M/s. Bansal Wire
Industries Ltd. & ANR Vs. State of U.P. & Ors
JUDGMENT
Dr. Mukundakam
Sharma, J.
1.
Leave
granted.
2.
The
issue that falls for consideration in these appeals is, as to whether the
`stainless steel wire' falls under the category, "tools, alloys and special
steels of any of the above categories" enumerated in entry no. (ix) of clause
(iv) of Section 14 of the Central Sales Tax Act, 1956 (for short the "Central
Act") and therefore the following question emerges for our consideration:-
"Whether stainless
steel wire, a product of the appellant, on a proper reading of Section 14 of the
Central Sales Tax Act along with the qualifying words `that is to say' would
fall under the category "tools, alloy and special steels of any of the above
categories" enumerated in entry no. (ix) of clause (iv) or under entry no.
(xv) of same clause (iv)"
3.
In
all these appeals identical issues are involved. We therefore, proceed to dispose
of all these appeals by this common Judgment and Order. In order to arrive at a
finding on the issue raised, it will be necessary to set out certain facts
leading to filing of the present appeals.
4.
The
appellant is a Public Limited Company incorporated under the Indian Companies
Act, 1956 and is engaged in the business of manufacture and sales of
"stainless steel wires". An assessment order was passed under Rule
41(8) of the UP Trade Tax Rules for the assessment year 1999-2000 under the UP
Trade Tax Act, 1948 (for short "the UP Act") as well as under the
Central Act. As per the said assessment order, the tax on sales of "stainless
steel wire" was levied @ 4% and sales covered by Form 3-kh were taxed @
2%.
5.
The
respondent, however, thereafter held that the sales of "stainless steel wire"
has wrongly been taxed @ 4% treating the same as a "declared commodity"
and that in fact "stainless steel wire" is not a declared commodity
because it is outside the ambit of "Iron and Steel", which is a
declared commodity under Section 14 of the Central Act.
6.
In
view of the satisfaction arrived at by the respondent, a proposal was sent to the
Additional Commissioner, Grade-I, Trade Tax, Ghaziabad Zone, Ghaziabad requesting
him for permission to re-open the case of the appellant for the assessment year
1999-2000.
7.
The
Additional Commissioner, Grade-I, Trade Tax, Ghaziabad Zone, Ghaziabad issued a
notice dated 22.03.2006 directing the appellant to show cause as to why the
permission should not be granted to the assessing authority for re-opening of the
case under Section 21(2) of the UP Act.
8.
Respondent
No. 3 on 24.3.2006 issued a notice under Section 10-B of the U.P. Act for
revising the assessment order passed for the assessment year 2000-01. The appellant
states that similar notices for the assessment years 2001-02 and 2002-03 were also
issued to the appellant by Respondent No. 3.
9.
The
appellant filed its reply dated 27.3.2006 to the notice dated 24.3.2006 and, inter
alia, stated that "stainless steel wire" is a declared commodity
under clause (iv) of Section 14 of the Central Act, hence in view of Section 15
thereof, no tax can be imposed on the declared commodities in excess of 4%. The
appellant had also submitted identical replies to the notices relating to assessment
years 2001-02 and 2002-03 respectively.
10.
After
considering the reply as furnished by the appellant, the Additional Commissioner,
Grade-I, Trade Tax, Ghaziabad Zone, Ghaziabad by its order dated 27.03.2006 granted
permission to the assessing authority to re-open the case under Section 21(2) of
the UP Act for the assessment year 1999-2000.
11.
Being
aggrieved by the issuance of the aforesaid notice, the appellant herein filed a
Writ Petition before the Allahabad High Court, which was registered as Writ
Petition No. 770 of 2006, wherein, the respondent filed a counter affidavit. The
Allahabad High Court, thereafter heard the counsel appearing for the parties and
by its judgment and order dated 21.05.2010 dismissed the Writ Petition holding that
the "stainless steel wire" is not covered under the item "tools,
alloys and special steel" on entry no. (ix) and, therefore, does not fall
under "Iron and Steel" as defined under clause (iv) of Section 14 of the
Central Act and therefore the provision of Section 15 of the Central Act does
not apply.
12.
Being
aggrieved by the judgment and order dated 21.05.2010 passed by the Allahabad
High Court, the present appeals were filed by the appellants on which we heard the
learned counsel appearing for the parties.
13.
The
learned counsel appearing for the parties during the course of their
submissions relied upon various notifications, some of which are required to be
extracted at this stage.
14.
The
first reference that was made was to the notification dated 26.10.1991. The aforesaid
notification was issued by respondent No. 1 in exercise of powers under clause (d)
of sub-section (1) of section 3-A of the U.P. Act, whereby under Item 7, Sheets
and Circles made wholly or principally of stainless steel and all remaining articles
(excluding wares and surgical instruments) made wholly or principally of stainless
steel were taxable @ 12%. The relevant part of the said notification is extracted
herein below:
|
S.No.
|
Description
of goods
|
Point
of tax
|
Rate
of tax percentage
|
|
(a)
|
Sheets
and circles made wholly or principally of stainless steel.
|
M or
I
|
12%
|
|
(b)
|
All
remain articles (excluding wares and surgical instruments) made wholly or
principally of stainless steel."
|
M or
I
|
12%
|
15.
Subsequently
another notification dated 23.11.1998 was issued by Respondent No. 1 by exercising
power under clause (d) of sub-section (1) of section 3-A of the U.P. Act, whereby
under Item 7, Sheets and Circles made wholly or principally of stainless steel
and all remaining articles (excluding wares and surgical instruments) made wholly
or principally of stainless steel were taxable @ 15% and steel wires were sought
to be taxed @ 15% presuming to be an article made of stainless steel.
|
S.No.
|
Description
of goods
|
Point
of tax
|
Rate
of tax percentage
|
|
(i)
|
Sheets
and circles made wholly or principally of stainless steel.
|
M or
I
|
15%
|
|
(ii)
|
All
remain articles (excluding wares and surgical instruments) made wholly or
principally of stainless steel."
|
M or
I
|
15%
|
The relevant part of the
said notification is extracted herein below:
16.
Later,
on 15.01.2000, Respondent No. 1 issued a notification superseding the notifications
dated 26.10.1991 and 23.11.1998 respectively, and Item No. 8 of the said notification
provided for levy of tax @ 15% on sheets and circles made wholly or
principally of stainless steel and also all remaining articles excluding ware and
surgical instruments made wholly or principally of stainless steel @ 15 %.
The relevant part of the
said notification is extracted herein below:
|
S.No.
|
Description
of goods
|
Point
of tax
|
Rate
of tax percentage
|
|
(i)
|
Sheets
and circles made wholly or principally of stainless steel.
|
M or
I
|
15%
|
|
(ii)
|
All
remain articles (excluding wares and surgical instruments) made wholly or
principally of stainless steel."
|
M or
I
|
15%
|
17.
Section
14 (iv) of the Central Act is the relevant provision in the present appeals and
we therefore extract the relevant portion of Section 14 (iv) of the Central Act
and the same is as under: -
"14. Certain
goods to be of special importance in inter-State trade or commerce. - It is hereby
declared that the following goods are of special importance in inter-State
trade or commerce, - xxxxxxxxxxxxxxxxx (iv) iron and steel, that is to say, -
i.
pig
iron and caste iron including ingot moulds, bottom, plates, iron scrap, caste iron
scrap, runner scrap and iron skull scrap;
ii.
steel
semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes);
iii.
skull
bars, tin bars, sheet bars, hoe-bars and sleeper bars;
iv.
steel
bars (rounds, rods, squares, flats, octagons and hexagons, plain and ribbed or twisted,
in coil form as well as straight lengths);
v.
Steel
structurals (angels, joists, channels, tees, sheet piling sections, sections or
any other rolled sections);
vi.
sheets,
hoops, stripe and skelp, both black and galvanized, hot and cold rolled, plain and
corrugated, in all qualities, in straight lengths and in coil form, as rolled and
in riveted condition;
vii.
plates
both plain and chequered in all qualities;
viii.
discs,
rings, forgings, and steel castings;
ix.
tool,
alloy and special steels of any of the above categories;
x.
steel
melting scrap in all forms including steel skull, turnings and borings;
xi.
steel
tubes, both welded and seamless, of all diameters and lengths, including tube
fittings;
xii.
tin-plates,
both hot dipped and electrolytic and tin free plates;
xiii.
fish
plates bars, beaming plate barn, crossing sleeper bars, fish plates, bearing plates,
crossing sleepers and pressed steel sleepers, rails heavy and light crane
rails;
xiv.
wheels,
tyres, axles and wheel sets;
xv.
wire
rods and wires-rolled, drawn, galvanized, aluminized, tinned or coated such as
by copper;
xvi.
defectives,
rejects, cuttings or end pieces of any of the above categories."
18.
Section
15 of the Central Act is also a relevant provision and the same is extracted
hereunder :-
"15. Restrictions
and conditions in regard to tax on sale or purchase of declared goods within a
State - Every sales tax law of a State shall, insofar as it imposes or authorises
the imposition of a tax on the sale or purchase of declared goods, be subject to
the following restrictions and conditions, namely:-
(a) the tax payable
under that law in respect of any sale or purchase of such goods inside the State
shall not exceed four per cent, of the sale or purchase price thereof,; xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx"
19.
The
Commissioner of Commercial Taxes issued a circular on 25.11.2005 to the Joint
Commissioner Trade Tax, Ghaziabad directing that sale of stainless steel pipe,
tubes, sheets shall not be taxable as declared goods under Section 14 (iv) of
the Central Act since stainless steel is an alloy which consists of nickel etc.
In view of the said circular the Commissioner issued direction to the
authorities under him for proceeding under Sections 21 and 10(b) of the U.P. Act
for initiating the re-assessment proceedings for different years.
20.
The
learned counsel appearing for the appellant submitted before us that the
"stainless steel wire" is one of the species of "Iron and Steel"
and therefore would fall within the aforesaid "declared commodity" and
consequently rate of tax that is leviable on the goods of the appellant is 4% as
originally assessed by the Department itself.
21.
He
also submitted that the expression "Iron and Steel" mentioned in clause
(iv) of Section 14 of the Central Act is a genus and "stainless steel
wire" being a form of "Iron and Steel" is a specie thereof and therefore
such "stainless steel wire" which the appellant produces would come
within the expression of entry no. (xv) stating words "wire rods and wires-rolled,
drawn, galvanized, aluminized, tinned or coated such as by copper" of any kind
of "Iron and Steel" referring to the main expression of clause (iv) and
that the Department had committed an error of law in restricting the expression
of "stainless steel wire" through entry no. (ix), namely,
"tools, alloy and special steels of any of the above categories".
22.
He
also submitted that the Government of India in its Reference No. F No. 24/20/76
ST Department of Revenue and Banking dated 17.11.1976 has clarified that
stainless steel is a type of alloy steel and is, therefore, covered within the
definition of the term "iron and steel" for the purposes of entry no.
(ix) of Section 14(iv) of the Central Act. He further submitted that once the
Central Government has taken a stand, it is not open to the authorities of the
State Government to take a different view. He has also referred to the object and
reason for the amendment which is referred at page 1338 of Chaturvedi's Central
Sales Tax Act, 1956 Vol. I.
23.
The
aforesaid submissions of the counsel appearing for the appellants were however refuted
by the learned counsel appearing for the respondent who relied upon the expression
"that is to say" as used in clause (iv) of Section 14 of the Central Act
to contend that the word `user' makes the expression "Iron and Steel"
exhaustive and restrictive and not an expansive or extensive.
24.
He
also referred to the expression "of any of the above categories" occurring
in entry no. (ix) of clause (iv) of Section 14 of the Central Act contending
inter alia that the said expression plays an instrumental role in determining
the scope and ambit of the aforesaid item. Relying on the same, he submitted
that any product of stainless steel is confined within entry nos. (i) to (ix)
of clause (iv) of Section 14 of the Central Act and it cannot be given a wider meaning
to include "stainless steel wire" in entry No. (xv) of clause (iv) of
Section 14 of the Central Act. He specifically relied upon the decision of this
Court in State of Tamil Nadu vs. M/s. Pyare Lal Mehrotra, reported in (1976)
25.
In
the light of aforesaid submissions made by the counsel appearing for the
parties, we proceed to answer the issue which arises for our consideration by
recording our reasons therefor.
26.
In
the aforesaid decision in Pyare Lal Mehrotra (supra) the very word "that
is to say", as per Section 14 of the Central Act was considered and it was
held that originally expression "that is to say" is employed to make
clear and fix the meaning of what is to be explained or defined and that such
words are not used, as a rule, to amplify a meaning while removing a possible doubt
for which purpose the word "includes" is generally employed. In the
context of Section 14 of the Central Act, this Court in the said decision held that
the expression "that is to say" is used in Section 14 apparently to mean
to exhaustively enumerate the kinds of goods in a given list. It was also held
in the said decision that the purpose of an enumeration in a statute dealing with
sales tax at a single point in a series of sales would, very naturally, be to indicate
the types of goods each of which would constitute a separate class for a series
of sales. In paragraph 15 of the said Judgment, this Court observed as under:
"15. It appears
to us that the position has been simplified by the amendment of the law, as
indicated above, so that each of the categories falling under "iron and steel"
constitutes a new species of commercial commodity more clearly now. It follows that
when one commercial commodity is transformed into another, it becomes a separate
commodity for purposes of sales tax."
27.
Therefore,
in view of the position settled by this Court, it is clearly established that
so far the items as mentioned in clause (iv) of Section 14 of the Central Act is
concerned, each of the categories falling under "iron and steel" constitutes
a new species and each one of them is separate commodity for the purposes of
sales tax.
28.
The
expression "of any of the above categories" appearing in entry Nos. (ix)
and (xvi) of clause (iv) of Section 14 of the Central Act would indicate that they
would each be items referred in the preceding items. Therefore, even the
expression "of any of the above categories" in entry No. (ix) of clause
(iv) would only relate to steel and alloy produced for any of the materials mentioned
in item nos. (i) to (viii). Thus "stainless steel wire" produced by
the appellant cannot be read into item no. (xv) which reads as "wire rods and
wires-rolled, drawn, galvanized, aluminized, tinned or coated such as by
copper".
29.
This
Court in the case of Pyare Lal Mehrotra (supra), in paragraph 5, observed as
under:-
"5. It will be seen
that "iron and steel" is now divided into 16 categories which clearly
embrace widely different commercial commodities, from mere scrap iron and leftovers
of processes of manufacturing to "wires" and "wheels, tyres, axles,
and wheel sets". Some of the enumerated items like "melting scrap"
or "tool alloys" and "special steels" could serve as raw
material out of which other goods are made and others are definitely varieties of
manufactured goods. If the subsequent amendment only clarifies the original intentions
of Parliament, it would appear that Heading (iv) in Section 14, as originally worded,
was also meant to enumerate separately taxable goods and not just to illustrate
what is just one taxable substance: "iron and steel".
The reason given, in the
Statement of Objects and Reasons of the 1972 Act, for an elucidation of the "definition"
of iron and steel, was that the "definition" had led to varying interpretations
by assessing authorities and the courts so that a comprehensive list of specified
declared iron and steel goods would remove ambiguity. The Select Committee, which
recommended the amendment, called each specified category "a item no."
falling under "iron and steel". Apparently, the intention was to
consider each "item no." as a separate taxable commodity for purpose
of sales tax. Perhaps some items could overlap, but no difficulty arises in
cases before us due to this feature. As we have pointed out, the statement of
reasons for amendment spoke of Section 14(iv) as a `"definition" of "iron
and steel". A definition is expected to be exhaustive. Its very terms may,
however, show that it is not meant to be exhaustive. For example, a purported
definition may say that the term sought to be defined "includes" what
it specifies, but, in that case, the definition itself is not complete."
30.
It
is thus clear, that if the object of newly substituted clause (iv) of Section
14 of the Central Act was to make iron and steel taxable as one substance, the item
could have been "Goods of iron and steel" or, to be more clear, "Iron
and steel irrespective of change of form or shape or character of goods made
out of them". The more natural meaning, therefore is that each item
specified in Section 14(iv) forms a separate species for each series of sales. When
one commercial commodity is, by manufacturing process etc., transformed into another,
it becomes a separate commodity for sales tax purposes. If iron bars were drawn
into "wire", such wire shall be a different taxable commodity.
31.
Parliament
can restrict powers of State Government to tax "declared goods". Section
2(c) of the Central Act defines "declared goods" as those declared
under Section 14 of Central Act as `goods of special importance in Inter State Trade
or Commerce. Section 14 of the Central Act gives a list of such goods and
Section 15 specifies restrictions on power of States to tax such goods.
32.
This
Court in the case of Rajasthan Roller Flour Mills Assn. vs. State of Rajasthan,
reported in 1994 Supp (1) SCC 413, observed as under:- 16. ...... "that
is to say" assigned in Stroud's Judicial Dictionary (Fourth Edn.) Vol. 5 at
page 2753 to the following effect: "That is to say.-- (1) `That is to say'
is the commencement of an ancillary clause which explains the meaning of the principal
clause. It has the following properties: (1) it must not be contrary to the principal
clause; (2) it must neither increase nor diminish it; (3) but where the principal
clause is general in terms it may restrict it:....." 17. .................
"The quotation, given above, from Stroud's Judicial Dictionary shows that,
ordinarily, the expression, `that is to say' is employed to make clear and fix
the meaning of what is to be explained or defined. Such words are not used, as
a rule, to amplify a meaning while removing a possible doubt for which purpose the
word `includes' is generally employed ... but, in the context of single point sales
tax, subject to special conditions when imposed on separate categories of specified
goods, the expression was apparently meant to exhaustively enumerate the kinds of
goods in a given list. The purpose of an enumeration in a statute dealing with sales
tax at a single point in a series of sales would, very naturally, be to
indicate the types of goods each of which would constitute a separate class for
a series of sales. Otherwise, the listing itself loses all meaning and would be
without any purpose behind it."
33.
It
is thus clear, that the language used in entry no. (ix) is plain and unambiguous
and that the items which are mentioned there are "tools, alloy and special
steel". By using the words "of any of the above categories" in entry
Nos. (ix) would refer to entries (i) to (viii) and it cannot and does not refer
to entry no (xv). However, entry (xvi) of Clause (iv) would be included in entry
(xvi) particularly within the expression now therein any of the aforesaid categories.
Therefore, the specific entry "tool, alloy and special steel" being
not applicable to entry (xv), the contention of the counsel for the appellant has
to be rejected. It is, therefore, held that the stainless steel wire is not covered
within entry (ix) of clause (iv) of Section 14 of Central Sales Tax Act.
34.
It
is a settled principle of law that the words used in the section, rule or notification
should not be rendered redundant and should be given effect to. It is also one of
the cardinal principles of interpretation of any statue that some meaning must be
given to the words used in the section. Expression "Wire rods and
wires" which is mentioned in item no. (xv) would not and cannot cover the expression
"tools, alloy and special steels" of entry no. (ix) nor it would
refer to the expression "Iron and Steel" as each item used in entry nos.
(ix) and (xv) are independent items not depending on each other at all as has been
held in the case of Pyare Lal Mehrotra (supra).
35.
In
arriving at the aforesaid conclusion, we find support from the decision of this
Court in Union of India vs. Hansoli Devi reported in (2002) 7 SCC 273 wherein this
Court held that it is a cardinal principle of construction of a statute that when
the language of the statute is plain and unambiguous, the court must give
effect to the words used in the statute.
36.
Besides,
in a taxing Act one has to look merely at what is clearly said and there is no room
for any intendment. In a taxing statute nothing is to be read in, nothing is to
be implied, one can only look fairly at the language used.
37.
Therefore,
the findings and the decision arrived at by the High Court that stainless steel
wire is not covered under the entry of "tools, alloys and special steels"
in entry no. (ix) and, therefore, does not fall under "Iron and
Steel" as defined under Section 14(iv) of the Central Act have to be
upheld. Hence, the said commodity cannot be treated as a declared commodity under
Section 14 of the Central Act and provision of Section 15 of the Central Act does
not apply to the facts of the present appeals.
38.
In
our considered opinion, the findings arrived at by the High Court does not suffer
from any infirmity. Consequently, we find no merit in these appeals and the
same are dismissed without any order as to costs.
............................................J
[Dr. Mukundakam Sharma]
............................................J
[Anil R. Dave]
New
Delhi,
April
26, 2011.
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