State of Uttar Pradesh Vs. M/S. Kores
(India) Ltd.  INSC 250 (18 October 1976)
SINGH, JASWANT SINGH, JASWANT KHANNA, HANS
CITATION: 1977 AIR 132 1977 SCR (1) 837 1976
SCC (4) 477
CITATOR INFO :
D 1985 SC1201 (12) RF 1986 SC 386 (6) RF 1986
SC1730 (7) R 1988 SC2223 (13)
U.P. Sales Tax Act, 1948, s. 3-A,
Notification issued under----Rule for constructing words--Whether carbon paper
is taxable as 'Paper'--Whether ribbon is accessory or part of typewriter.
The Governor of U.P. issued a Notification
under Section 3-A of the U.P. Sales Tax Act, 1948, and the Sales Tax Officer
(Section IV) Kanpur, ordered the respondent company to pay tax on the turnover
of' carbon paper at 6%, and that of ribbon at 10%, as per entry 2 of the Notification.
The respondent challenged the order in a writ petition before the High Court.
contending that carbon paper was not 'paper' with the meaning of entry 2 and
its turnover was therefore to be assessed at the rate of 2% prescribed for
unclassified goods, and that 'ribbon' being an accessory and not a part of the
typewriter, could only be taxed at the rate of 6% and not 10%. The High Court
allowed the writ and quashed the levy.
The appellant contended that carbon paper
does not lose its character as paper in spite of being subjected to chemical
processes, and that ribbon is not an accessory but an essential part of the
Dismissing the appeal the Court,
HELD :(1) A word which is not defined in an
enactment has to be understood in its popular and commercial sense with
reference to the context in which it occurs. It has to be understood according
to the well established canon of construction in the sense in which persons
dealing in and using the article understand it. [839 A-B] Attorney General v.
Winstanley (1831) 2 Dow & Clark 302:(1901) 6 E.R. 740, and Grenfell v.
Commissioner of Inland Revenue (1876)1 Ex. D. 242 at p. 248 applied.
(2) 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 the wails. Carbon paper cannot
be used for these purposes but is used for making replicas or carbon copies,
and cannot properly be described as paper. [839 G, 840 A-B] K. Kilburn &
Co. Ltd. v. Commissioner of Sales Tax, U.P.
Lucknow (31 S.T.C. 625), Sree Rama Trading
Company v. State of Kerala (28 S.T.C. 469). state of Orissa v. Gestetner
Duplicators (P) Ltd. (33 S.T.C. 333 ) Commissioner of Sales Tax, U.P.v.S.N.
Brothers (31 S.T.C. 302) applied.
(3) The above mentioned rule of construction
equally applies to ribbon. an accessory and not a part of the typewriter,
though it may not be possible type out any matter without it. [841 D-E] State
of Mysore v. Kores (India) Ltd. (26 S.T.C. 87) approved.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1773 of 1971.
(From the Judgment and order dated 20-2-1970
of the Allahabad High Court in Civil Misc. Writ Petition No.
2943/69) S.C. Manchanda and O.P. Rana, for
V.S. Desai, P.B. Agarwala and B.R. Agarwala,
for the Respondents.
838 The Judgment of the Court was delivered
by JASWANT SINGH, J.---This appeal by certificate which is directed against the
judgment and order dated February 20, 1970, passed by the High Court of
Judicature at Allahabad in writ petition No. 2943 of 1969 raises two
interesting questions viz. ( 1 ) whether carbon paper is paper falling within
the purview of the word 'paper' as used in serial No.
2 of Notification Ng. ST-3124/X-1012(4)-1964
dated July 1, 1966, issued by the Governor of Uttar Pradesh in exercise of the
power vested in him under section 3-A of the U.P. Sales 'Fax Act, 1948 (U.P.
Act No. XV of 1948) so as to be liable to sales tax at the point and at the
rate specified in the Schedule to the Notification and (2) whether ribbon is an
accessory or a part of the typewriter.
It appears that the respondent which is a
company incorporated under the Indian Companies Act dealing in carbon paper,
typewriter, ribbon, stepler machines and stepler pins, despatches the said
goods from its head office at Bombay to its branch office at Kanpur wherefrom
sales thereof are effected in the State of Uttar Pradesh. During the course of
the assessment proceedings for the assessment year 1956-57, the respondent
claimed that carbon paper not being paper falling within the ambit of Entry No.
2 of the Schedule to the aforesaid Notification but a specialised article used
for copying purposes, its turnover had to be assessed at the rate of 2 per cent
prescribed for unclassified goods and not at the rate of 6 paise per rupee i.e.
6% prescribed in the aforesaid Notification. The respondent further claimed
that ribbon being an accessory anti not a part of the typewriter, its turnover
could not be subjected to sales tax at the rate of 10% prescribed inter alia
for typewriters and parts thereof by Notification No. ST-1738/X-I012-1963 dated
June 1, 1963. The Sales Tax Officer, (Section IV), Kanpur, did not accede to
the contentions of the respondent and holding that carbon paper remained paper
even after going through certain chemical processes and that ribbon was a part
of the typewriter, taxed the turnover of carbon paper for the period commencing
from July 1, 1966, to the end of March, 1967 at 6% and that of ribbon at 10%. He,
however, taxed the turnover of carbon paper for the period April 1, 1966 to
June 30, 1966 at 2%.
The validity and correctness of this order in
so far as it related to the levy of tax on carbon paper at 6% and ribbon at 10%
was challenged by the respondent by means of the aforesaid writ petition before
the High Court at Allahabad which by its aforesaid judgment and order allowed
the same and quashed the levy. Hence this appeal.
Appearing in support of the appeal, Mr.
Manchanda has assailed the reasoning and approach of the High Court and has
vehemently urged that carbon paper does not lose its character as paper even
after being subjected to chemical processes and that ribbon is not an accessory
but an essential part of the typewriter. We have carefully considered the
submission made by Mr. Manchanda but find ourselves unable to accept the same.
839 It is well settled that a word which is
not defined in an enactment has to be understood in its popular and commercial
sense with reference to the context in which it occurs.
In Attorney-General v. Winstanley (1), Lord
Tenterden started as follows:
"Now, when we look at the words of an
Act of Parliament, which are not applied to any particular science or art, we
are to construe them as they are understood in common language." In
Grenfell v. Commissioners of Inland Revenue (2) Pollock, J, pointed out:
"As to tile construction of the Stamp
Act, I think it was very properly urged that the statute is not to be construed
according to the strict or technical meaning of the language contained in it,
but that it is to be construed in its popular sense, meaning, of course, by the
words 'popular sense' that sense which people conversant with the subject-matter
with which the statute is dealing would attribute to it." The word 'paper'
admittedly not having been defined either in the U.P. Sales Tax Act, 1948 or
the Rules made there under, it has to be understood according to the aforesaid
well established canon of construction in the sense in which persons dealing in
and using the article understand it. It is, therefore, necessary to know what
is paper as commonly or generally understood. The said word which is derived
from the name of reedy plant papyrus and grows abundantly along the Nile river
in Egypt is explained in 'The Shorter Oxford English Dictionary (Volume 2)
(Third Edition) as "a substance composed of fibres interlaced into a
compact web, made from linen and cotton rags, straw, wood, certain grasses,
etc., which are macrated into a pulp, dried and pressed; it is used for
writing. printing, or drawing on, for wrapping things in, for covering the
interior of wails, etc." In 'Encyclopedia Britannica', (Volume 13), (15th
Edition), 'paper' has been defined as the basic material used for written
communication and the dissemination of information." In the Unabridged
Edition of "The Randon House Dicitionary 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 or for wrapping things, decorating walls etc." From the above
definitions, 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 the
walls. Now carbon paper which is manu (1)  2 Dow & Clark 302=(1901) 6
(2)  1 Ex.D. 242 at 248.
840 factured by coating the tissue paper with
a thermo-setting ink (made to a liquid consistency) based mainly on wax, non
drying oils, pigments and dyes by means of a suitable coating roller and
equalising rod and then passing it through chilled rolls cannot be used for the
aforesaid purposes but is used. according to 'The Randon House Dictionary of
the English Language' between two sheets of plain paper in order to reproduce
on the lower sheet that which is written or typed on the upper sheet i.e.
making replicas or carbon copies cannot properly be described as paper.
It will be well at this stage to refer to a
few decisions which confirm our view.
In Kilburn & Co. Ltd. v. Commissioner of
Sales Tax U.P., Lucknow(I) a Bench of Allahabad High Court while examining the
very same entry in the Notification with which we are concerned in the instant
case and holding that "Ammonia paper and ferro paper used for obtaining
prints and sketches of site plans are not paper us understood generally and,
therefore, will not come within the expression 'paper other than hand-made paper'
as used in Notification No. ST 3124/X-1012(4) dated 1st July, 1966, issued
under section 3-A of the U.P. Sales Tax Act, 1948" observed :-"The
word 'paper' has not been defined in the Act or the Rules, and, as such, it has
to be given the meaning which it has in 'ordinary parlance. Paper, as
understood in common parlance, is the paper which is used for printing. writing
and packing purposes." In Sree Rama Trading Company v. State of Kerala(2)
the High Court of Kerala after a good deal of research held that cellophane is
not paper coming within entry 42 in the First Schedule to the Kerala General
Sales Tax Act, 1963, as it stood at the time relevant to the year 1966-67.
In State of Orissa v. Gestetner Duplicators
(P) Ltd.(3) the HIgh Court of Orissa held that stencil paper was not paper
within the meaning of serial No. 7-A of the Schedule to the Notification issued
by the State Government under the first proviso to section 5(1)'of the Orissa
Sales Tax Act, 1947 and that sale of stencil paper was, therefore, not taxable
at the rate of 7 per cent but is exigible to tax at the rate of 5 per cent.
In Commissioner of Sates Tax, U.P, v.S.N.
Brothers(1) this Court while upholding the decision of the Allahabad High Court
which held that 'food colours' and 'syrup essences' arc .edible goods while
'dyes and colours and compositions thereof and 'scents and perfume' did not
seem prima facie to connote that they are edible goods observed:
(1) 31 S.T.C. 625. (2) 28 S.T.C. 469.
(3) 33 S.T.C. 333. (4) 31 S.T.C. 302.
841 "The words 'dyes and. colours' used
in entry No. 10 and the words: scents and perfumes' used in entry No. 37 have
to be construed in their own context and in the sense, as ordinarily understood
and attributed to these words by people usually conversant with and dealing in
such goods. Similarly, the words "food colours" and "syrup
essences", which are descriptive of the class of goods the sales of which
are to be taxed under the Act, have to be construed in the sense in which they
are popularly understood by those who deal in them and who purchase and use
them." Bearing in mind the ratio of the above mentioned decisions, it is
quite clear that the mere fact that the word 'paper' forms part of the
denomination of a specialised article is not decisive of the question whether
the article is paper as generally understood.
'the word 'paper' in the common parlance or
in the commercial sense means paper which is used for printing, writing or
packing purposes. We are, therefore, clear of opinion that Carbon paper is not
paper as envisaged by entry 2 of the aforesaid Notification.
Regarding ribbon also to which the above
mentioned rule construction equally applies, we have no manner of doubt that it
an accessory and not a part of the typewriter (unlike spool) though it may not
be possible to use the latter without the former. Just as aviation petrol is
not a part of the aero plane nor diesel is a part of a bus in the same way,
ribbon is not a part of the typewriter though it may not be possible to type
out any matter without it.
The very same question with which we are here
confronted came up for decision before the High Court of Mysore in State of
Mysore v. Kores (India)Ltd. (1) where it was held:
"Whether a typewriter ribbon is a part
of a typewriter is to be considered in the light of what is meant by a
typewriter in the commercial sense. Typewriters are being sold in the market
without the typewriter ribbons and therefore typewriter ribbon is not an essential
part of a typewriter so as to attract tax as per entry 18 of the Second
Schedule to the Mysore Sales Tax Act, 1957." For the foregoing reasons, we
do not find any force in this appeal which is dismissed but in the
circumstances of the case without any order as to costs.
M.R. Appeal dismissed (1) 26 S.T.C. 87.