Full Judgment Text
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PETITIONER:
HINDUSTAN ALUMINIUM CORPORATION LTD.
Vs.
RESPONDENT:
STATE OF UTTAR PRADESH & ANR.
DATE OF JUDGMENT28/07/1981
BENCH:
TULZAPURKAR, V.D.
BENCH:
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 thereunder-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
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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.
JUDGMENT:
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
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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
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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 upto 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
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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,
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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
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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
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(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.
P.B.R. Appeals dismissed
138