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The Commissioner of Sales Tax Vs. Tejco Industries - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberS.T.R. No. 12 of 1972
Judge
Reported in(1976)5CTR(Bom)333; [1976]384STC93(Bom)
ActsBombay Sales Tax Act, 1959
AppellantThe Commissioner of Sales Tax
RespondentTejco Industries
Advocates:B.A. Desai, Adv.
Excerpt:
direct taxation - tax rate - section 61 (1), entry 44 of schedule c and entry 22 of schedule e to bombay sales tax act, 1959 - reference under section 61 (1) - whether magnifying glasses (optical appliances) sold by respondent are 'glassware' for the purpose of entry 44 of schedule c - nature of business of respondent together with description of goods in question furnish enough evidence to show that in trade parlance respondents goods not regarded as glassware but optical appliances - magnifying glassware sold by respondent would fall within entry 22 of schedule e - held, magnifying glasses sold by respondent cannot be regarded as 'glasswares' and not covered by entry 44 of schedule c. - .....before the tribunal from which a finding could be arrived at as to the sense in which this entry 'glassware' may be understood in the trade parlance or by the people who are called upon to deal with these articles. in this connection, reference can be usefully made to our decision in commissioner of sales tax vs. dawoodbhoy m. tayabally 36 s.t.c. 291 : 1975 c.t.r. (bom.) 192 where we have held that the meaning of the terms describing goods in the entries in the schedules to the bombay sales tax act, 1959, prescribing rates at which commercial articles have to be taxed has to be gathered from the trade parlance or the common parlance in trade. the question as to what is the meaning given to a term used in any entry in common parlance is a question of act to be determined on.....
Judgment:

Kania, J.

1. This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the said Act') made at the instance of the Commissioner of Sales Tax. The facts giving rise to this reference are as follows :

2. By their application dated 5th May, 1966 made to the applicant, the Commissioner of Sales Tax, the respondents, requested the Commissioner to determine in exercise of the powers vested in him under section 52(1)(e) of the said Act the rate of tax payable in respect of sales of certain magnifying glasses made by the respondents evidenced by their Bill No. 118 dated 28th March 1966. The statements made in this application show that the respondents carried on the business of manufacturing optical appliances and brass parts. Magnifying glasses have been referred to in this application as 'optical appliances' these being the words used in the brackets after the expression 'magnifying glasses.' It was submitted by the respondents that these magnifying glasses were covered by entry 22 of Schedule E to the said Act and were liable to tax at the rate specified therein. After the receipt of this application it appears that the Commissioner issued a show cause notice calling upon the respondents to show cause as to why the said magnifying glasses should not be treated as articles made of glass and as such held to be covered by entry 44 of Schedule C to the said Act. At the hearing before the Commissioner of Sales Tax, the respondents contended that the said magnifying glasses were not covered by entry 44 of Schedule C, as the bulk of the cost of manufacturing a magnifying glass was incurred in making the handle and frame and pointed out that the magnifying glasses sold by them were lenses fitted with chrome plated handle and frame and that the value of the lenses in the said magnifying glasses was much less than the cost of the handle and the frame, as the glass part of the said magnifying glasses cost even less than half of the costs of the chrome plated handles and frames. It was also contended by the respondents that the said magnifying glasses could not be covered by entry 44 of Schedule C to the said Act as they were not wholly or predominantly made of glass. Both these contentions of the respondents were rejected by the Commissioner and it was held by him that the magnifying glasses sold by the respondent fell under entry 44 of Schedule C to the said Act and attracted tax at the rate mentioned therein. The respondents then went in appeal before the Maharashtra Sales Tax Tribunal. At the hearing before the Tribunal, the learned Advocate for the respondents produced in Court two types of magnifying glasses, which had been sold by the respondents under the aforesaid Bill. One of these magnifying glasses consisted of a lens fitted with a frame and handle and the other of a lens installed on a stand. In this connection, it may be stated that the respondents had made an offer in their application dated 5th May 1966 to produce these glasses even before the Commissioner of Sales Tax. From the facts stated in the Judgment of the Tribunal, it appears that the magnifying glasses sold by the respondents consisted of lenses fitted with chrome plated handle and frame and that the value of the lens in such a magnifying glass was much less than the costs of the handle and frame. It was sought to be contended by the learned Advocate for the respondents that in common parlance a magnifying glass was not regarded as glassware. But the Tribunal did not allow the learned Advocate for the respondents to urge this contention, as, according to the Tribunal, no evidence was led by the respondents to the effect that magnifying glasses were not sold by dealers in glassware. The Tribunal, however, came to the conclusion that the expression 'glassware' in entry 44 of Schedule C to the said Act, must be held to comprise only such articles which are of domestic use, such as vessels, decorative pieces, sanitary ware and so on and that it could not be said that a magnifying glass was included in the said entry as it was not an article of daily use by common men. The Tribunal upheld the contention of the respondents that the said magnifying glasses were covered by entry 22 of Schedule E to the said Act.

3. The question referred to us for determination is as follows :

'Whether the word 'glassware' appearing in entry 44 of Schedule C to the Bombay Sales Tax Act, 1959, at the material time included only glassware of domestic use and therefore magnifying glasses (optical appliances) were not covered by the said word 'glassware' in that entry ?'

4. Since the arguments in the case turn, to a large extent on entry 44 of schedule C to the said Act, as it stood at the time, it would not be out of place to take note of the same at this stage. Description of the goods covered by entry 44 of the said schedule read thus :

'Articles of domestic use made from porcelain or glazed earthenware, sanitary fittings made primarily from glazed earthenware or porcelain (other than pipes) and glassware when sold at a price of not less than one rupee per piece.

Explanation - (i) One cup and one saucer and (ii) any vessel and its lid sold together, shall be deemed to be one piece, but not a set of cups and saucers, plates or dishes etc.'

It may be further mentioned that entry 22 of Sch. E to the said Act is residuary entry and there is no dispute before us that if the aforesaid magnifying glasses did not fall within entry 44 of Schedule C of the said Act, they would be covered by entry 22 of Schedule E thereof and would attract the liability to tax at the rate mentioned therein.

5. The submission of Mr. Desai, learned counsel for the Department, was that the Tribunal was completely in error in coming to the conclusion that the term 'glassware' in entry 44 of Schedule C covered only such articles of glassware or articles made of glass as were intended for domestic use or constituted articles of daily use by common men. It was pointed out by him that on a plain reading of this entry the requirement that the article concerned should be one of domestic use was applicable only to articles made of porcelain or glazed earthenware and this requirement did not apply to the articles mentioned in the remaining portion of entry 44. Mr. Desai further drew our attention to entry 44 of Schedule C to the said Act, as it stood prior to its amendment from 14th July 1962. It was pointed out by him that the opening part of the unamended entry read as follows :

'Glassware, Chinaware or articles made of porcelain adapted for domestic use .....'

It was urged by him that the amendment of the entry showed that after the amendment the requirement of domestic use was not intended to be applicable to glassware. It was further pointed out by him that the reliance placed by the Tribunal on the Explanation did not throw any light on the question as to whether the glassware mentioned in that entry was confined to articles meant for domestic use. These submissions of Mr. Desai are not altogether without force. As against these considerations, it is of course true, as the Tribunal has pointed out, that the scheme followed in this Schedule is that articles which have some connection inter se have been grouped together in the various entries and this might suggest that the requirement of domestic use was also applicable to glassware before it could be said to fall within the scope of this entry. The question, however, would remain to be considered as to whether such connection can be said to be furnished by the fact that glassware, earthenware and porcelain articles can be regarded as fragile or brittle articles in common use whether domestic or otherwise. This is a somewhat vexed question and it is not necessary for us to decided this question because even assuming that the word 'glassware' used in entry 54 of Schedule C to the said Act is not restricted to articles of domestic use, the reference must still be decided, in view, against the Commissioner of Sales Tax. It is somewhat unfortunate that the respondents are not represented before us, so that we have no assistance from any Advocate on behalf of the respondents who could have put forward the opposite point of view. In these circumstances, we propose to leave this particular question open and to proceed to decide the reference on the footing or assumption that the term 'glassware' used in entry 44 of Schedule C to the said Act it not restricted to articles of domestic use.

6. It was next submitted by Mr. Desai that in the present case the respondents had not lead any evidence as to what was the true or popular meaning of the term 'glassware', and hence that word in entry 44 should be interpreted according to its dictionary meaning. In support of this submission, Mr. Desai relied upon the decision of a Division Bench of this Court at Nagpur in Tribuwandas Gulabchand & Bros. vs. State of Maharashtra 16 S.T.C. 452, where it was held that the question whether the term 'glassware' in entry 15 of Sch. I, part I to the C.P. and Berar Sales Tax Act, 1947, includes glass sheets as understood in trade parlance is a matter of evidence and a question of fact. Where no evidence was led at any stage of the proceeding to show that in common parlance 'glassware' does not include glass sheets, the question has to be decided on the construction of the entry and the provision in the Schedule. A perusal of the judgment shows that it was in the absence of such evidence as set out above that reliance was placed by the Court on the dictionary meaning of the word 'glassware'. Mr. Desai particularly drew our attention to the fact that the dictionary meaning of the term 'glassware' as 'articles of glass' was accepted by the Court and it was held that by that term was meant goods or merchandise made of glass. In that judgment reference has been made by the learned Judges to the Shorter Oxford Dictionary and Webster's International Dictionary where the meaning of the term 'glassware' is given as 'articles made of glass'. The Division Bench has however, pointed out that it would have been an entirely different matter if there was material or evidence before the Tribunal from which a finding could be arrived at as to the sense in which this entry 'glassware' may be understood in the trade parlance or by the people who are called upon to deal with these articles. In this connection, reference can be usefully made to our decision in Commissioner of Sales Tax vs. Dawoodbhoy M. Tayabally 36 S.T.C. 291 : 1975 C.T.R. (Bom.) 192 where we have held that the meaning of the terms describing goods in the entries in the Schedules to the Bombay Sales Tax Act, 1959, prescribing rates at which commercial articles have to be taxed has to be gathered from the trade parlance or the common parlance in trade. The question as to what is the meaning given to a term used in any entry in common parlance is a question of act to be determined on evidence and in the absence of such evidence, the entries could be construed according to their dictionary meaning.

7. Following these principles the first question which we have to consider is whether according to the trade parlance or the common parlance in trade magnifying glasses are regarded as glass wares. It is true that no oral evidence or evidence by way of affidavits, has been led in connection with this question before the Commissioner of Sales Tax. But it is significant that in the application itself, the expression used to describe the goods in question was 'magnifying glasses (i.e. optical appliances)'. It is also significant that the respondents have been described in the application dated 5th May 1966 as carrying on business as manufacturers of optical appliances and brass parts and in the order of the Commissioner dated 8th April, 1967 the respondents have been described as manufacturers of optical and surgical applicances, electrical and automobile spare parts and it is further stated that the respondents claim to be specialists in brass parts and plastic mouldings. There is nothing in the judgment of the Tribunal to show that there was any dispute about this description given to the articles in question or about the business of the respondents. This to our mind, indicates that even though there was no evidence of the type we have referred to above, there was sufficient indication in the application of the respondents that in the trade parlance the magnifying glasses manufactured by them could not be regarded as glass wares but were known in the trade parlance or the common parlance in trade as optical appliances. The word 'optical' has been defined in the Concise Oxford Dictionary of Current English, Fourth Edition, at page 833, as '..... belonging to optics, constructed to assist sight or on the principles of optics'. Hence optical appliances are really appliances which are meant for aiding eye sight. The nature of the business of the respondents together with the description of the goods in question as optical appliances furnishes enough guidance to show that in the trade parlance they were not regarded as glassware but as optical appliances. If this be so, then it must be held that the magnifying glasses sold by the respondents do not fall within the meaning of the term 'glassware' used in entry 44 of Schedule C to the said Act and, as a result, would fall within entry 22 of Schedule E to that Act.

8. We now, however, proceed to consider the matter even on the footing that we might be in error in holding that there is sufficient indication on the record to show that in the trade parlance the magnifying glasses manufactured and sold by the respondents could not be regarded as glassware. In connection with this question, apart from the decision in Tribuwandas Gulabchand & Bros. vs. State of Maharashtra 16 S.T.C. 452, to which we have already referred, Mr. Desai also sought to place reliance on the decisions in Commissioner of Sales Tax vs. Mohanlal Ramkisan Nathani 6 S.T.C. 136 and Haji Jamaluddin Manguji vs. The State 6 S.T.C. 141. In our view, these decisions are not of much help to Mr. Desai in advancing his contentions because these decisions relate to articles entirely made of glass, whereas in the present case, the articles sold by the respondents viz. the magnifying glasses, were not entirely made of glass and in fact there is ample evidence on record to show that a major part of the cost of the article went towards the costs of the handle and the frame and the cost of the lens only constituted a small fraction of the total cost of the article. Taking the dictionary meaning of the term 'glassware' as 'an article of glass' or 'an article made of glass', it appears to us that this description can apply only to articles made entirely of glass. We express no opinion as to whether articles made predominantly of glass would fall within the dictionary meaning of the term 'glassware'. However, even if that be so, in our view, the articles in question before us cannot be said to be articles made predominantly of glass, and hence they cannot be said be said to fall within the dictionary meaning of the term 'glassware'.

9. Mr. Desai finally relied on the decision of the Madras High Court in P. Orr & Sons vs. Collector of Customs A.I.R. 1965 Madras 812 where it has been held that the word 'glassware' used in item 60(9) of the Tariff Act, 1934, includes lenses and object glasses. In our view, this decision is not useful for the purpose of deciding the question before us. In the first place, it arises from an altogether different Act and item 60(9) of the Tariff Act, with which the Court was concerned in that case, provided for the levy of counter-veiling duty. It has been pointed out that the reason for the imposition of the duty under item 60(9) equivalent to excise duty leviable on similar goods manufactured in this country, is that manufacturer of the same category of goods in this country ought not to suffer unfair competition from outsiders. Moreover even in that case the items concerned viz. lenses and object-glasses, were entirely made of glass.

10. In our view the magnifying glasses sold by the respondents cannot be regarded as glass wares and hence are not covered by entry 44 of Schedule C of the said Act as it stood at the relevant time. In the view, which we have taken, we do not feel it necessary to decide the question as framed by the Tribunal, and we reframe the question as follows :-

'Whether on the facts and in the circumstances of the case the magnifying glasses (optical appliances) sold by the respondents are 'glass wares' for the purpose of entry 44 of Schedule C to the Bombay Sales Tax Act, 1959'

11. For the reasons, which we have already given earlier, the question as reframed by us must be answered in the negative. As the respondents have not appeared before us, there will be no order as to costs.


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