Martand Dairy & Farm Vs. The Union
of India & Ors  INSC 105 (23 April 1975)
SARKARIA, RANJIT SINGH GUPTA, A.C.
CITATION: 1975 AIR 1492 1975 SCR 265 1975 SCC
CITATOR INFO :
F 1989 SC 611 (7) RF 1992 SC 224 (11)
Central Sales Tax Act 1956-"Sealed
A notification issued under the Central Sales
Tax Act, 1956 allowed exemption to, among others, cream but excluding
"products sold in sealed containers". The appellant sends cream to
Calcutta in sealed container& The sales tax authorities held that the sales
were of cream, that they were interstate sales but that the exemption extended
by the notification could not be enjoyed by the assessee since he fell within
the area of exclusion contained in the exemption notification.
The High Court rejected the writ petition of
On appeal to this Court it was contended that
the containers were used for bulk mission, that sealing was for preventing
abuse on the way or to avoid pilferage and that the emphasis should be on the
"cream" and the container had no relevance in the context.
Dismissing the appeal,
HELD: It is not for the Court to launch on obscure
fiscal astrology but merely to construe what has been expressed in plain words.
"Sealed container" merely means a container which is "so closed
that access to the contents is impossible without breaking the fastening. The
expression seal in this context does not involve affixture of the seal of the
seller such as impressing a signet in wax etc., as evidence or guarantee of
authenticity. An article may be regarded as put in sealed containers if it is
closed securely in any vessel or container by any kind of fastening or covering
that must be broken before access can be obtained to what is packed inside.
This is the popular, perhaps the literal, meaning of the expressions used in
the notification. Maybe the State thought that sealed containers would be used
only by big manufacturers who were able to bear the burden of tax; maybe
administrative convenience in assessing quantities sold induced this step.
[269B-D] Commissioner of Sales Tax, U.P., v.
G. G. Industries; 21 S.T.C. 63 followed.
Govindram Ramprasad v. Assessing Authority
(Sales Tax) 8 S.T.C. 407, held inapplicable.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 1623 and 1624 of 1971.
From the Judgment add Order dated the 13th
October, 1970 of the Allahabad High Court in O.M. Writ Petition No. 55 and 56
S. T. Desai, Naunit Lal and Miss Lalita Kohli
for the appellant.
G. L. Sanghi, Girish Chandra and R. N.
Sachthey for respondent No. 1.
S. C. Manchanda and O. P. Rana for
Respondents Nos. 2-4.
266 The Judgment of the Court was delivered
by KRISHNA IYER, J.-Mr. S. T. Desai, counsel for the appellants in both the
appeals, correctly assured us that the facts are not in dispute, although the
legal inference bearing on taxability is very much in controversy.
The appellant, who has arrived in this Court
by certificate under Art. 133(1) (a) of the Constitution, urges before us that
he is not liable to sales tax under the Central Sales Tax Act, 1956 (LXXIV of
1956) (for short, the Act) sought to be levied from him: Admittedly the
appellant is a leading dairy of Benaras and has been sending cream to Calcutta
for being converted into butter or ghee. The long journey involved and the
considerable quantities dispatched necessarily called for protective
receptacles during transport. So the cream used to be carefully sent in
canisters whose lids were sealed by the seller. The Calcutta buyers received
the cream and paid for it on the basis of the ghee/butter recovered from the
Although there was some controversy even on
the facts, counsel on both sides proceeded on the factual findings recorded by
the Judge (Revisions) who held that the sales were of cream, that they we're
inter-State sales and that the exemption extended by Government notification
under the Act for cream could not be enjoyed by the assessee as he fell within
the area of exclusion contained in the exemption notification. It is
appropriate at this stage to reproduce the notification, dated May 10, 1956,
under which the exemption is claimed. It reads :
"No. ST-3506/X D/10-5-56 Exemption has
been allowed to Milk and Milk products such as Chhena, Dahi, kha, Butter and
Cream but excluding (i) products sold in sealed containers (ii) sweetmeats and
(iii) ghee." This in general terms cream is exempted from payment of
Central Sales Tax by virtue of this notification but it carves out an exception
to the exemption. If the cream were 'sold in sealed containers' the seller
could not come within the exemption notification. We need not go into the
technique of sealing adopted in this case since it is common ground now that
the cream is put in containers whose lids are properly soldered. The short
question is whether cream sold in soldered containers in the circumstances set
out above can be described appropriately as 'products sold in sealed
Fascinated we were by the imaginative and
realistic picturisation of the expression 'products sold in sealed containers'
projected by Shri S. T. Desai, counsel for the assessee-appellant but, on
further reflection, we veered round to the view presented by Sri Sanghi, for
the State, that after all law is not always logic and taxation considerations
may stem from administrative experience and other factors of life and not
artistic visualisation or neat logic and so the literal, though pedestrian,
interpretation must prevail.
267 The High Court has negatived the plea of
the assessee and since we are inclined to agree with its reasoning, we express
our grounds only briefly, although we may, in passing, make reference to two
decisions cited, before us, viz., Govindram Ramprasad v. Assessing Authority
(Sales Tax) (1) and Commissioner of Sales Tax, U.P. v. G. G.
Industries(2). Govindram(1)-a decision of the
Madhya Pradesh High Court-is not germane to the question we are dealing with
and therefore we need not discuss it. The latter-The Commissioner of Sates Tax,
U.P.(2)--We shall discuss as it in some measure, governs the issue before us.
The assessee's main contention is that cream
sold in sealed containers must bear a 'market' meaning, if we may say so, and
not be, taken literally. What Shri Desai urges is that there are many articles
which the consumers buy on the strength of the image projected before them in
their packed state. For instance, a well-secured box of chocolates, carton of
dried fruits or a tin of coffee put out with wellknown makings, a sealed bottle
of whisky gold in such manner that its quality, quantity and genuineness are
easily acceptable--these, going by the consumers' habit of looking for articles
properly packed or tinned and acquiring a special value as a unit of consumer
commodity, may legitimately be described as items 'sold in sealed containers'.
If we consult our housewives or our village vendors, there is no doubt that
these illustrations may be borne out as apt and may even be supplement by other
like instances. A thing is bought loose for a price by a buyer on certain
assumptions. But a securely packed or properly sealed commodity sold by a
well-known manufacturer is purchased by the consumer based on a sort of
flavoured considerations. The assessee's case is that here no cream in sealed
containers as a unit with an individuality is sold. On the other hand cream qua
cream is bargained for and despatched. The canister is used because, ex
necessitae large quantities of cream cannot be transported over distances
without being put in some container and its leakage and spoilage can be
prevented only by soldering or scaling. Items sold in containers are usually so
sold for two reasons : (i) for easy consumption by the retail consumer who, by
mere sight, is able to distinguish the particular 'patented brand, and picks it
off the counter ;
(ii) to prevent adulteration or mixing with
In the instant case the containers used are
for bulk transmission--like tea chests-and scaling is for preventing abuse on
the way or pilferage. And soldering is a sure method of sealing. Further, if
the item were not a liquid like cream, but a solid, it could be transported
even in gunny bags-merely stitched and d without any seal. If this view be
sound, certainly the Benaras cream dealer is out of the liability zone. We do
not examine the impact on taxability had the receptacles been returned by the
buyer since it does not arise on the evidence.
Shri Desai further drew our attention to the
fact that the containers had no particular design nor did they bear any special
marks or have a uniform size. Thus the sealed container bad no connection with
(1) 8 S.T.C. 407.
(2) 21 S.T.C. 63.
268 the bargain or the stuff sold. The emphasis
was on the cream and the container had no pertinence in the context.
In this connection, he also referred to s. 8
of the Act which refers to containers and packing material. There is force in
the argument, certainly. But, as indicated, judicial adventure in
interpretation-particularly in tax matters,-is severely circumscribed, Mr.
Desai posed the question whether sale in loose quantities and unsealed
containers (in this very case, cream also been sold in milk cans which were not
sealed and had been granted tax exemption) made any difference from similar
sates in old kerosene tins, the soldering being no sin which attached tax
guilt. Not that we are oblivious to the force of this argument, but we are
influenced by the words whose normal meaning should ordinarily guide
interpretation. All that the notification states is that products sold in
sealed containers must sail out of the harbour of exemption. The simple
question is this : Was the sale, of cream ? Yes. Was it, when sold, packaged in
containers which were sealed ? Yes. On these two affirmative answers the
exclusion from the exemption operates. Such is the contention put forward on
behalf of the taxing authority by Shri Sanghi, learned counsel.
In this connection, he drew our attention to
Commissioner of Sales Tax, U.P. (supra). Sikri, J. (as he then was), speaking
for the Court, considered a somewhat similar question of exemption where
sales,-tax dealers in cooked food 'other than cooked food sold in sealed
containers' were conferred exemption, on certain conditions. The commodity
there was confectionery sold in sealed containers and the High Court upheld the
assessee's case with these words In commercial world in such trades,,
particularly where food materials are concerned, it would be seen that the name
and reputation of the manufacturer by itself is a sufficient evidence or
guarantee of the quality of the contents. The most usual form or method for
furnishing such evidence or guarantee of the quality and quantity of the
contents is by way of putting its seal 'by the manufacturer in order to secure
the goods in the container in such manner that to have access to the contents
of the container the seal so put has to be destroyed or broken.
For if it were not so done neither the retailer
nor the purchaser would be sure whether the goods inside the container as to
their quality and quantity are the same as represented and have not been
otherwise adulterated or mixed up by extraneous elements is hardly necessary to
mention that a dealer carrying on the business of selling sweetmeats and
confectionery on a comparatively smaller scale would find it uneconomical
commercially to put the stuff sold or to be sold in sealed containers; it is
only a large scale manufacturer who manufactures and exports the confectionery,
who would need selling the same in a container, In our opinion, therefore, it
is only that class of dealers carrying on the business of sale of confectionery
in sealed containers as explained above who were not intended to be exempted,"
from the liability to pay sales tax on their turnover.
269 On appeal, this Court,. after noticing
the plausibility of the opposite point of view and guessing the possible
administrative and other reasons for the exclusion from exemption, held :
"Be that as it may, in the context it is
difficult to give to the expression 'scaled contained a meaning different from
the ordinary dictionary meaning.' "Sealed container" merely means a
container which is "so closed that access 'to the contents' is impossible
without breaking the fastening". The expression 'seal' in this context
does not involve an affixture of the seal of the seller such as impressing a
signet in wax etc., as evidence or guarantee of authenticity. An article may be
regarded as put in sealed containers if it is closed securely in any vessel or
container by any kind of fastening or covering that must be broken before
access can be obtained to what is packed inside. This is the popular, perhaps
the literal, meaning of the expressions used in the notification. Maybe the
State thought that sealed containers would be used only by big manufacturers
who were able to bear the burden of tax; maybe administrative convenience in
assessing quantities sold induced this step. It is not for the Court to launch
on obscure fiscal astrology but merely to construe what has been expressed in
plain words. We should have been happier if the State had furnished the reasons
prompting the exclusion from the exemption. An intelligent appreciation of the
reason of the rule is an aid to judicial construction but the State has not
been as alert on this score as we might have wished. Why should a sale, if
generally exempt from tax, being a milk product, forfeit it merely because the
wholesome step of sealing the container and insulating the food article from
contamination, is taken during transit? But counsel for the State has expressed
his inability to throw light on this aspect or on the reasons for the policy.
Had the State's counter-affidavit been more illuminating on these questions, it
would have performed a service to this Court and to the public and rendered the
task of judicial construction simpler.
With these observations, we dismiss the
appeals but there will be no order as to costs in this Court.
P.B.R. Appeal dismissed.