether  movable
or immovable, valuables, shares, securities, bonds and  the  like  or  other
property in which the aggrieved person has an interest  or  is  entitled  to
use by virtue of the  domestic  relationship  or  which  may  be  reasonably
required by the aggrieved person or her children  or  her  stridhan  or  any
other property jointly or separately held by the aggrieved person; and

(c)  prohibition  or  restriction  to  continued  access  to  resources   or
facilities which the aggrieved person is entitled to use or enjoy by  virtue
of the domestic relationship including access to the shared household.

Explanation II.-For the purpose of determining whether  any  act,  omission,
commission or conduct of  the  respondent  constitutes  "domestic  violence"
under this section, the overall facts and circumstances of  the  case  shall
be taken into consideration.”

11.   Section 8(1) empowers the State Government to appoint such  number  of
Protection Officers in each district as it may consider necessary  and  also
to notify the  area  or  areas  within  which  a  Protection  Officer  shall
exercise the powers and perform the duties conferred on him by or under  the
2005 Act. The  provision,  as  is  manifest,  is  mandatory  and  the  State
Government  is  under  the  legal  obligation  to  appoint  such  Protection
Officers.  Section 12 deals with application  to  Magistrate.   Sub-sections
(1) and (2) being relevant are reproduced below:-
“Section 12.  Application  to  Magistrate.-(1)  An  aggrieved  person  or  a
Protection Officer or any other person on behalf  of  the  aggrieved  person
may present an application to the Magistrate seeking  one  or  more  reliefs
under this Act: Provided that before passing any order on such  application,
the Magistrate shall take into consideration any  domestic  incident  report
received by him from the Protection Officer or the service provider.

(2) The relief sought for under sub-section (1) may  include  a  relief  for
issuance of  an  order  for  payment  of  compensation  or  damages  without
prejudice to the right of such person to institute a suit  for  compensation
or damages for  the  injuries  caused  by  the  acts  of  domestic  violence
committed by the respondent: Provided that where a decree for any amount  as
compensation or damages has been passed  by  any  court  in  favour  of  the
aggrieved person, the amount, if any, paid or payable in  pursuance  of  the
order made by the Magistrate under this Act shall be  set  off  against  the
amount payable under such  decree  and  the  decree  shall,  notwithstanding
anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or  any
other law for the time  being  in  force,  be  executable  for  the  balance
amount, if any, left after such set off.”

12.   Section 18 deals with passing of protection orders by the  Magistrate.
Section 19 deals with  the  residence  orders  and  Section  20  deals  with
monetary reliefs.  Section 28 deals with procedure and stipulates  that  all
proceedings under Sections 12, 18, 19, 20, 21, 22 and 23 and offences  under
Section 31 shall be governed by the  provisions  of  the  Code  of  Criminal
Procedure, 1973. Section 36 lays down that the provisions of  the  2005  Act
shall be in addition to, and not in derogation  of  the  provisions  of  any
other law, for the time being in force.
13.   Having scanned the anatomy of the 2005 Act, we may now refer to a  few
decisions of this Courts that have dealt with the  provisions  of  the  2005
Act. In V.D. Bhanot  v. Savita Bhanot[2]  the  question  arose  whether  the
provisions of the 2005  Act  can  be  made  applicable  in  relation  to  an
incident that had occurred prior to the coming into force of the  said  Act.
Be it noted, the High  Court  had  rejected  the  stand  of  the  respondent
therein that the provisions of  the  2005  Act  cannot  be  invoked  if  the
occurrence had taken place prior to the coming into force of the  2005  Act.
This Court while dealing with the same referred to the decision rendered  in
the High Court which after considering the constitutional  safeguards  under
Article 21 of the Constitution vis-à-vis the provisions of Sections  31  and
33 of the 2005 Act and after examining the Statement of Objects and  Reasons
for the enactment of the 2005 Act, had held that it was  with  the  view  of
protecting the rights  of  women  under  Articles  14,  15  and  21  of  the
Constitution that Parliament enacted the 2005 Act in order  to  provide  for
some effective protection of rights guaranteed  under  the  Constitution  to
women, who are victims of any kind of violence occurring within  the  family
and matters connected therewith and incidental thereto, and  to  provide  an
efficient and expeditious civil remedy to them and further that  a  petition
under the provisions of the 2005 Act is maintainable even  if  the  acts  of
domestic violence had been committed prior to the coming into force  of  the
said Act, notwithstanding the fact that in the past she had  lived  together
with her husband in a shared household, but was no more living with him,  at
the time when the Act came into force. After analyzing the  verdict  of  the
High Court, the Court concurred with the view expressed by  the  High  Court
by stating thus:-
“We agree with the view expressed by the High Court that in looking  into  a
complaint under Section 12 of the PWD Act, 2005, the conduct of the  parties
even prior to the coming into force of the PWD  Act,  could  be  taken  into
consideration while passing an order under Sections 18, 19 and  20  thereof.
In our view, the Delhi High Court has also  rightly  held  that  even  if  a
wife, who had shared a household in the past, but was  no  longer  doing  so
when the Act came into force, would still be entitled to the  protection  of
the PWD Act, 2005.”

14.   In Saraswathy  v.  Babu[3]  a two-Judge Bench, after referring to  the
decision in V.D. Bhanot   (supra), reiterated the  principle.  It  has  been
held therein:-
“We are of the view that the act of the respondent  husband  squarely  comes
within the ambit of Section 3 of the  DVA,  2005,  which  defines  “domestic
violence” in wide terms. The High Court made an apparent  error  in  holding
that the conduct of the parties prior to the coming into force of  the  DVA,
2005 cannot be taken into consideration while passing an order.  This  is  a
case where the respondent husband  has  not  complied  with  the  order  and
direction passed by the  trial  court  and  the  appellate  court.  He  also
misleads the Court by giving wrong statement before the High  Court  in  the
contempt petition filed by the appellant wife.  The  appellant  wife  having
being harassed since 2000 is entitled for  protection  order  and  residence
order under Sections 18 and 19 of the DVA, 2005 along with  the  maintenance
as allowed by the trial court under  Section  20(1)(d)  of  the  DVA,  2005.
Apart from these reliefs, she is also entitled for compensation and  damages
for the injuries, including mental torture and  emotional  distress,  caused
by the acts of  domestic  violence  committed  by  the  respondent  husband.
Therefore, in addition to the reliefs granted by the courts  below,  we  are
of the view that the appellant wife should be compensated by the  respondent
husband. Hence, the respondent is hereby directed to  pay  compensation  and
damages to the extent of Rs 5,00,000 in favour of the appellant wife.”

15.   In the instant case, as has been indicated earlier, the  courts  below
as well as the High Court have referred to the decision  in  Inderjit  Singh
Grewal (supra).  The said case has to be understood regard being had to  the
factual exposè therein.  The Court  had  referred  to  the  decision  in  D.
Velusamy v.  D.  Patchaiammal[4]  wherein  this  Court  had  considered  the
expression “domestic  relationship”  under  Section  2(f)  of  the  Act  and
judgment  in  Savitaben  Somabhai  Bhatiya  v.  State  of   Gujarat[5]   and
distinguished  the  said  judgments  as  those  cases  related  to   live-in
relationship without marriage.  The Court analyzing  the  earlier  judgments
opined that the couple must hold themselves out to society as being akin  to
spouses in addition to fulfilling  all  other  requisite  conditions  for  a
valid marriage. The said judgments were  distinguished  on  facts  as  those
cases related to live-in relationship without marriage.   The  Court  opined
that the parties therein had got married and the decree of the  civil  court
for divorce  subsisted and that apart a suit to declare  the  said  judgment
and  decree  as  a  nullity  was  still  pending  consideration  before  the
competent court.  In that background, the Court ruled that:-
“In the facts and circumstances of the case, the submission made  on  behalf
of Respondent 2 that the judgment and  decree  of  a  civil  court  granting
divorce is null and void and they continued to  be  the  husband  and  wife,
cannot be taken note of at this stage unless the suit filed by Respondent  2
to declare the said judgment and decree dated 20-3-2008 is  decided  in  her
favour. In view thereof,  the  evidence  adduced  by  her  particularly  the
record of the telephone calls, photographs attending a wedding together  and
her  signatures  in  school  diary  of  the  child  cannot  be  taken   into
consideration so long  as  the  judgment  and  decree  of  the  civil  court
subsists. On a similar footing, the contention advanced by her counsel  that
even after the decree  of  divorce,  they  continued  to  live  together  as
husband and  wife  and  therefore  the  complaint  under  the  2005  Act  is
maintainable, is not worth acceptance at this stage.”
                                                         [Emphasis supplied]

16.   It may be noted that a  submission  was  advanced  by  the  wife  with
regard to the applicability of Section 468 CrPC.   While  dealing  with  the
submission on the issue of limitation, the Court opined:-

“...... in view of the provisions of Section 468 CrPC,  that  the  complaint
could be filed only within a period  of  one  year  from  the  date  of  the
incident seem to be preponderous in view of the provisions  of  Sections  28
and 32 of the 2005 Act read with Rule 15(6) of the Protection of Women  from
Domestic Violence Rules, 2006 which make the provisions of  CrPC  applicable
and stand fortified by the judgments  of  this  Court  in  Japani  Sahoo  v.
Chandra Sekhar Mohanty, (2007) 7 SCC 394,  and NOIDA Entrepreneurs Assn.  v.
NOIDA,  (2011) 6 SCC 508.”

17.   As it appears, the High Court has referred to the same  but  the  same
has really not been adverted.  In fact, it is not  necessary  to  advert  to
the said aspect in the present case.
18.   The core issue that is  requisite  to  be  addressed  is  whether  the
appellant has ceased to be an “aggrieved person” because of  the  decree  of
judicial separation.  Once the decree of divorce is passed,  the  status  of
the parties becomes different, but that is not so when  there  is  a  decree
for judicial separation. A three-Judge Bench in Jeet Singh  and  Others  Vs.
State of U.P. and Others[6] though in a different context, adverted  to  the
concept of judicial  separation  and  ruled  that  the  judicial  separation
creates  rights  and  obligations.  A  decree  or  an  order  for   judicial
separation permits the parties to live apart. There would be  no  obligation
for either party to cohabit with the other. Mutual  rights  and  obligations
arising out of a marriage are suspended. The decree however, does not  sever
or dissolve the marriage. It affords an opportunity for  reconciliation  and
adjustment. Though judicial separation after a certain period may  become  a
ground for divorce, it is not necessary and the parties  are  not  bound  to
have recourse to that remedy and the parties can live keeping  their  status
as wife and husband till their lifetime.
19.   In this regard, we may fruitfully refer to the authority in  Hirachand
Srinivas Managaonkar  v.   Sunanda[7]  wherein  the  issue  that  arose  for
determination was whether the husband  who  had  filed  a  petition  seeking
dissolution of the marriage by a decree of divorce under Section  13(1-A)(i)
of the Hindu  Marriage Act, 1955 can be declined relief on the  ground  that
he had failed to pay maintenance for his wife and daughter despite an  order
of the court. The husband was appellant before this Court and had  filed  an
application under Section 10 of the Hindu Marriage  Act,  1955  for  seeking
judicial separation on the ground of adultery on the part of the  appellant.
Thereafter,  the  appellant  presented  the  petition  for  dissolution   of
marriage by decree  of  divorce  on  the  ground  that  there  has  been  no
resumption of cohabitation as between the parties  to  the  marriage  for  a
period of more than one year  after  passing  of  the  decree  for  judicial
separation. The stand of the wife was that the appellant  having  failed  to
pay the maintenance as ordered by the court, the petition for divorce  filed
by the husband was liable to be rejected  inasmuch  he  was  trying  to  get
advantage of his  own  wrong  for  getting  the  relief.    The  High  Court
accepted the plea of the wife  and  refused  to  grant  the  prayer  of  the
appellant seeking divorce. It was contended before this Court that the  only
condition  for  getting  divorce  under  Section  13(1-A)(i)  of  the  Hindu
Marriage Act, 1955 is that there has  been  no  resumption  of  cohabitation
between the parties to the marriage for a period  of  one  year  or  upwards
after the passing of the decree for judicial separation in a  proceeding  to
which both the  spouses  are  parties.   It  was  urged  that  if  the  said
condition is satisfied the court is required to pass a  decree  of  divorce.
On behalf of the wife, the said submissions were resisted on the score  that
the husband had been living in continuous adultery  even  after  passing  of
the decree of judicial separation and had reasonably failed to maintain  the
wife and daughter.  The Court proceeded to analyse Section             13(1-
A)(i) of the Hindu Marriage Act, 1955. Analysing the  provisions  at  length
and speaking about judicial separation, it expressed that after  the  decree
for judicial separation was passed on the petition filed by the wife it  was
the duty of both the spouses to do their part for cohabitation. The  husband
was expected to act as a dutiful husband towards the wife and the  wife  was
to act as a devoted wife towards the husband. If this concept  of  both  the
spouses  making  sincere  contribution  for  the   purpose   of   successful
cohabitation after a judicial separation is ordered then it  can  reasonably
be said that in the facts and circumstances  of  the  case  the  husband  in
refusing to pay maintenance to the wife failed to act as a husband.  Thereby
he committed a “wrong”  within  the  meaning  of  Section  23  of  the  Act.
Therefore, the High Court was justified in declining to allow the prayer  of
the husband for dissolution of the marriage by divorce under  Section  13(1-
A) of the Act.
20.   And, the Court further stated thus:-
“... The effect of the decree is that certain mutual rights and  obligations
arising from the marriage are as  it  were  suspended  and  the  rights  and
duties prescribed in the decree are substituted  therefor.  The  decree  for
judicial separation does not  sever  or  dissolve  the  marriage  tie  which
continues  to  subsist.  It  affords  an  opportunity  to  the  spouse   for
reconciliation and readjustment. The decree may fall by  a  conciliation  of
the parties in which case the rights of the respective parties  which  float
from the marriage and were suspended are restored. Therefore the  impression
that Section 10(2) vests a right in the petitioner  to  get  the  decree  of
divorce notwithstanding the fact that  he  has  not  made  any  attempt  for
cohabitation with the respondent and has even acted in a  manner  to  thwart
any move for cohabitation does not flow from a reasonable interpretation  of
the statutory provisions. At the cost of repetition it may  be  stated  here
that the  object  and  purpose  of  the  Act  is  to  maintain  the  marital
relationship between the spouses and  not  to  encourage  snapping  of  such
relationship.”

21.   It is interesting to note that  an  issue  arose  whether  matrimonial
offence of adultery had  exhausted  itself  when  the  decree  for  judicial
separation was granted and, therefore, it cannot be said that it  is  a  new
fact or circumstance amounting to wrong which will stand as an  obstacle  in
the way of the husband to obtain the relief which he claims in  the  divorce
proceedings.  Be it stated that reliance  was  placed  on  the  decision  of
Gujarat High Court in Bai Mani v. Jayantilal Dahyabhai[8].  This  Court  did
not accept the contention by holding that living in adultery on the part  of
the husband is a continuing matrimonial offence, and it does not get  frozen
or wiped out merely on passing of a decree  for  judicial  separation  which
merely suspends certain duties and obligations of the spouses in  connection
with their marriage and does not snap the matrimonial tie. The  Court  ruled
that the decision of the Gujarat High Court does not lay  down  the  correct
position of law. The Court approved the principle stated by the Madras  High
Court in the case of Soundarammal v. Sundara Mahalinga Nadar[9] in  which  a
Single Judge had taken the view that the husband who continued  to  live  in
adultery even after decree at the instance of the wife could not succeed  in
a petition seeking decree for divorce and that Section 23(1)(a)  barred  the
relief.
22.   In view of the aforesaid pronouncement, it is quite clear  that  there
is a distinction between  a  decree  for  divorce  and  decree  of  judicial
separation; in the former, there is a severance of status  and  the  parties
do not remain as husband and wife, whereas in the latter,  the  relationship
between husband and wife continues and the legal relationship  continues  as
it has not been snapped.  Thus  understood,  the  finding  recorded  by  the
courts below which have been concurred by the High Court  that  the  parties
having been judicial separated, the appellant  wife  has  ceased  to  be  an
“aggrieved person” is wholly unsustainable.
23.   The  next  issue  that  arises  for  consideration  is  the  issue  of
limitation. In the application preferred by the wife, she  was  claiming  to
get back her stridhan.  Stridhan has been  described  as  saudayika  by  Sir
Gooroodas Banerjee in “Hindu Law of  Marriage  and  Stridhan”  which  is  as
follows:-
“First, take the case of property obtained by gift.  Gifts  of  affectionate
kindred, which are known by the name of  saudayika  stridhan,  constitute  a
woman’s absolute property, which she has at all times independent  power  to
alienate, and over which her husband has only  a  qualified  right,  namely,
the right of use in times of distress.”

24.   The said passage, be it noted, has been quoted Pratibha Rani v.  Suraj
Kumar and Another[10]. In the  said  case,  the  majority  referred  to  the
stridhan as described in “Hindu Law” by   N.R.  Raghavachariar  and  Maine’s
“Treatise on Hindu Law”. The  Court  after  analyzing  the  classical  texts
opined that:-
”It is, therefore, manifest  that  the  position  of  stridhan  of  a  Hindu
married  woman’s  property  during  coverture  is   absolutely   clear   and
unambiguous; she is the absolute owner of such property and  can  deal  with
it in any manner she likes — she may spend the whole of it or give  it  away
at her own pleasure by gift or will without any reference  to  her  husband.
Ordinarily, the husband has no  right  or  interest  in  it  with  the  sole
exception that in times of extreme distress, as in famine,  illness  or  the
like, the husband can utilise it but he is morally bound to  restore  it  or
its value when he is able to do so. It may be further noted that this  right
is purely personal to the husband and the property so  received  by  him  in
marriage cannot be proceeded against even  in  execution  of  a  decree  for
debt.”

25.   In the said case, the Court ruled:-
“... a pure and simple entrustment of stridhan without creating  any  rights
in the husband excepting putting the articles in  his  possession  does  not
entitle him to use the same  to  the  detriment  of  his  wife  without  her
consent. The husband  has  no  justification  for  not  returning  the  said
articles as and when demanded by the wife nor can he burden her with  losses
of business by using the said property  which  was  never  intended  by  her
while  entrusting  possession  of  stridhan.  On  the  allegations  in   the
complaint, the husband is no more  and  no  less  than  a  pure  and  simple
custodian acting on behalf of his wife  and  if  he  diverts  the  entrusted
property elsewhere or for different  purposes  he  takes  a  clear  risk  of
prosecution under Section 406 of the IPC. On a parity of  reasoning,  it  is
manifest that the husband, being only a custodian of  the  stridhan  of  his
wife, cannot be said to be in joint possession thereof and  thus  acquire  a
joint interest in the property.”

26.   The decision rendered in the said case was referred for a  fresh  look
by a three-Judge Bench. The three-Judge Bench Rashmi Kumar (Smt)  v.  Mahesh
Kumar Bhada[11] while considering the issue in the said case, ruled that :-

“9. A woman’s power of disposal, independent of her  husband’s  control,  is
not confined to saudayika but extends to other properties  as  well.  Devala
says: “A  woman’s  maintenance  (vritti),  ornaments,  perquisites  (sulka),
gains (labha), are her stridhana. She herself has  the  exclusive  right  to
enjoy it. Her husband has no right to use it except in distress….”  In  N.R.
Raghavachariar’s Hindu Law — Principles and Precedents,  (8th  Edn.)  edited
by Prof. S. Venkataraman, one of the renowned Professors of Hindu  Law  para
468 deals with “Definition of Stridhana”. In para 469 dealing with  “Sources
of acquisition” it is stated that the sources of acquisition of property  in
a woman’s possession  are:  gifts  before  marriage,  wedding  gifts,  gifts
subsequent to marriage etc. Para 470 deals with “Gifts to  a  maiden”.  Para
471 deals with “Wedding gifts” and it  is  stated  therein  that  properties
gifted at the time of  marriage  to  the  bride,  whether  by  relations  or
strangers, either Adhiyagni or Adhyavahanika, are the bride’s stridhana.  In
para 481 at page 426, it is stated that ornaments presented to the bride  by
her husband or  father  constitute  her  Stridhana  property.  In  para  487
dealing with “powers during coverture” it is stated that  saudayika  meaning
the gift of affectionate kindred, includes both Yautaka  or  gifts  received
at the time of marriage as well as its  negative  Ayautaka.  In  respect  of
such property, whether given by gift or will she is the absolute  owner  and
can deal with it in any way she likes. She may spend, sell or give  it  away
at her own pleasure.

10. It is thus clear that the properties gifted to her before the  marriage,
at the time of marriage or at the time of giving farewell or thereafter  are
her stridhana properties. It is her absolute property  with  all  rights  to
dispose at her own pleasure. He has no control over her stridhana  property.
Husband may use it during the time of his distress but nonetheless he has  a
moral obligation to restore the same or its value to  his  wife.  Therefore,
stridhana property does not become a joint property  of  the  wife  and  the
husband and the husband has  no  title  or  independent  dominion  over  the
property as owner thereof.”

27.   After so stating the Court proceeded to rule that  stridhana  property
is the exclusive property of the  wife  on  proof  that  she  entrusted  the
property or dominion over the stridhana  property  to  her  husband  or  any
other member of the family, there  is  no  need  to  establish  any  further
special agreement to establish that the property was given  to  the  husband
or other member of the family.  Further,  the  Court  observed  that  it  is
always a question of fact in each case as to how the  property  came  to  be
entrusted to the husband or any other member of the family by the wife  when
she left the matrimonial home or was driven out therefrom.  Thereafter,  the
Court adverted to the concept of entrustment and eventually  concurred  with
the view in the case of Pratibha Rani (supra). It is necessary to note  here
that the question  had  arisen  whether  it  is  a  continuing  offence  and
limitation could begin to run everyday lost its relevance in the said  case,
for the Court on scrutiny came to hold that the complaint preferred  by  the
complainant for the  commission  of  the  criminal  breach  of  trust  under
Section 406 of the Indian Penal Code was within limitation.
28.   Having appreciated the concept of Stridhan, we shall  now  proceed  to
deal with the meaning of “continuing  cause  of  action”.   In  Raja  Bhadur
Singh v. Provident Fund Inspector and Others[12]  the  Court  while  dealing
with the continuous offence opined that the expression “continuing  offence”
is not defined in the Code but that is because the expressions which do  not
have a fixed connotation or a static import are difficult to  define.    The
Court referred to the  earlier  decision  in  State  of  Bihar  v.  Deokaran
Nenshi[13] and reproduced a passage from the same which is to the  following
effect:-
“A continuing offence is one which is  susceptible  of  continuance  and  is
distinguishable from the one which is committed once and for all. It is  one
of those offences which arises out of a failure to obey  or  comply  with  a
rule or its requirement and which involves  a  penalty,  the  liability  for
which continues until the rule or its  requirement  is  obeyed  or  complied
with. On every occasion that such disobedience or non-compliance occurs  and
reoccurs, there is the offence committed. The distinction  between  the  two
kinds of offences is  between  an  act  or  omission  which  constitutes  an
offence once and for all  and  an  act  or  omission  which  continues,  and
therefore, constitutes a fresh offence every time or occasion  on  which  it
continues.  In  the  case  of  a  continuing  offence,  there  is  thus  the
ingredient of continuance of the offence which is absent in the case  of  an
offence which takes place when an act or omission is committed once and  for
all.”

29.    The Court further observed :-
“This passage shows that apart from saying that a continuing offence is  one
which continues and a non-continuing offence is one which is committed  once
and for all, the Court found it difficult to explain as to when  an  offence
can be described as a continuing offence. Seeing that difficulty, the  Court
observed that  a  few  illustrative  cases  would  help  to  bring  out  the
distinction between a continuing offence and a non-continuing  offence.  The
illustrative cases referred to by the Court  are  three  from  England,  two
from Bombay and one from Bihar.”

30.    Thereafter, the Court referred to the  authorities  and  adverted  to
Deokaran Nenshi (supra) and eventually held:-
“The question whether a particular offence  is  a  continuing  offence  must
necessarily depend upon the language  of  the  statute  which  creates  that
offence, the nature of the offence and, above  all,  the  purpose  which  is
intended  to  be  achieved  by  constituting  the  particular  act   as   an
offence...”

31.   Regard being had to the aforesaid statement of law,  we  have  to  see
whether retention of stridhan by the husband or any other family members  is
a continuing offence or not.  There can be no dispute that wife can  file  a
suit for realization of the stridhan but it does not debar her  to  lodge  a
criminal complaint for criminal breach of trust.  We  must  state  that  was
the situation before the 2005 Act came into force.  In  the  2005  Act,  the
definition of “aggrieved person” clearly postulates about the status of  any
woman who has been subjected to domestic violence as defined  under  Section
3 of the said Act.  “Economic abuse” as  it  has  been  defined  in  Section
3(iv) of the said Act has a large canvass.  Section 12, relevant portion  of
which  have  been  reproduced  hereinbefore,  provides  for  procedure   for
obtaining orders of reliefs.  It has been  held  in  Inderjit  Singh  Grewal
(supra) that Section 498 of the Code of Criminal Procedure  applies  to  the
said case under the 2005 Act as envisaged under Sections 28 and  32  of  the
said Act read with Rule 15(6) of  the  Protection  of  Women  from  Domestic
Violence Rules, 2006.   We need not advert to the same  as  we  are  of  the
considered opinion that as long  as  the  status  of  the  aggrieved  person
remains and stridhan remains in the custody of the  husband,  the  wife  can
always put forth her claim  under  Section  12  of  the  2005  Act.  We  are
disposed to think so as the  status  between  the  parties  is  not  severed
because  of  the  decree  of  dissolution  of  marriage.  The   concept   of
“continuing  offence”  gets  attracted  from  the  date  of  deprivation  of
stridhan, for neither the husband nor any other family members can have  any
right over the stridhan and they remain the custodians.  For the purpose  of
the 2005 Act, she can submit an application to the  Protection  Officer  for
one or more of the reliefs under the 2005 Act.  In  the  present  case,  the
wife had submitted the application on 22.05.2010 and the said authority  had
forwarded  the  same  on  01.06.2010.  In  the  application,  the  wife  had
mentioned that the husband had stopped payment of monthly  maintenance  from
January 2010 and, therefore, she had been compelled to file the  application
for stridhan. Regard being had to the said concept of  “continuing  offence”
and the demands made, we are disposed to think that the application was  not
barred by limitation and the courts below as well  as  the  High  Court  had
fallen into a grave error by dismissing  the  application  being  barred  by
limitation.
32.   Consequently, the appeal is allowed and the orders passed by the  High
Court and the courts below are set aside.  The matter  is  remitted  to  the
learned Magistrate to proceed with the application under Section 12  of  the
2005 Act on merits.


                                             .............................J.
                                                               [Dipak Misra]



                                             ..........................., J.
                                                          [Prafulla C. Pant]
New Delhi
November 20, 2015

-----------------------
[1]    (2011) 12 SCC 588
[2]    (2012) 3 SCC 183
[3]    (2014) 3 SCC 712
[4]    (2010) 10 SCC 469
[5]     (2005) 3 SCC 636
[6]    (1993) 1 SCC 325
[7]    (2001) 4 SCC 125
[8]    AIR 1979 Guj 209
[9]    AIR 1980 Mad 294
[10]   (1985) 2 SCC 370
[11]   (1997) 2 SCC 397
[12]   (1984) 4 SCC 222
[13]   (1972) 2 SCC 890