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Commissioner of Sales Tax, Maharashtra State, Bombay Vs. Gordhandas Tokersey - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax References Nos. 68 and 69 of 1978 in Reference Applications Nos. 20 and 19 of 1976
Judge
Reported in[1983]52STC381(Bom)
Acts Bombay Sales Tax Act, 1959 - Sections 52; Uttar Pradesh Trade Tax Act, 1948 - Sections 3A
AppellantCommissioner of Sales Tax, Maharashtra State, Bombay
RespondentGordhandas Tokersey
Excerpt:
.....to the words found in immediate connection with them. but in construing particular words in any entry like entry 51, it is not as though one must take any particular item, find out its dictionary meaning or the meaning attributable to that particular item and disregard the effect on that item arising from its association with other items and the limitation or expansion of the meaning of that item by such association. it has to be rubbed hard on the hand or some other part of the body so that the temperature can be raised by friction and better vaporisation takes place. therefore sandalwood oil has to be used in mixture with other substances like oil or alcohol or soap so that the resultant product can emit the peculiar perfume characteristics of sandal. this principle of..........consider whether sandalwood and sandalwood oil are perfumes within the meaning of that word in the entry. 'perfume' as defined in the dictionary has a wide range of meanings. in its broadest sense any object which emits fragrance or a pleasing odour, whether in its natural state or when subjected to a chemical process such as heat, can be called a perfume. the word 'perfumes' in entry 19, however, cannot be construed in isolation. entry 19 contains the word 'perfumes' in association with 'depilatories' and 'cosmetics' and excludes from this entry soap and other articles specified in entry 7 in schedule e. entry 7 in schedule e, originally referred to toilet articles including hair cream, hair tonic and hair oil (excluding soap). it has since been amended to exclude not merely soap but.....
Judgment:

Sujata V. Manohar, J.

1. The respondents in both these references, M/s. Gordhandas Tokersey are registered dealers under the provisions of the Bombay Sales Tax Act, 1959. The respondents filed two applications both dated 17th August, 1970, before the Commissioner of Sales Tax under the provisions of section 52 of the Bombay Sales Tax Act, 1959, for the determination of the correct rate of tax payable on the sales of sandalwood and sandalwood oil effected by the respondents under their invoices Nos. 1958 and 1850 dated 6th August, 1970 and 18th April, 1970, respectively. It was the contention of the respondents that sandalwood and sandalwood oil were governed by the residuary entry 22 of Schedule E to the Bombay Sales Tax Act, 1959. The Commissioner of Sales Tax, however, held that sandalwood and sandalwood oil were perfumes within the meaning of that word in entry 19 of Schedule E to the Bombay Sales Tax Act, 1959, and were liable to tax accordingly. From these decisions the respondents preferred appeals before the Sales Tax Tribunal being Appeals Nos. 3 and 4 of 1971. The Tribunal, by its common judgment in both the appeals dated 14th April, 1972, sent back the cases to the Commissioner for a fresh decision after considering the fresh evidence that the respondents may produce. The respondents were also given permission to produce whatever evidence they desired before the Commissioner. Thereafter, a fresh hearing was given by the Commissioner to the respondents and the Commissioner considered the fresh evidence produced by the respondents before the Commissioner. The Commissioner held that sandalwood and sandalwood oil were perfumes within the meaning of entry 19 of Schedule E of the Bombay Sales Tax Act, 1959. Against this decision the respondents preferred Appeals Nos. 27 and 28 of 1974 before the Tribunal. By a common judgment in both the appeals the Tribunal came to the conclusion that both sandalwood and sandalwood oil were not covered by entry No. 19 of Schedule E and would fall under the residuary entry 22 of Schedule E. From this decision of the Tribunal, at the instance of the department, the following two questions are referred to us for consideration, which are common questions arising in both the references :

'(1) Whether, on the facts and in the circumstances of this case and on a true and proper interpretation of entry 19 of Schedule E to the Bombay Sales Tax Act, 1959, the Tribunal was correct in law in coming to the conclusion that 'sandalwood' was not perfume within the meaning of the entry ?

(2) Whether, on the facts and in the circumstances of this case and on a true and proper interpretation of entry 19 of Schedule E to the Bombay Sales Tax Act, 1959, the Tribunal was correct in law in coming to the conclusion that 'sandalwood oil' was not perfume within the meaning of the said entry ?'

2. Entry 19 of Schedule E to the Bombay Sales Tax Act, 1959, at the relevant period was as follows :

'---------------------------------------------------------------------- Serial Description Rate of sales Rate of general Rate of purchase No . of goods tax in paise sales tax in tax in paise in in the rupee paise in the the rupee rupee ----------------------------------------------------------------------- 19. Perfumes, depilatories and cosmetics (except soap and articles specified in entry 7 in this schedule). Ten Three Ten ' We have to consider whether sandalwood and sandalwood oil are perfumes within the meaning of that word in the entry. 'Perfume' as defined in the dictionary has a wide range of meanings. In its broadest sense any object which emits fragrance or a pleasing odour, whether in its natural state or when subjected to a chemical process such as heat, can be called a perfume. The word 'perfumes' in entry 19, however, cannot be construed in isolation. Entry 19 contains the word 'perfumes' in association with 'depilatories' and 'cosmetics' and excludes from this entry soap and other articles specified in entry 7 in Schedule E. Entry 7 in Schedule E, originally referred to toilet articles including hair cream, hair tonic and hair oil (excluding soap). It has since been amended to exclude not merely soap but also tooth powder and tooth-paste. Thus in entry 19 perfumes are coupled with depilatories and cosmetics but excluding certain toilet articles. It is a well-known rule of construction that the words in such entries have to be construed with reference to the words found in immediate connection with them. When two or more words which are capable of being understood in an analogous manner are coupled together, they should be understood in the common analogous sense and not in a general sense. Applying this rule of noscitur a sociis the word 'perfumes' in entry 19 must be construed in conjunction with cosmetics and depilatories but excluding certain toilet articles to refer to such articles which can be used as perfumes in personal toilet. In other words, 'perfumes' in entry 19 refers to such preparations as are commonly known in the market for use on the body as perfumes. In this connection a reference may be made to a decision in the case of A. Boake Roberts and Co. (India) Ltd. v. Board of Revenue (C.T.), Madras reported in [1978] 42 STC 270. The Madras High Court was required to consider in that case entry 51 in the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, prior to its amendment by Act 7 of 1977. The relevant entry 51 described the goods as 'scents and perfumes, powders, snows (including all purpose creams and cold and vanishing creams) and scented hair oils'. The Madras High Court held that if 'scents and perfumes' had stood by themselves without anything else being mentioned, then they could have been construed in a wider sense, and the fact that although heat had to be applied or that the substance was required to be mixed with some other substance to produce a chemical compound which would result in any fragrance being produced, would not alter the effect of the substance being construed as a perfume. But in construing particular words in any entry like entry 51, it is not as though one must take any particular item, find out its dictionary meaning or the meaning attributable to that particular item and disregard the effect on that item arising from its association with other items and the limitation or expansion of the meaning of that item by such association. The court in that case was required to consider whether synthetic essential oils which emanated different fragrances but which were not directly utilised for the purpose of being used for beautifying the body but utilised for the purpose of making requisites such as soap, powders, cosmetics, were perfumes within the meaning of entry 51 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. It held that the word 'perfumes' in that entry referred to items of toilet preparations and therefore synthetic essential oil was not a perfume within the meaning of that entry. In the case of Assessing Authority v. Amir Chand Om Parkash reported in [1974] 33 STC 120, the Punjab and Haryana High Court was required to construe entry 16 of Schedule A to the Punjab General Sales Tax Act, 1948. This entry was to the following effect : 'Cosmetics, perfumery and toilet goods, but not including tooth-paste, tooth-powder, soap and kum-kum.' The Punjab and Haryana High Court was required to construe whether 'dhoop' and 'agarbatti' can be held to be perfumery within the meaning of this entry, The court held that the context in which the word 'perfumery' occurred showed that what was meant by all the three general items, 'cosmetics, perfumery and toilet goods' was articles which were used for personal hygiene or pleasure. So in this context, the word 'perfumery' would not include 'dhoop' and 'agarbatti'.

3. Our attention was drawn to the decision of the Supreme Court in the case of Commissioner of Sales Tax, U.P. v. Indian Herbs Research and Supply Co. reported in [1970] 25 STC 151 (SC), which has been distinguished by the Madras and Punjab and Haryana High Courts in the above decisions. The Supreme Court was required to construe the word 'perfume' in item 37 of Notification No. 905/X dated 31st March, 1956, issued under section 3-A of the U.P. Sales Tax Act, 1948. Item 37 of the notification was 'scent and perfumes (in English) Itra tatha sugandhian (in Hindi)'. The question before the Supreme Court was whether 'dhoop' and dhoopatti' fell within the category of perfumes in item 37. The dispute before the Supreme Court in that case centered around the question whether the word 'perfume' should be confined only to those objects which emit an agreeable odour in their natural state. It was submitted before the Supreme Court that 'dhoop' and 'dhoopatti' were not perfumes because they do not emit any agreeable odour in their natural state, but only after heat is applied to these items and fumes are emitted which fumes give an agreeable odour. The Supreme Court rejected this argument. It considered the etymological meaning of the word 'perfume' as originating from the latin word 'fumare' which means 'to smoke' or 'to emit vapour' and held that the word 'perfume' in item 37 should be construed in its ordinary sense, that is to say, as including any substance, natural or prepared, which emits or is capable of emitting an agreeable odour either by burning or by application of some foreign matter to induce any chemical reaction which results in fragrant odours emerging from that substance. It therefore, held that 'dhoop' and dhoopatti' are perfumes within the meaning of that term in item 37. In this case, the Supreme Court was not required to consider the term 'scents and perfumes' in conjunction with any articles of toilet, or cosmetics. The words stood by themselves and there was no reason therefore to limit these words in any manner. The Supreme Court therefore construed these words in their widest sense and included 'dhoop' and 'dhoopatti' within their meaning.

4. In the case of Prakash Stores v. State of Tamil Nadu reported in [1976] 38 STC 300, the Madras High Court was required to construe whether certain articles which were used as raw materials for the manufacture of scented sticks could be classified as scents or perfumes under entry 51 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. It was argued before the Madras High Court that in order to bring an article within the meaning of the word 'scent' or 'perfume' the article should be capable of vaporisation at the ordinary or normal temperature of the atmosphere. The Madras High Court in that case applied the ratio of the Supreme Court decision in the case of Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. [1970] 25 STC 151 (SC) and held that these raw materials were also perfumes because a sweet and pleasant smell emanated from them and also they did not appear to require sufficient heat for the odoriferous element to evaporate. The question of construing the words 'scent or perfume' in entry 51 in the light of other words used in that entry appears not to have been raised before the Madras High Court or considered by it in that case. Accordingly, this judgment has been distinguished by the Madras High Court itself in the subsequent case of Boake Roberts and Co. (India) Ltd. v. Board of Revenue [1978] 42 STC 270 referred to earlier.

5. In yet another earlier case of Mettur Sandalwood Oil Co. v. State of Madras reported in [1965] 16 STC 9, the Madras High Court was required to construe whether sandalwood oil was a perfume within the meaning of entry 51 of the First Schedule to the Madras General Sales Tax Act, 1959. The Madras High Court in that case held, inter alia, that sandalwood oil as sold in the market does not vaporise readily, to serve the purpose of a common perfume. It has to be rubbed hard on the hand or some other part of the body so that the temperature can be raised by friction and better vaporisation takes place. Therefore sandalwood oil has to be used in mixture with other substances like oil or alcohol or soap so that the resultant product can emit the peculiar perfume characteristics of sandal. Because sandalwood oil could not be used in its natural state as a perfume, the court held that it could not be classified as a perfume. This part of the reasoning of the Madras High Court can no longer be considered as valid in view of the decision of the Supreme Court in the case of Indian Herbs Research and Supply Co. [1970] 25 STC 151 (SC).

6. In the present case however, the relevant entry does not deal with scents and perfumes in isolation as in the case of the relevant entry in the case of Indian Herbs Research and Supply Co. [1970] 25 STC 151 (SC), which the Supreme Court was required to construe. The entry in the present case when read in conjunction with depilatories and cosmetics, refers to these preparations which are commonly considered as perfumes in the market dealing with cosmetics or toilet preparations. Now an entry in a legislation such as the Bombay sales tax legislation must be understood in the manner in which the terms in that entry are commonly understood or know in the trade. This principle of interpretation is too well-known to require support from any authority. In this light, we must consider whether sandalwood and sandalwood oil are considered in trade parlance as perfumes for the purpose of being used on the body as a part of one's toilet. From the evidence lead in the case it seems that sandalwood is mainly used for the purpose of extracting oil from it. The bulk of it is used for distillation of oil in the Mysore Government Factory. Only 10 or 12 per cent of sandalwood is sold outside and is used mainly as firewood by Parsees in temples and homes or in some cases, for cremation of Jain munis. Some of it is used for wood carvings. There is thus no evidence to show that sandalwood is used as a perfume or is known in the trade as a perfume. It cannot therefore be construed as 'perfume' within the meaning of entry 19 in Schedule E.

7. In respect of sandalwood oil the parties relied upon the observations in a brochure (Marketing series No. 128) on the marketing of sandalwood and its oil in India issued by the Government of India, Ministry of Food and Agriculture. In that brochure it is observed as follows :

The greater proportion of oil of sandalwood is at present made use of in perfumery. It is a liquid of very high boiling point and has great fixative properties for perfumes. The main function of a fixative is to 'hold' the perfume so that its fragrance will last long after the evaporation of the solvent, such as alcohol. Oil of sandalwood does this exceedingly well. It blends with almost every type of perfume and is an ideal constituent for composite perfume preparations. It has a very light colour and may therefore be used without fear of ultimate discolouration of any articles to which it is applied. It is so tenacious and delightful a perfume that its use in large quantities is indispensable where the heavy oriental type effect is desired. On the other hand, it is so delicate in aroma that it may advantageously be blended in small quantities where the dominant odour of sandalwood is not desired.'

It would thus appear that sandalwood oil is mainly used as a fixative in the preparation of perfumes, that is to say, it is used for the purpose of holding the perfume so that the fragrance will last for a long time after evaporation of the solvent such as alcohol. The respondents also relied upon a letter dated some time in February, 1971, addressed by V. P. Anantanarayan, Joint Agricultural Marketing Adviser to the Government of India, Ministry of Food and Agriculture, C.D. & Co-operation, addressed to M/s. Sorabji Nowroji & Co. In it he has stated that '...... sandalwood oil cannot be called a perfume on its own. It is used in the perfumery industry to a greater or lesser extent. The characteristics of sandalwood oil referred to in the brochure on the marketing of sandalwood and its oil in India (Marketing series No. 128), referred to by you in your letter itself shows that it is a good vehicle only for high-class perfumes and its own value as a perfume is insignificant'.

The evidence produced also shows that sandalwood oil is used in ayurvedic medicinal preparations. In modern medical preparations sandalwood has been replaced by sulpha drugs and other antibiotics. In the light of this evidence it is not possible to come to a conclusion that sandalwood oil is itself a perfume though it is extensively used in the preparation of perfumes. Undoubtedly, both sandalwood and sandalwood oil have a delicate fragrance and are prized on that account. But everything possessing a delicate fragrance is not necessarily a perfume. Fresh flowers such as roses or jasmine, and spices such as cardamom or saffron for example, have a fragrance, but are not, for that reason, perfumes. Sandalwood and sandalwood oil are not known as or used as perfumes. Moreover they are not used in personal toilet or for the beautification of the body as perfumes. They are therefore not covered by entry 19 of Schedule E. In our view therefore, the Tribunal was right in coming to the conclusion that neither sandalwood nor sandalwood oil are covered by entry 19 of Schedule E of the Bombay Sales Tax Act, 1959. In the premises the questions posed before us are answered as follows :

Question No. (1) in the affirmative, that is to say, in favour of the assessee and against the department.

Question No. (2) in the affirmative, that is to say, in favour of the assessee and against the department.

The applicants will pay to the respondents costs of these references, fixed at Rs. 300.


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