R.L. Gulati, J.
1. The Additional Revising Authority (Sales Tax), Varanasi, has submitted this reference under Section 11(3) of the U.P. Sales Tax Act for the opinion of this court on the following question of law :
Kiya steel box lohe ki bani vastu (hardware) hai ya nahin?
2. The firm of M/s. Aftab Husain Imdad Husain of Varanasi is the assessee. It manufactures and sells steel trunks. Prior to the assessment year 1962-63 the turnover of steel trunks used to be assessed under Section 3 of the Act at the rate specified therein which at the material time was 2 per cent. For the assessment years 1962-63 and 1963-64 the rate of tax was enhanced to 3 per cent.on the view that steel trunks fall within the definition of 'hardware' which was a commodity assessable at a higher rate. The assessee appealed and the Judge (Appeals) accepted its contention that steel trunks were not an item of hardware. The Commissioner of Sales Tax went up in revision, but the revising authority also upheld the order of the Judge (Appeals). At the instance of the Commissioner of Sales Tax the revising authority has now submitted this and the connected reference.
3. Before we proceed to answer the question we would like to make a few observations about the statement of the case and the question of law submitted by the revising authority. The statement of the case under Section 11 must contain all material facts of the case as found by the sales tax authorities and/or admitted between the parties. The revising authority should also indicate the statutory provisions with reference to which the case was decided by the sales tax authorities and which are relevant for the proper determination of the question submitted to the High Court for its opinion. The revising authority is not required to express its own opinion on the question of law apart from what might have been stated in the revisional order. In the instant case we find that the statement of the case is unsatisfactory. The material facts have not been incorporated in the statement of the case nor have the relevant statutory provisions been indicated. The revising authority has, in the statement of the case, incorporated its opinion on the question of law, and that opinion happens to be contrary to the one expressed by the Judge (Revisions), who decided the revision petitions. The question of law has also not been properly framed. The question of law should have reference to the facts of the case and should not be in an abstract form. In the instant case the proper question should have been as to whether on the facts of the case the steel trunks manufactured and sold by the assessee were an item of hardware within the meaning of that term in the relevant notification and not as to whether steel trunks in general could be regarded as hardware or not.
4. We would have been justified in returning this reference unanswered but since the question of law involved is of a recurring nature and is of general public importance, we have thought it fit to gather the material facts from the various orders of the sales tax authorities, to reframe the question and to answer it after ascertaining the relevant statutory provisions.
5. Section 3 of the U.P. Sales Tax Act is the charging section under which turnover of all commodities is taxed at the rate specified therein. The rate of tax at the material time was 2 per cent. Under a proviso to Section 3 the State Government has been invested with the power to enhance the rate of tax on the turnover of any goods or class of goods subject to a maximum of 3 per cent. It appears that in the exercise of this power the State Government issued the Notification No. ST-1367/X-1045(19)-1960 dated 5th April, 1961, providing that with effect from 5th April, 1961, the rate of tax in respect of the turnover of goods mentioned therein would be 3 paise per rupee instead of 2 paise per rupee at all points of sale. Item No. 7 of that notification is 'mill-stores and hardware.' It is on the basis of this notification that the rate of tax on the turnover of steel trunks was enhanced from 2 to 3 per cent. The question that falls for determination is as to whether the term 'hardware' as appearing in the notification comprehends steel trunks.
6. Sri V.K. Mehrotra learned Standing Counsel appearing for the Commissioner of Sales Tax has referred us to various dictionaries to support his contention that all articles made of iron and other base metals are covered by the word 'hardware'. It is true that according to one of the dictionary meanings the term 'hardware' means 'articles made of iron and other base metals'. Sri V.K. Mehrotra relies upon the order of the Judge (Appeals), wherein steel trunks in question have been described as made of iron and steel sheets. Sri G.P. Bhargava, learned counsel for the assessee, on the other hand, says that the statement in the appellate order of the Judge (Appeals) is not wholly true inasmuch as the sheets utilised by his client in the manufacture of trunks were exclusively of steel and no iron sheets were utilised. According to him, steel and iron are not the same commodity. He invited our attention to the Hindi version of various notifications issued under the Act to show that in Hindi 'steel' is called 'spat' while 'iron' is called 'loha'. His contention is that while iron may be a base metal, steel is not. We do not think the distinction pointed out by the learned counsel is either real or important.
7. The word 'base' when used as an adjective with a metal has a technical meaning. Metal is a class of elements of which gold, silver, copper, iron, lead and tin are examples or a mixture of these (alloy). In inorganic chemistry metals are divided into two classes : (1) base metals and (ii) noble or precious metals. Among noble or precious metals are gold, silver and sometime platinum, and other metals and their alloys are called base metals. Steel denotes alloys of purified iron with carbon (up to 1 per cent.) and metals such as nickel, manganese or chromium would thus be included in the group of base metals. We are, therefore, clearly of opinion that trunks in dispute were made of base metals.
8. However, this finding does not provide an answer to the question which we have been called upon to decide. The real question that calls for determination is as to whether the trunks in question are an item of 'hardware'. It is now well settled that in the absence of a definition in the statute, a term occurring in a fiscal statute like the U.P. Sales Tax Act, which deals primarily with the business community, has to be interpreted in a sense in which the business community understands it. Reference to dictionaries is not always helpful and indeed can sometimes be positively misleading. A dictionary would contain all possible meanings of a term whereas we are concerned only with one of such meanings, viz., the meaning given to the term by the business community.
9. In the commercial world the term 'hardware' refers to a well defined section of trade. Every article that is made of iron or of other base metal is not regarded as an article of hardware. In the popular sense 'hardware' would comprise small articles of base metals such as iron, copper, aluminium and their alloy like brass etc. The meaning in the Shorter English Oxford Dictionary approximates to this popular meaning. There the term 'hardware' means 'small wares or goods of metal, ironmongery.'
10. Learned counsel for the parties were agreed that in order to ascertain the true scope of the term 'hardware', as understood in the commercial world, it would be helpful to look into some trade journals and catalogues of hardware items. Our attention was accordingly drawn to some trade journals like 'British Empire Trade Index' and the 'Bombay Market'. We were also shown catalogues of some leading hardware merchants and the classified list in the telephone directories of the State of Uttar Pradesh. A perusal of these documents shows :-
(i) that hardware and mill-stores are allied trades ;
(ii) that mill-stores comprise of items like small tools and spare parts of machinery;
(iii) that hardware trade by itself refers ordinarily to small items of base metals particularly building materials like nuts, bolts, hinges, rivets, laches, curtain railings, window grills etc.;
(iv) that steel trunks are not one of the items of hardware or of mill-stores; and
(v) that there is a separate classification of trade known as iron and steel trade. Steel trunks would probably fall in that classification.
11. We are, therefore, satisfied that steel trunks cannot be regarded as an item of hardware. We accordingly reframe the question to read:
Whether on the facts and circumstances of the case the turnover of steel trunks was taxable as the turnover of hardware under Notification No. ST-1367/X-1045(19)-1960, dated 5th April, 1961?
and answer the same in the negative. The assessee is entitled to its costs which we assess at Rs. 100. Counsel's fee is also assessed at the same figure.