Hindustan Aluminium Corporation Ltd. Vs.
State Of Uttar Pradesh & ANR [1981] INSC 131 (28 July 1981)
TULZAPURKAR, V.D.
TULZAPURKAR, V.D.
PATHAK, R.S.
CITATION: 1981 AIR 1649 1982 SCR (1) 129 1981
SCC (3) 578 1981 SCALE (3)1130
CITATOR INFO :
R 1989 SC 644 (18) RF 1992 SC 422 (3)
ACT:
U.P. Sales Tax Act 1948-Section 3A (2) and
notifications issued there under-Scope of.
Interpretation-Words of common parlance used
in a Sales Tax Act-How interpreted.
HEADNOTE:
Pursuant to a circular issued by the Commissioner
of Sales Tax that aluminium ingots only should be taxed at the lower rate and
that all other items like rods, bars, rolled products, extrusion sections etc.
should be taxed at higher rates as unclassified items, the Sales Tax Officer
taxed aluminium ingots manufactured by the appellant at the lower rate; and
treating the remaining products manufactured by them as unclassified items
taxed them at the higher rate.
The High Court, dismissing the appellant's
writ petition impugning the assessment made by the Sales Tax Officer, held that
while aluminium ingots, wire bars and billets would fall in the category of
"metals and alloys", rolled products prepared by rolling ingots and
extrusions manufactured from billets were different commercial commodities from
the ingots and billets and that they fell outside the category of "metals
and alloys". The method of assessment made by the Sales Tax Officer was,
therefore, upheld.
In appeal to this Court it was contended that
the High Court erred in holding that the rolled products and extrusions were
new commercial commodities, distinct from the aluminium ingots and billets from
which they were prepared and that they represented the marketable form merely
of ingots and billets.
Dismissing the appeal,
HELD: The expression 'metal' has been
generally employed in the relevant notifications to refer to the metal in its
primary sense i.e. in the form in which it is marketable as a primary
commodity. Subsequent forms evolved from the primary form and constituting distinct
commodities marketable as such must be regarded as new commercial commodities.
In all the relevant notifications, therefore, the framers followed the scheme
that one clause dealt with metal in its original saleable form and another
separate clause dealt with fabricated forms in which it was saleable as a new
commodity. Aluminium ingots and billets are saleable commodities as such in the
market. When such a notification refers to a metal it refers to the metal in
the primary or original form in which it is saleable and not to any
subsequently fabricated form. [133 H; 134 F] 130 The word "all"
occuring in "all kinds of minerals, ores, metals and alloys including
sheets..." in the notification cannot be interpreted to include even subsequently
fabricated forms of the metal, for such an interpretation would be inconsistent
with the scheme of the notifications. While broadly a metal in its primary form
and a metal in its subsequently fabricated form may be said to belong to the
same genus, the distinction made between the two constitutes a dichotomy of
direct significance to the controversy in the instant case. [135 B-C] Having
regard to the scheme followed in the framing of the notifications, the
expression "including" does not enlarge the meaning of the word
"metal". It must be understood in a conjunctive sense, as a
substitute for "and". [134 H] Devi Dass Gopal Krishnan and Others v.
The State of Punjab and Others [1967] 20 S.T.C. 430 followed.
Tungabhadra Industries Ltd., Kurnool v.
Commercial Tax Officer, Kurnool [1960] 11 S.T.C. 827 and State of Madhya Bharat
(now State of Madhya Pradesh) and Others. v. Hiralal [1966] 17 S.T.C. 313
distinguished.
State of Tamil Nadu v Pyare Lal Malhotra
[1976] 37 S.T.C. 319 and 325, & Maharaja Book Depot v. State of Gujarat
[1979] 2 S.C.R. 138 referred to.
State of Gujarat v. Shah Velijibhai
Motichand, Lunawada [1969] 23 S.T.C. 288 not approved.
A word describing a commodity in a sales tax
statute should be interpreted according to its popular sense, the sense in
which people conversant with the subject matter with which the statue is
dealing would attribute to it.
Words of everyday use must be construed not
in their scientific or technical sense but as understood in common parlance.
But what is relevant in the circumstances of the present case is the manner in
which these and similar expressions have been employed by those who framed the
relevant notifications and with the inference that can be drawn from the
particular arrangement of the entries in the notifications. The intent must be
derived from a contextual scheme. [133 D-F] Porritts & Spencer (Asia) Ltd.
v. State of Haryana [1978] 42 S.T.C. 433 followed.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 2014 to 2016 of 1977 Appeals by special leave from the judgment and order
dated the 17th November, 1976 of the Allahabad High Court in Civil Misc. Writ
Nos. 107, 108, & 357 of 1976.
S.S. Ray, Depankar Gupta, Raja Ram Agarwal,
O.P. Khaitan, N.R. Khaitan, Bharat Ji Agarwal, Mrs. Neelam Thakur and Umesh
Khaitan for the Appellants.
131 S.C. Manchanda, R. Ramchandran and O.P.
Rana for the Respondent.
The Judgment of the Court was delivered by
PATHAK, J: These appeals by special leave raise the question whether aluminium
rolled products and extrusions can be described as "metal" for the
purposes of the notifications dated December 1, 1973 and May 30, 1975 issued
under the U.P. Sales Tax Act, 1948.
The appellant, the Hindustan Aluminium
Corporation Limited, carries on the business of manufacturing and dealing in
aluminium metal and various aluminium products.
On December 1, 1973 the State of Uttar
Pradesh notified under section 3-A (2) of the U.P. Sales Tax Act, 1948 that the
turnover in respect of the following goods set forth in item No. 6 of the
attached schedule would be liable to tax at all points of sale at 3 1/2%-
"6. All kinds of minerals and ores and alloys except copper, tin, zinc,
nickel or alloy of these metals only." On May 30, 1975 the State of Uttar
Pradesh published a notification, under section 3A (2-A) of the Act, in which
item No. 1 of the schedule read as follows:
"1. All kinds of minerals, ores, metals
and alloys except those included in any other notification issued under the
Act." and a rate of 2% was prescribed. The notification dated December 1,
1973 was amended and item No. 6 was deleted.
On August 14, 1975 the U.P. Legislature
enacted the U.P. Sales Tax (Amendment and Validation) Act, 1975 section 31 (7)
of which amended the aforesaid notification of May 30, 1975 retrospectively, so
that it would be deemed always to have read as follows:- "1. All kinds of
minerals, ores, metals, and alloys including sheets and circles used in the
manufacture of brass 132 wares and scraps containing only any of the metals,
copper, tin, zinc, or nickel except those included in any other notification
issued under the Act." On July 11, 1975 the appellant wrote to the Sales
Tax Officer contending that the aluminium ingots, billets, rolled products,
extrusions and other aluminium products manufactured and sold by it up to May
31, 1975 fell within item No. 6 of the notification dated December 1, 1973 and
thereafter their sale was covered by item No. 1 of the notification dated May
30, 1975. However, the Commissioner of Sales Tax, U.P. issued a circular on
October 15, 1975 to all Sales Tax Officers advising that aluminium ingots only
should be taxed as "metal", and in regard to other items such as
rods, bars, rolled products, extrusion sections tax at the rate of 7% would be
payable as on unclassified items.
On December 30, 1975, the Sales Tax Officer
made provisional assessments under rule 41(3), U.P. Sales Tax Rules, 1948 for
the quarters ending June 30, 1975 and September 30, 1975. The Sales Tax Officer
applied a rate of 3-1/2% under the Notification of December 1, 1973 to
aluminium ingots only and treated the remaining products as unclassified items
attracting sales tax at 7%. Similarly under the Notification of May 30, 1975 a
rate of 2% was applied to the turnover of aluminium ingots while the remaining
products were charged to tax at 7% as unclassified items.
The appellant filed a writ petition in the
Allahabad High Court against the provisional assessments. During the pendency
of the writ petition the Sales Tax Officer made a final assessment order for
the assessment year 1975-76 on August 3, 1976. The writ petition was amended in
the High Court and relief was now sought against the final assessment order. On
November 17, 1976 the High Court passed judgment on the writ petition holding
that while aluminium ingots, wire bars and billets would fall in the category
"metals and alloys", rolled products prepared by rolling ingots and
extrusions manufactured from billets must be regarded as different commercial
commodities from the ingots and billets and therefore outside the category of
"metals and alloys".
The rolled products included plates, coils,
sheets, circles and strips. The extrusions were manufactured in the shape of
bars, rods, structurals, tubes, angles, channels and different types of
sections. In regard to properzi redraw rods, the High Court considered that a
further 133 enquiry was necessary and therefore directed the Sales Tax Officer
to re-examine the matter.
The present appeals are directed against the
part of the High Court judgment refusing relief in regard to rolled products
and extrusions. It is vehemently contended that the High Court has erred in
holding that the rolled products and extrusions are new commercial commodities
distinct from the aluminium ingots and billets from which they are prepared.
It is urged that they represent the
marketable form merely of ingots and billets. We have been referred to a number
of documents and publications as well as the Aluminium (Control) Order, 1970,
and the submission is that when reference is made to aluminium as a metal it
includes rolled products and extrusion products.
We are not satisfied that the appellant is
right. There is no doubt that, as laid down by this Court in Porritts &
Spencer (Asia) Ltd. v. State of Haryana, a word describing a commodity in a sales
tax statute should be interpreted according to its popular sense, the sense
being that in which people conversant with the subject matter with which the
statute is dealing would attribute to it. Words of everyday use must be
construed not in their scientific or technical sense but as understood in
common parlance. That principle has been repeatedly reaffirmed in the decisions
of this Court. It holds good where a contest exists between the scientific and
technological connotation of the word on the one hand and its understanding in
common parlance on the other. We are here concerned, however, with a very
different situation. We are concerned, with the manner in which these and
similar expressions have been employed by those who framed the relevant notifications,
and with the inference that can be drawn from the particular arrangement of the
entries in the notifications. We must derive the intent from a contextual
scheme.
Section 3A of the U.P. Sales Tax Act empowers
the State Government to prescribe, by notification, the rate, and the point at
which the tax may be imposed on the sale of a commodity. A consideration of the
notifications issued from time to time will show that the expression
"metal" has been generally employed to refer to the metal in its primary
sense. The reference is to the metal in the form in which it is marketable as a
primary commodity. Subsequent 134 forms evolved from the primary form and
constituting distinct commodities marketable as such must be regarded as new
commercial commodities. The notification No. ST-2631/X- 902 (64)-50 of November
21, 1952, for example, sets forth two clauses:
(a) Copper, tin, nickel, or zinc or any
alloy, containing any of these metals only, and (b) Scrap, meant for melting,
and sheets including circles meant for making brass-ware, and containing only
any or all of the said metals, viz., copper, tin, nickel and zinc.
It is clear that while clause (a) makes
specific reference to certain metals, clause (b) separately sets forth the
products which emerge as a result of processing the original metal. Clause (b)
speaks of sheets, including circles meant for making brass-ware, and containing
only any or all of the metals specified in clause (a). A sheet of copper only
or tin only or nickel only or zinc only is regarded as belonging to a distinct
entry in the notification from copper, tin, nickel or zinc in its unfabricated
from. This schematic arrangement has been followed in notification No. ST-3500/X
dated May 10, 1956, notification No. 1366/X-990- 1956, dated April 1, 1960 and
notification No. St-9377/X-906 (AB-4)-1971 dated October 6, 1971. In all those
notifications the framers of the notifications followed the scheme that one
clause dealt with the metal in its original saleable form and another separate clause
dealt with fabricated forms in which it was saleable as a new commodity. It is
admitted before us on behalf of the appellant that aluminium ingots and billets
are saleable commodities as such in the market. In the circumstances the
inference is irresistible that when such a notification refers to a metal, it
refers to the metal in the primary or original form in which it is saleable and
not to any subsequently fabricated form. It is true that in the notification
dated May 30, 1975, as amended retrospectively on August 14, 1975, the entry
reads:
"All kinds of minerals, ores, metals and
alloys including sheets and circles used in the manufacture of brass wares and
scraps containing only any of the metals, copper, tin, zinc, or nickel except
those included in any other notification issued under the Act." But here,
the expression "including" does not enlarge the meaning of the word
"metal" and must be understood in a conjunctive sense, 135 as a
substitute for "and". This is the reasonable and proper construction
having regard to the scheme followed in the framing of notifications.
It is urged that item No. 6 in the
notification of 1973 and Item No. 1 in the notification of 1975 speak of
"all kinds of minerals, ores, metals and alloys" and, it is said, the
word "all" should be given its fullest amplitude so as to include
even subsequently fabricated forms of the metal.
It seems to us that the construction
suggested is inconsistent with the scheme to which we have referred.
While broadly a metal in its primary form and
a metal in its subsequently fabricated form may be said to belong to the same
genus, the distinction made between the two constitutes a dichotomy of direct
significance to the controversy before us.
The question whether rolled steel sections are
a different commodity from scrap iron ingots was considered by this Court in
Devi Das Gopal Krishnan and Others v. The State of Punjab and Others, and this
Court had no hesitation in holding that when scrap iron ingots are converted
into rolled steel sections they go through a process of manufacture which
brings into existence a new marketable commodity. We are of the opinion that
the same conclusion must follow when aluminium ingots and billets are converted
into aluminium rolled products and extrusion products.
Learned counsel for the appellant places
reliance on Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer,
Kurnool where this Court took the view that hydrogenated "groundnut
oil" commonly called Vanaspati was "ground nut oil" within the
meaning of rule 18(2) of the Madras General Sales Tax (Turnover and Assessment)
Rules, 1939. In that case, the Court was of opinion that the process of
hydrogenation did not alter the essential identity of the oil, and reference
was made to the broad compass of the expression "groundnut oil",
besides the circumstance that the use to which the original groundnut oil could
be put would also be the use to which the hydrogenated oil could be applied. It
seems to us that the case is distinguishable. We then turn to State of Madhya
Bharat (now the State of Madhya Pradesh) and Others v. Hiralal, the next case
placed before us. This Court held that scrap iron, when put through a process
of re-rolling to produce attractive and acceptable forms of iron and steel in
the shape of 136 bars, flats and plates, must be regarded as continuing to be
"iron and steel" for the purpose of the notification issued under the
Madhya Bharat Sales Tax Act. The case, however, has been distinguished by this
Court in State of Tamil Nadu v. Pyare Lal Malhotra on the ground that the
nature of the raw material from which the goods were made was the decisive
criterion for deciding the earlier case. It observed - "The language of
the notification involved there made it clear that the exemption was for the
metal used. In the cases before us now, the object of single point taxation is
the commercial commodities and not the substance out of which it is made. Each
commercial commodity here becomes a separate object of taxation in a series of
sales of that commercial commodity so long as it retains its identity as that
commodity." And the Court then referred with approval to Devi Dass Gopal
Krishnan (supra).
Our attention has been invited to State of
Gujarat v. Shah Veljibhai Motichand, Lunawada where the Gujarat High Court held
that corrugated iron sheets were merely "iron" in another shape and
form and could not be regarded as articles or products manufactured or
fabricated out of iron. We have perused the three judgments delivered in that
case but it seems to us that the majority opinion is of doubtful validity,
specially having regard to the observations of this Court made in Pyare Lal
Malthora (supra).
We are also referred to Maharaja Book Depot
v. State of Gujarat. This Court held that an exercise book is "paper"
as defined in s. 2(a) (vii) of the Essential Commodities Act, 1955 and Item 13
in Schedule I to the Gujarat Essential Articles Dealers (Regulation) Order
1971. The Court accepted that construction on the ground that it would be in
consonance with and would carry out effectively the object or purpose of the
Act and the Regulation Order. It is desirable to recall that the Essential
Commodities Act was enacted to control the distribution and price of essential
commodities. A sufficiently comprehensive interpretation was called for 137 in
order that all products essential to the community which would reasonably fall
within the scope of the definition could be covered.
Learned counsel for the appellant relies on
the wide definition of the word "aluminium" in the Aluminium
(Control) Order, 1970, but we must remember that the word has been given the
broad definition set out there only for the purposes of that Control Order. It
cannot be pressed into service for resolving the controversy before us.
Learned counsel for the appellant also relies
on the Glossary of Terms for Aluminium and Aluminium Alloys prepared by the
Indian Standards Institution(1), the Glossary of Terms prepared by the British
Standards Institution(2), Engineering Metallurgy(3), Non-Ferrous Metals and
their Alloys(4), Metal Industry: Hand Book and Directory, 1962 and allied
literature. In considering the material, it is necessary to caution ourselves
that the literature is concerned with conceptions particular to the aluminium
industry, while we are here concerned with the application of a sales tax
statute.
Finally, it is urged that two interpretations
are possible of the relevant entries in the notifications of 1973 and 1975 and
therefore the interpretation favourable to the dealer should be adopted. We are
of the definite opinion that the only interpretation possible is that aluminium
rolled products and extrusions are regarded as distinct commercial items from
aluminium ingots and billets in the notifications issued under the U.P. Sales
Tax Act.
In the result, the appeals fail and are
dismissed with costs.
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