Sales Tax, U.P Vs. M/S. Bharat Bone Mill  Insc 159 (20 February 2007)
S.B. Sinha & Markandey Katju
(Arising out of SLP(C) No. 25232/2004) S.B. Sinha, J.
Whether a 'crushed bone' can be treated to be 'fertilizer' is the question
involved in this appeal arising out of a judgment and order dated 20.10.2003
passed by a learned Single Judge of the Allahabad High Court in Sales Tax
Revision No. 1570 of 1990 whereby and whereunder the revision petition filed by
the appellant herein was dismissed.
Respondent herein is engaged in manufacture of crushed bone. It runs a bone
mill for the above-mentioned purpose.
The question as to whether crushed bone-meal would come within the
definition of the term "fertilizer" must be considered having regard
to some notifications issued by the State of Uttar Pradesh from time to time.
By a notification dated 16.07.1956, 'Fertilizers' other than 'Chemical
Fertilizers' were exempted from payment of sales tax by the State in exercise
of its powers conferred upon it under the U.P. Sales Tax Act, 1948. However, by
reason of a notification dated 10.3.1970, 'Chemical Fertilizers' were also
brought within the purview of exemption from payment of sales tax. By a
notification dated 31.03.1976 a taxing entry was introduced in the Schedule
appended to the notification dated 15.11.1971 in terms whereof sale of 'bone to
consumer' was exigible to sales tax of 6 per cent. Yet, in terms of 7.09.1981,
the Schedule appended to the said Act was amended; the relevant entries being 8
and 10 read as under:- "Sl. No. Description of goods Point of tax Rate of
Bones Sale to consumer 6% 10.
Chemical fertilizers M or I 5% "
It is in the aforementioned context, the question as to whether 'crushed
bone' would answer the description of 'fertilizer' or not is required to be
considered. We may notice that the High Court in view of some decisions
rendered by the Tribunal as also a decision of the learned Single Judge of the
M.P. High Court in Commissioner of Sales Tax, Madhya Pradesh v. Sagar Bone
Mills, Sagar : No. 1 [18 STC 338] opined that 'crushed bone' would come within
the purview of 'fertilizer'. Reference was also made to a decision of a learned
Single Judge of the said Court in CST v. Crusher and Fertilizer Company [1985
Mr. Kavin Gulati, learned counsel appearing on behalf of the appellant,
would submit that the High Court committed a serious error in arriving at the
said conclusion relying on or on the basis of the decisions of the M.P. High
Court in Sagar Bone Mills (supra) and the Allahabad High Court in Crusher and
Fertilizer Company (supra).
In Sagar Bone Mills (supra), the Madhya Pradesh High Court stated the law,
"It cannot be denied that bone-meal or crushed bones are "bones of
animals" which include powdered bones.
The three entries referred to earlier must be read harmoniously, and, so
read, their effect is clearly to impose sales tax on bones of animals which
include crushed bones and bone-meal.
In coming to the conclusion that the question whether crushed bone or
bone-meal manufactured by the assessee was "fertilizer" for the
purpose of the Sales Tax Acts should be determined with reference to the
definition of "fertilizer" given in the Fertilizer (Control) Order,
1957, the Sales Tax Tribunal altogether overlooked the settled rules of
construction about the meaning of words used in different statutes. It is
firmly settled that the interpretation or definition clause occurring in a
statute can be used only for the purpose of interpreting words appearing in
that statute and not for the purpose of interpreting words appearing in other
statutes. To take a word bearing a peculiar meaning in a particular Act and to
clothe that word with the same meaning when found in different context in a different
Act is a fallacious process of interpretation. The Tribunal was, therefore, not
justified in pressing into service the definition of "fertilizer"
given in the Fertilizer (Control) Order, 1957-a statutory provision, the scope
and object of which is altogether different from the Sales Tax Act. The
Tribunal was, therefore, in error in remanding the matter to the Sales Tax
Officer for a fresh decision after determining whether the produce manufactured
by the assessee was or was not a "fertilizer" according to the
definition of that term given in the Fertilizer (Control) Order, 1957."
The said view was approved by a Full Bench of the said Court in The Ratlam
Bone & Fertilizer Co. v. The State of Madhya Pradesh and Another [35 STC
In Yasin Bone Mills v. State of U.P. and Another [46 STC 112 : 1980 UPTC
450], the Allahabad High Court considered a report of the Directorate of
Marketing and Inspection, Ministry of Food and Agriculture, Government of
India, in terms whereof four products were obtained from bones known as: (1)
Bones sinews, (2) Crushed bones, (3) Bone grits, and (4) Bone meal.
The characteristics of the said four products from bones are said to be
different. The learned Judges also referred to the Standard Cyclopedia of
Modern Agriculture, wherein a distinction had been drawn between 'bone meal'
and 'crushed bone', on the basis whereof it was opined :
"As noted above in the instant case the assessee is dealing in
crushed bones and not bone-meal. The distinction between the two-commodities is
quite clear on the basis of the information contained in the report of the
Directorate of Marketing and Inspection, Ministry of Food and Agriculture,
Government of India and the Standard Cyclopaedia of Modern Agriculture referred
to above. It is not possible, therefore, to hold that crushed bones are
fertilisers. Apart from this the assessee himself does not appear to have been
making sales of crushed bones as fertilisers. This commodity is not sold by the
assessee in the country and the turnover of the years under consideration goes
to show that almost the whole of it was in the form of exports to foreign
countries. As noted above crushed bones are meant for use as raw material in
the manufacture of glue and gelatine, the industries which have not developed
to any appreciable extent in India and, hence, this commodity has to be
exported to countries outside India."
Therein reliance was placed on the opinions of some experts to establish
'crushed bone' and 'fertilizers'. The Court, however, found the report of the
Directorate of Marketing and Inspection more creditworthy, opining that
bone-meal and not crushed bones can be treated as fertilizers.
Moreover, it is well-known that the question as to whether a commodity would
be exigible to sales tax or not must be considered having regard to its
identity in common law parlance. If, applying the said test, it is to be borne
in mind that if one commodity is not ordinarily known as another commodity;
normally, the provisions of taxing statute in respect of former commodity which
comes within the purview of the taxing statute would be allowed to operate. In
any event, such a question must be determined having regard to the expert
opinion in the field. We have noticed hereinabove the difference between 'bone
meal' and 'crushed bone'.
Different utilities of the said items has also been noticed by the Allahabad
High Court itself. The High Court or for that matter, the Tribunal did not have
the advantage of opinion of the expert to the effect as to whether crushed
bones can be used only for the purpose of fertilizer or whether crushed bones
are sold to the farmers for use thereof only as fertilizer.
For the reasons aforementioned, we set aside the orders of the Assessing
Authorities including that of the High Court. However, we intend to leave the
question open for subsequent cases, if any.
There is another aspect of the matter, notice whereof must be taken by us,
viz., the Assessing Authority proceeded to determine the taxability in view of
the decisions, as were prevailing. It sought to rectify its order keeping in
view the subsequent decisions. The question which arose for consideration
before the Tribunal was as to whether the Assessing Authority could pass such
an order having regard to the power of rectification in terms of Section 22 of
This aspect of the matter has been considered in The Income Tax Officer,
Alwaye v. The Asok Textiles Ltd., Alwaye [(1961) 3 SCR 236] wherein it was held
that the provisions for rectification of "mistakes apparent on the
record" cannot be equated with a power of a civil court to review its own
order as envisaged under Order XLVII Rule 1 of the Code of Civil Procedure
"The learned Judges of the High Court seem to have fallen into an error
in equating the language and scope of s. 35 of the Act with that of O.47, r.1,
Civil Procedure Code. The language of the two is different because according to
s. 35 of the Act which provides for rectification of mistakes the power is
given to the various income-tax authorities within four years from the date of
any assessment passed by them to rectify any mistake "apparent from the
record" and in the Civil Procedure Code the words are "an error
apparent on the face of the record" and the two provisions do not mean the
The appeal is allowed with the aforementioned observations. No costs.
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