M/S Parle Biscuits (P)
Ltd. Vs. The State of
& Ors  Insc 757 (15 December 2004)
Arijit Pasayat & C.K.
Thakker Arijit Pasayat, J.
Appellant (hereinafter referred to as 'dealer') calls in question legality
of the judgment rendered by Division Bench of the Patna High Court holding that
notification S.O. 154, dated 28.1.1985 issued under proviso to Section 13(1) of
the Bihar Finance Act, 1981 (in short the 'Act') in relation to sale and
purchase of packing materials, is applicable to the appellant, and Section
13(1)(e) of the Act inserted by Bihar Finance Amendment Act, 1985 (in short
'Amendment Act') w.e.f.
1.8.1985 did not render it inapplicable.
The background facts necessary for disposal of the appeal essentially are as
Appellant is a company registered under the Companies Act, 1956 (in short
Act') and is a dealer registered under the Act and the Central Sales Tax
Act, 1956 (in short the 'Central Act').
It is a manufacturer of biscuits and started its manufacturing operation in
the State of Bihar w.e.f. 1.4.2002. According to it, Parle Products Limited was
its predecessor who was given benefit of concessional rate of sale tax of 4% on
purchase of C.B. Boxes (also known as cardboard box or corrugated box) used for
packing. The benefit of the concessional rate was given under Section 13(1) of
However, it has been denied the benefit and has been asked to pay sales tax
@ 10% on purchase of C.B. Boxes used for packing. The appellant had also
applied to the Deputy Commissioner, Commercial Tax, Patna city, Patna praying
for inclusion of packing materials made out of paper in column 13 of the
Registration Certificate. The same was denied by the Deputy Commissioner by
order dated 7.4.2003. Earlier packing material were exempted from sales tax as
its sale price was not included in the "taxable turnover" as defined
under Section 21(1)(c) of the Act. The said provision was amended w.e.f. 1.8.1985
and the provision with regard to non-inclusion of sale price on account of sale
of packing materials in the taxable turnover was deleted. Section 13(1) of the
Act was amended by adding Clause (e) which provided for concessional rate of
tax with regard to sale and purchase by registered dealer of goods specified in
the registration certificate issued under Section 14 of the Act, as required by
him in or for packing of goods which he sells. As noted above, appellant
applied for inclusion of all kinds of packing materials including packing
materials made out of paper in the registration certificate against column
no.13. The Deputy Commissioner by order dated 31.3.2002 accepted the prayer so
far as it relates to packing materials such as plastics and polybags, gunny bags,
gum tapes and adhesives, complaint slips, tin containers and pouches but
rejected the prayer for including packing materials made out of paper, such as
cartons, corrugated boxes etc. Appellant thereafter filed application for
inclusion of said items which was rejected, as noted above, by order dated
7.4.2003. It was indicated in the order that in view of the notification dated
28.1.1985 paper of all kinds is excluded from the operation of Section 13 of
the Act. Appellant filed writ petition before the Patna High Court highlighting
that its predecessor was granted concession. The notification dated 28.1.1985
cannot have any operation to rule out operation of Section 13(1)(e) of the Act.
In any event, what the appellant wanted to include was "card board
box" and what is excluded is "card board". Reference was made to
an earlier decision of the High Court in Card Board Products vs. State of Bihar
(1989 (73) STC 438) where it was held that "card board boxes" are
different from "card board". It was also submitted that the
expression 'carton' used in the notification also would not include the
"card board boxes" as was held in the said case. Both the
notification and Section 13(1) have to be read harmoniously and, therefore, the
authorities were not correct in their view. Stand of the learned counsel for
the respondents was that Section 13 of the Act provides for concessional rate
of tax. Proviso to Section 13(1) indicates that the State Government may
exclude any goods or class or description of goods from the operation of the
Section. Accordingly, notification dated 28.1.1985 amending earlier
notification dated 26.12.1977 was issued.
By the said notification paper and other materials made out of paper were
excluded from the operation of Section 13 of the Act. While other packing
materials continued to enjoy the benefit of concessional rates as provided
under Section 13(1)(e) of the Act, the same is not the case with those articles
which are covered by the notification. Even if clause (e) in sub-section (1) of
Section 13 is inserted subsequently i.e. on 1.8.1985, it will not supersede or
affect the earlier notification. Reference was made to Section 21 of the Act
which deals with taxable turnover and though sale of packing material for
packing of goods used by the dealer prior to 1.8.1985 was exempted from payment
of sales tax, the position was altered after 1.8.1985.
The High Court on consideration of rival submissions came to hold that
clause (e) of sub-section (1) of Section 13 of the Act did not take away the effect
of the notification issued earlier. There was nothing in Section 13(1)(e) of
the Act which provided specifically that earlier notification shall not cover
clause (e) of sub-section (1) of Section 13. Provisions of the notification are
not inconsistent with the amending provision and there was nothing to show that
the earlier notification was superseded. It was, therefore, held that the view
taken by the authorities not to include packing materials made out of paper was
In support of the appeal, Mr. S. Ganesh, learned senior counsel submitted
that the High Court has failed to notice the distinction between
"cardboard" and "cardboard boxes" which was clearly noted
in Card Board Products case (supra). The entry which was considered in that
case was identical to the one under consideration. The State having not
questioned the correctness of the judgment made an impermissible departure in
case of the appellant, particularly when several other dealers have been
granted the benefit. It was submitted that the stand of the State presently
taken that "cardboard boxes" would also be included in 'carton' has
also been dealt with in Card Board Products case (supra) and the same has been
The stand of the State that the entry at serial no.12 relates to "paper
of all kinds" and cardboard boxes being made out of paper are also covered
by the exclusion is not correct, because serial no.12 of the notification deals
with paper of all kinds and paper products of the enumerated category. Stand of
the State that papers of all kinds is included cannot be correct for the simple
reason that had same been the intention, there was no necessity for enumerating
various paper products. The notification No.154 dated 28.1.1985 cannot be
pressed into service to take out the effect of Section 13(1)(e) of the Act
which was inserted subsequently.
Learned counsel for the State additionally submitted that the entry in the
notification is intended to include paper of all descriptions and kinds. The
definition is an inclusive one and that cannot mean that only paper products of
the enumerated category were covered and not other products. No evidence was
led to show that in common parlance "cardboard" and "cardboard
boxes" are different commodities. No evidence relating to common parlance
or understanding was filed before any authority. Words of the notification have
to be understood taking into account the object for which the same was issued.
The reasons for inclusion have been spelt out in the counter affidavit.
Concessional rate of tax was never intended to be extended to paper and its
products. Since policy is to protect trees, plants and forests, there was no
intention to extend the benefits as claimed.
Object is to encourage use of substitutes of paper as packing materials.
Reliance on Card Board Products case (supra) does not further the petitioners'
case because the points were not considered in the earlier case. Even if for
the sake of argument it is accepted that "cardboard" and
"cardboard boxes" are different commodities, "cardboard
box" is clearly covered by the entry 'carton". The decision in Card
Board Products case (supra) was concerned with the cardboard boxes used for
storage of explosives. With reference to Explosive Rules 1940, Explosive Rules 1983
and various other provisions on the fact of that case it was held that
cardboard boxes are not covered by the expression "cartons". In the
instant case, the cardboard boxes are used for packing biscuits. Therefore, the
factual position is entirely different.
In order to appreciate the rival submission, a few provisions of the Act and
the notification need to be noted. Sections 13 and 21 as originally enacted
read as follows:
"Section 13. Special rate of tax on certain sales or purchases:- (1)
Notwithstanding anything contained in this part but subject to such conditions
and restrictions as may be prescribed (a) Sale of goods, for purpose other
than re- sale or for use in manufacture of goods for sale, to State Government
or Central Government or to a company, corporation or undertaking owned,
financed or controlled wholly by such Government;
(b) Sales to or purchases by a registered dealer of goods required by him
directly for use in the manufacture or processing of any goods for sale in
Bihar or in the course of inter-State trade or commerce;
(c) sale of goods to a registered dealer required directly for use in
mining, or to a person, company or undertaking holding registration certificate
under the Bihar Electricity Duty Act, 1948 (Bihar Act XXXVI of 1948) required
directly for use in the generation or distribution of electricity; and (d)
sales of machineries, tools, plants and accessories thereof to a person firm,
company, corporation or concern intending to establish a business in Bihar for
the purpose of manufacturing goods for sale and in whose case the likely sale
proceeds of such manufactured goods in expected to exceed the quantum specified
in sub-section (1) of section 3 or for mining or generation and distribution of
and in respect of which the purchaser has been granted a certificate by the
prescribed authority in the prescribed manner and for prescribed period shall
unless the goods are taxable at a lower rate under Section 12 be subject to
sub-section (2), leviable to tax at such rate as may be notified by the State
Government in this behalf not exceeding 4 percentum:
Provided that the State Government may, from time to time by notification in
Official Gazette, exclude any goods or class or description of goods from the
operation of this Section.
Section 21. Taxable turnover:
(1) For the purpose of this part the taxable turnover of a dealer shall be
that part of his gross turnover which remains after deduction therefrom (a)
sale price on account of sales exempted under Section 7.
(b) amount of sales tax actually collected as such, if any, along with the
sale prices received or receivable in respect of sales of goods.
(c) sale prices on account of sales to a registered dealer other than a
dealer liable to any tax under sub-section (4) of Section 11 and specified in
his registration certificate as being required for resale by him inside Bihar
or in course of inter-State trade or commerce for use in the packing of goods
which he sells inside Bihar or in the course of inter-State trade or commerce.
Provided in that in the case of such sales a declaration in the prescribed
form duly filled up and signed by the registered dealer to whom the goods are
sold, or by his manager declared under Section 15 is furnished in the
prescribed manner by the selling dealer.
(d) sale price at the subsequent stages of sales of such goods as are
specified by a notification issued under sub-section (1) of Section 11 as being
subject to tax at the first point of sale in Bihar, if necessary evidence as
required by sub- section (2) of Section 11, are produced in the prescribed
manner before the prescribed authority." By the 1985 amendment, Sections
13 and 21 were amended and the relevant amendments are as follows:
"Amendment of Section 13 of Bihar Act 5, 1981: In Section 13 of the
said Act (1) In sub-section (i) to clause (b) of sub-section (1) the words
"in Bihar or in course of inter- State trade or commerce" shall be
(2) After clause (d) to sub-section (1) the following new clause shall be
inserted, namely:- "(e) Sales to or purchases by a registered dealer of
goods specified in his registration certificate issued under Section 14 as
required by him in the or for packing of goods which he sells."
"Amendment of Section 21 of Bihar Act 5, 1981: In the said Act,
sub-section (1) of Section 21 - (1) Clause "a)" shall be re-numbered
as clause "(a)(ii)" and before this a new sub-clause shall be
inserted as follows namely:- "(a)(i) In case of works contract the amount
of labour charges in the manner or to the extent prescribed." (ii) In
clause (c), after the words "trade or commerce" the comma
"(,)" shall be substituted by a semi-colon "(;)" and the
words "or for" use in packing of goods which he sells inside Bihar or
in course of inter-State trade or commerce shall be deleted." Entry 12 of
the Notification No.S.O.154 dated 28.1.1985 reads as follows:
"12 Paper (of all kinds) including Paste Board, Mill Board, Straw
Board, Card Board, Blotting Paper, Cartridge Paper, Paper bags, packing paper,
cartons, cards and Blank registers, Note books, Exercise books, Envelops
labels, Letter pads, Writing tablets and flat files made out of paper."
Description of the goods as indicted in serial no.12 relates to "paper (of
all kinds)" and inclusive definition in clear terms refers to certain
paper products. Those which are relevant for our purpose are
"cardboard" and "cartons". Had it been the intention to
cover paper products of all kinds in the expression 'paper' there was no
necessity for including definite paper products. At this juncture, it would be
proper to note what the article "paper" means:
Dictionary meaning of "Paper" as given in various dictionaries is
Chamber's Dictionary A material made in thin sheets as an aqueous deposit
from linen rags esparto woods pulp other form of cellulose, used for writing
and printing, wrapping and other purposes; sometimes extended to similar
materials not so made, as papyrus, rice-paper; to the substance of which some
wasps built their nests, to card board and even to tin foil, a piece of paper.
Oxford Dictionary Substance used for writing, printing, drawing, wrapping
up parcels etc. made of interlaced fibers of rags, straw, wood etc.
Webster's Dictionary Paper. (ME Papire an Egyptian reed from the inner bark
of which a kind of writing paper was made in ancient Egypt) A thin flexible
material made in leaves or sheets from the pulp of rags, straw, wood or other
fibrous material and used for writing or printing upon or for wrapping and
various other purposes. A single piece, sheet or leaf of such material, smaller
wrapper or card of paper usually including its contents; as a paper of pins;
any material like paper, as papyrus.
In Encyclopaedia Britannica [Volume 13 (15th Edition)], "paper"
has been defined as basic material used for written communication and the
dissemination of information. Paper, the general name for the substance
commonly used for writing upon or wrapping things in.
In Unabridged Edition of the Random House Dictionary of the English Language
the word "paper" has been defined as "a substance made from
rags, straw, wood or other fibrous material, usually in thin sheets, used to
bear writing or printing on or for wrapping things, decorating walls etc."
Oxford Advanced Learners' Dictionary (Sixth Edn. Page 917)- For
writing/wrapping: (1) (Often in compounds) the thin material that you write and
draw on and that is also used for wrapping and packing things a piece/sheet of
paper a package wrapped in brown paper, recycled paper.
From the above definition it is clear that in popular parlance the word
"paper" is understood as meaning a substance which is used for
bearing writing or printing, or for packing or for drawing on, or for
decorating, or covering walls. [See State of U.P. v. Kores India Limited, (1977)
39 STC 8) McGraw-Hill Encyclopedia of Science & Technology (Volume 13, Page
Many excellent sheet materials made from synthetic polymers, derived from
petroleum or natural gas, have displaced paper for many uses. Some are
available for printing and writing as well as packaging, but usually such
materials are substantially more costly than paper which is manufactured from
The largest use for paper is in sheets of varied thickness, called
paperboard, for packaging, followed by printing and writing papers and sanitary
tissues. Substantial quantities of paper are impregnated with asphalt for use
as roofing materials while other paper products are used as decorating
materials, packaging materials, stamps, resin-impregnated laminates, and
The Encyclopedia Americana (International Edition Page 261) Paper: A matted
or felted sheet of fibers usually vegetable but sometimes mineral, animal, or
synthetic formed on a screen from a water suspension. The term paper" is
specifically limited to lighter weight, thinner, more flexible sheets formed in
this manner. Sheets that are 0.012 inch (0.3 millimeter) or more in thickness,
including Bristol board, container board, box-board, wallboard, and so forth,
are classified as paperboard. Paper derives its name from papyrus, a sheet of
writing material made in ancient times by pasting together sections of Egyptian
sedge (Cyperus papyrus), a marsh plant.
In common parlance, the meaning is not different.
That brings us to the residual question as to whether "cardboard
box" is covered by the Entry "cardboard". We find that this
question was elaborately dealt with in Cardboard Products case (supra). While
considering almost identical provision it was found as a fact that "cardboard
box" is not the same as "cardboard". It is fairly accepted by
learned counsel for the State that the decision was not challenged.
We find that reasoning indicated in Card Board Products case (supra) to hold
that "cardboard" is not synonymous with "cardboard box",
suffers from no infirmity. An article of merchandise whenever used in a
taxation statute must always be understood in common parlance and must be given
its popular sense, meaning that since with which people are conversant and
while dealing with the articles would attribute to it.
The word "cardboard box" is not the term of an art. It is a
commercial article to be understood in the sense that people dealing with such
an article can understand it and would attribute to it in the common parlance.
Learned counsel for the State submitted that no evidence was led about
common parlance and understanding. Reference was made to decisions in
Parameswar Lal Bihani v. Commercial Tax Officer and Ors.
(2000 (9) SCC 259) and State of Kerala v. V. Padmanabhan (2000 (9) SCC 262)
to contend that when there is no evidence, the plain language has to be
adopted. There is no quarrel with this preposition. But considering an almost
similar Entry the Division Bench of the High Court had observed as in Card
Board Products case (supra) that "cardboard" and "cardboard
box" are commercially different products.
Therefore, the plea taken that cardboard and cardboard box convey the same
meaning is not correct.
It was submitted by learned counsel for the State that the legislative
intent while adding new clause was never to extend concessional rate of tax on
paper and its products. Since paper is made out of trees and plants it was the
duty of the State Government and the Central Government to protect forest which
now cover barely 13% of the land. With this legislative intent, paper and paper
products were excluded from operation of sub-section(1) of Section 13 of the
Act. This plea is not of any assistance to the State.
It is well-established that in a taxing statute there is no room for any
intendment and regard must be had to the clear meaning of the words. The entire
matter is governed wholly by the language of the notification. If the tax-payer
is within the plain terms of the exemption, it cannot be denied its benefit by
calling in aid any supposed intention of the exempting authority. If such
intention can be gathered from the construction of the words of the
notification or by necessary implication therefrom, the matter is different,
but that is not the case here. In this connection we may refer to the
observations of Lord Watson in Salomon v. Salomon & Co. (1897 A.C. 22, 38):
"Intention of the legislature is a common but very slippery phrase,
which, popularly understood may signify anything from intention embodies in
positive enactment to speculative opinion as to what the legislature probably
would have meant, although there has been an omission to enact it. In a Court
of Law or Equity, what the Legislature intended to be done or not to be done
can only be legitimately ascertained from that which it has chosen to enact,
either in express words or by reasonable and necessary implication." It is
an application of this principle that a statutory notification may not be
extended so as to meet a casus omissus. As appears in the judgment of the Privy
Council in Crawford v. Spooner, 6 Mco. P.C.C. 8:
".........we cannot aid the legislature's defective phrasing of the
Act, we cannot add, and mend, and, by construction, make up deficiencies which
are left there." The above position was illuminatingly highlighted by a
Constitution Bench of this Court in Harsraj Gobardhandas v. H.H. Dave (1969 (2)
Though it has been strenuously urged by learned counsel for the appellant
that the notification dated 28.1.1985 cannot affect the exemption granted in
terms of clause (e) of sub-section (1) of Section 13, the plea is clearly
untenable. Section 27 of the Bihar and Orissa General Clauses Act, 1917 (in
short the 'Bihar General Clauses Act') corresponding to Section 24 of the General
Clauses Act, 1897 (in short the 'General Clauses
Act') provides for "Continuation of Orders" etc.
issued under Enactments repealed and re-enacted. According to the provision
unless a different intention appears from the amended or re- enacted provision,
the notification issued under the earlier enactment, if not inconsistent with
the re-enacted provision shall continue in force and be deemed to have been
issued under the re-enacted provision, unless and until it is superseded by
issuance of fresh notification.
It is true the Section does not speak of an amendment. But the provision is
equally applicable in case of amendment. There is no real distinction between
repeal and amendment. The latter is wider in terms and includes deletion or
abrogation in existing statute. When the statutory provision is amended to a
limited or a small extent then it is termed as amendment, and when the
provision is extensively amended then it is called repeal. In that sense, after
repeal there is re- enactment of the law. The above position was illuminatingly
stated in Bhagat Ram Sharma v. Union of India and others (AIR 1988 SC 740).
It is a matter of legislative practice to provide while enacting an amending
law that an existing provision shall be deleted and a new provision
substituted. Such deletion has the effect of repeal of the existing provision.
Such a law may also provide for the introduction of a new provision. There is
no real distinction between repeal and an amendment. This was noted in
Sutherland's Statutory Construction (3rd Edn. Volume 1). There is nothing in
Section 13(1)(e) of the Act which specifically provides that the earlier
notification shall not cover the said provision. The provisions of the
notification are not inconsistent with the amended provision and there is
nothing in the amended provision to show that the earlier notification was
intended to be superseded. In that view of the matter, effect of notification
dated 28.1.1985 is not taken away by Section 13(1)(e) of the Act.
It is next to be considered whether item "carton" appearing at
serial 12 of the notification would include "cardboard box". It is
correct that in Cardboard Products case (supra) the Division Bench of the Patna
High Court dealt with this issue. A bare reading of the judgment goes to show
that the conclusion was drawn about cardboard boxes being not carton in view of
particular factual background specifically with reference to Explosives Rules
1940 and 1983.
Therefore, in Card Board Products case (supra) it was factually found with
reference to said Rules that the cardboard boxes to be sold for the purpose of
containing explosives were not light pasteboard or cardboard box but strong
cardboard box. Therefore, a factual determination is necessary.
"Carton" has been defined in various renowned dictionaries as
The New Shorter Oxford English Dictionary (Volume I Page 344) Carton A
(1)(a): A light cardboard or pasteboard; a light container of waxed cardboard,
plastic, etc. in which drinks and other foodstuffs are packaged. Cardboard,
pasteboard, papier mache. (2) The disc within the bull's-eye of a target; a
shot that hints this.
Words & Phrases Permanent Edition Volume 6 (Page 347) "By 'cartons'
* * * we understand those encasements which are not usually of permanent value,
and such as are ordinarily used for the convenient transportation of their
contents." The carton in which gloves and hosiery are placed is a box or
cover in which the goods are contained, within the meaning of Act March 3,
1883, $ 7, 22 Stat. 523, repealing the law imposing a duty on the usual box or
covering of imported goods. Oberteuffer v. Robertson, 6 S.Ct. 462, 470, 116 U.S.
499, 29, L.Ed. 706.
Oxford Advanced Learner's Dictionary (Sixth Edition Page 179) (1) A light
cardboard or plastic box or pot for holding goods, especially food or liquid;
the contents of a carton; a milk carton/a carton of milk-picture at packaging;
(2) a large container in which goods are packed in smaller containers: a carton
There cannot be universal application of any rigid standard for determining
the question and has to be decided on the factual background of each case. This
has not been done. The type of cardboard box which was used for packing the
product of the appellant has to be seen. Therefore, we think it appropriate to
direct the Deputy Commissioner of Sales Tax to consider the question whether
the cardboard box used by the appellant fits in with the definition of
"carton" taking into account the product which is packed. For this
purpose, the appellant shall be granted opportunity to substantiate its plea
that the cardboard boxes used by it are not factually covered by the entry
Appeal is disposed of accordingly. No costs.