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State of Orissa Vs. Dinabandhu Sahu and Sons - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtOrissa High Court
Decided On
Case NumberSpecial Jurisdiction Case Nos. 72, 73, 74, 75 and 76 of 1964
Judge
Reported in35(1969)CLT901; [1969]24STC233(Orissa)
AppellantState of Orissa
RespondentDinabandhu Sahu and Sons
Appellant AdvocateG. Rath, Adv. for ;Standing Counsel
Respondent AdvocateB. Agarwalla and ;R. Mohanty, Advs.
Cases ReferredState of Andhra Pradesh v. Kajjam Ramachandraiah
Excerpt:
.....or in the manufacture of varnishes, soaps and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like ;15. restrictions and conditions in regard to tax on the sale or purchase of declared goods within a state. this case is clearly distinguishable because the expression 'vegetables' had not been defined in the relevant act and as such it has to be interpreted by its popular meaning......fall under the definition of 'oil-seeds' and as such being goods, declared under section 14 of the central sales tax act, 1956 (hereinafter referred to as the 'central act'), as goods of special importance in inter-state trade or commerce, are by virtue of section 15 of the central act read with the fourth proviso to section 5 of the orissa sales tax act, 1947 (hereinafter referred to as the 'orissa act'), liable to be assessed to tax at 2 per cent. aggrieved by this decision of the assistant commissioner, the state filed appeals before the sales tax tribunal contending that the articles in question are 'spices' and not 'oil-seeds'. the tribunal rejected the state's contention and, in doing so, relied on the letter no. 4(8)-st/57, dated 31st january, 1958, of the government of india,.....
Judgment:

B.K. Patra, J.

1. The respondent is a dealer carrying on business inter alia in dhania (coriander seed), panmohuri (aniseed or anise), jeera (cumin seed), postak (papaver rhoeas), pippali (long pepper) and methi (fenugreek). He was assessed to sales tax by the assessing authority for the five quarters ending 31st March, 1959 to 31st March, 1960, on his total taxable turnover at the rate of 5 per cent. On appeal, the Assistant Commissioner, Sales Tax, Puri, held that the goods above-mentioned fall under the definition of 'oil-seeds' and as such being goods, declared under Section 14 of the Central Sales Tax Act, 1956 (hereinafter referred to as the 'Central Act'), as goods of special importance in inter-State trade or commerce, are by virtue of Section 15 of the Central Act read with the fourth proviso to Section 5 of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the 'Orissa Act'), liable to be assessed to tax at 2 per cent. Aggrieved by this decision of the Assistant Commissioner, the State filed appeals before the Sales Tax Tribunal contending that the articles in question are 'spices' and not 'oil-seeds'. The Tribunal rejected the State's contention and, in doing so, relied on the letter No. 4(8)-ST/57, dated 31st January, 1958, of the Government of India, Ministry of Finance, Department of Economic Affairs, addressed to all State Governments stating that the Ministry has been advised that the items appearing in the list annexed thereto come within the purview of the definition of 'oil-seeds' as given in Section 14 of the Central Act, and that the list might be circulated amongst the Sales Tax Authorities in the State for their guidance. In this view of the matter, the Tribunal dismissed the appeals. On being moved by the State in each of the five cases under Section 24 of the Orissa Act, the Tribunal referred the following two common questions in each of the five cases for the opinion of this Court:

(1) Whether in the facts and circumstances of the case, the Sales Tax Tribunal is right in holding that jura, dhania, panmohuri, methi, postak and pippali are oil-seeds within the meaning of Section 14 of the Central Act and the tax payable under the State law in respect of the sale or purchase of these goods inside the State, cannot exceed 2 per cent, of the sale or purchase price thereof.

(2) Whether the communication No. 4(8)-ST/57, dated 31st January, 1958, issued by the Government of India which is only an official communication having no statutory sanction behind it can have any legal effect to hold the goods in question as oil-seeds as understood in common parlance and whether such an official communication is binding on the State Government.

2. It is necessary to quote here the provisions of law relevant for a determination of the points of reference. Section 14 of the Central Act in so far as is relevant is in the following terms :

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 :-

* * *(vi) oil-seeds, that is to say, seeds yielding non-volatile oils used for human consumption, or in industry, or in the manufacture of varnishes, soaps and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like ; * * *

15. Restrictions and conditions in regard to tax on the sale or purchase of declared goods within a State.-Every sales tax law of a State shall, in so far 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 two per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage;

* * *Section 15 came into force with effect from the 1st October, 1958. Shortly, thereafter, a new proviso was added to Section 5 of the Orissa Act which runs as follows :Provided further that the tax payable in respect of the goods which are declared under Section 14 of the Central Sales Tax Act, 1956 (74 of 1956), as goods of special importance in inter-State trade or commerce shall be at a rate not exceeding that specified under Section 15 of the Central Sales Tax Act, 1956.

This proviso came into force on 1st December, 1958. It is therefore not disputed that if the above-mentioned six articles are held to be oilseeds, the rate of tax would be 2 per cent, and not more. There is also no dispute that these six articles are seeds. The only question, therefore, for consideration is whether they are oil-seeds.

3. To interpret the expression 'oil-seeds', two broad contentions are put forward. The contention advanced on behalf of the State is that oil-seeds are those which in common parlance are understood as oil-seeds. The respondent, on the other hand, contends that in view of the definition of oil-seeds given in Section 14 of the Central Act, its meaning cannot be restricted in the manner contended for by the State, but that full effect must be given to the definition and seeds from which oil can be extracted for the purposes mentioned in Section 14(vi) of the Central Act should be held to be oil-seeds. In support of the first contention, reliance is placed on a decision of the Andhra Pradesh High Court reported in State of Andhra Pradesh v. Kajjam Ramachandraiah Gari [1961] 12 S.T.C. 795, where the question for consideration was whether coriander, ajwan and sompu come within the definition of oil-seeds, the subject-matter of item No. 3 of Schedule IV of the Andhra Pradesh General Sales Tax Act, 1957. That definition is in terms identical with the definition of oil-seeds in Section 14(vi) of the Central Act. It was contended before their Lordships on behalf of the State that these are oil-seeds because oil can be extracted from them and in fact oils extracted from those articles were produced before the court. That contention however was not accepted and it was said that the correct criterion to decide the issue is not whether oil can be extracted from those seeds, but whether they are known in this country in common parlance to be oil-seeds. This view was followed in later decisions by the Madhya Pradesh High Court in Commissioner of Sales Tax, M.P. v. Bakhat Rai and Co. [1966] 18 S.T.C. 285, the Punjab High Court in Hans Raj Choudhri v. J.S. Rajyana, Excise and Taxation Officer [1967] 19 S.T.C. 489 and the Madras High Court in S. Kannappa Mudaliar v. State of Madras [1968] 21 S.T.C. 41. In all these cases, their Lordships were interpreting the expression 'oil-seeds' which in the respective Acts had been defined in a manner identical with the definition in Section 14 of the Central Act. With great respect to the learned Judges who decided these cases, we are unable to subscribe to their view that notwithstanding the definition of 'oil-seeds' in the manner appearing in Section 14 of the Central Act, it should be construed to mean what in common parlance is known as oil-seeds. If that was the intention of the Legislature, there was no necessity to elaborate the term further by explaining it to mean 'seeds yielding certain varieties of volatile and non-volatile oils used for certain specified purposes'. The explanation contains words and expressions which are not in popular usage. They are technical terms and they have to be construed accordingly. Reliance is also placed on behalf of the State on two decisions of the Supreme Court in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer Akola and Anr. A.I.R. 1961 S.C. 1325 and Commissioner of Sales Tax, M.P. v. Jaswant Singh Charan Singh A.I.R. 1967 S.C. 1454.

In the first of these two cases, the question for consideration was whether betel leaves were vegetables so as to be exempt from taxation under the C.P. and Berar Sales Tax Act. The Schedules to the Act contained a list of articles which were exempted from taxation and the list included two items, namely, vegetables and betel leaves. The list was subsequently amended omitting 'betel leaves' from the list. It was contended before their Lordships that in spite of this omission, betel leaves were exempt from sales tax as they are vegetables. Their Lordships negatived the contention holding that the intention of the Legislature in regard to what is vegetable is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from sales tax and the fact that subsequently betel leaves were removed from the Schedule is indicative of the Legislature's intention of not exempting betel leaves from the imposition of the tax. Their Lordships further proceeded to observe that the word 'vegetables' must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. This case is clearly distinguishable because the expression 'vegetables' had not been defined in the relevant Act and as such it has to be interpreted by its popular meaning. In fact, their Lordships have said-

It (betel leaves) has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning 'that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it.

In the second case, the question for consideration before the court was whether 'charcoal' is included in the expression 'coal' within the meaning of the Madhya Pradesh General Sales Tax Act, 1958, and in answering the question in the affirmative their Lordships observed in paragraph 6 :

The result emerging from these decisions is that while construing the word 'coal' in entry 1 of Part III of Schedule II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute, being one levying a tax on goods, must, in the absence of a, technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance. Viewed from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'.

Here again, in the relevant statute the word 'coal' had not been denned. All that the relevant entry shows is 'coal including coke in all its forms'. In neither of these two cases, their Lordships were concerned with an expression which had been defined in the statute. In the absence of any definition, their Lordships adopted the 'popular understanding' theory.

4. In support of the respondent's contention, reliance is placed on a decision of the Kerala High Court reported in C.M. Hamsa Haji v. Sales Tax Officer, Tirur [1967] 20 S.T.C. 470. The question for consideration was whether gingelly seed and mustard seed are oil-seeds within the meaning of Section 14 of the Central Act. The popular understanding theory was placed before Isaac, J., and reliance was placed on the State of Andhra Pradesh v. Kajjam Ramachandraiah [1961] 12 S.T.C. 795. The learned Judge rejected the contention and expressed his dissent from the view taken by the Andhra Pradesh High Court. His Lordship observed that the Legislature has in clear terms stated in the above Section [14(vi) of the Central Act] what oil-seeds are. That being so, no question arises as to in what way, they are understood in common parlance. If a commodity satisfies the definition which the Legislature has given to the word 'oil-seeds', it is an oil-seed within the meaning of the said provision. We are in entire agreement with this view. Where the Legislature uses an expression- may be an expression commonly used-and has proceeded to explain what it means, full effect has to be given to the definition and it is not. permissible to rest content with what it popularly means. Resort can be had to 'popular understanding' theory only in the absence of any definition. We are, therefore, of the view that oil-seeds are those seeds from which oil can be extracted for any of the purposes mentioned in Section 14(vi) of the Central Act.

5. We now proceed to consider whether the six articles, namely, dhania, panmohuri, jeera, postak, pippali and methi are oil-seeds. Mr. R. Mohanty, learned Advocate appearing for the respondent has placed before us the Condensed Chemical Dictionary (7th Edition) edited by Arthur and Elizabeth Rose from which the following information regarding the seeds in question can be gathered.

Dhania.-(coriander seed); botanical name coriandrum sativum. Coriander oil is distilled from the coriander sativum-a colourless or slightly yellowish liquid having aromatic odour.

Jeera.-(cumin seed) ; cumin oil is distilled from the cumin seed and is used for medicine, flavouring and perfumery. It is a colourless or yellowish limpid liquid having characteristic odour of cumin.

Postak.-(poppy seed) ; botanical name papaver somniferum. Poppy oil is a very pale golden yellow liquid with pleasant taste and odour extracted from the seeds and it is used as food oil, artist's colours, varnishes and lubrication.

Methi.-(fenugreek); botanical name-trigonella foenum-graecum (vide p. 164 of Vol. 9 of the Encyclopaedia Britannica). It is stated inter alia therein that it bears, a sickle-shaped pod, containing from 10 to 20 seeds, from which 6 per cent, of a foetid, fatty and bitter oil can be extracted by ether.

There is nothing in the Chemical Dictionary or the Encyclopaedia Britannica to indicate that any oil is extracted from panmohuri (aniseed) or pippali (long pepper), nor any other evidence is placed before us to indicate that oil can be extracted from these two seeds and much less for the purposes mentioned in the statute.

6. Mr. Mohanty, however, relies on a communication of the Government of India No. 4(8)-ST/57 dated the 31st January, 1958, addressed to all State Governments stating that the items appearing in the list attached thereto come within the purview of the definition of oil-seeds as given in Section 14 of the Central Act and requesting that the list might be circulated amongst the Sales Tax Authorities for their guidance. Of the six articles, 5 articles, namely postak (poppy seeds-item No. 18), panmohuri (aniseed-item No. 37), dhania (coriander-item No. 42), jeera (cumin- item No. 44) and methi (fenugreek-item No. 49) are included therein. There is no mention there of pippali (long pepper). We have already indicated on the basis of other evidence that dhania, jeera, postak and methi are oil-seeds. The limited question, therefore, for consideration is whether it is permissible to rely on this list for the purpose of holding that panmohuri is an oil-seed. It is not disputed that this communication has no statutory force and as such is not binding on anybody or the State Government. But it has some persuasive value in the sense that it is a communication obviously based on expert opinion issued by the Government of India for administrative guidance of the State Governments. There is nothing to indicate that after receipt of the communication in the year 1958, the State Government had written back to the Central Government either to the effect that it had no authority to issue such a communication or that in the list attached thereto are included certain items which are not oil-seeds. Although none of these circumstances can estop the State Government from contending that, all or any of the items in the list are not oil-seeds, still, taking an over-all view of the evidence and circumstances of this case, we hold that panmohuri is also an oil-seed. So far as pippali (long pepper) is concerned, no evidence is produced to show that oil can be extracted therefrom. When specifically questioned about it, Sri Mohanty, learned counsel for the respondent rightly conceded that pippali cannot be held to be an oil-seed.

7. We accordingly answer the two questions referred to us as follows :

(1) Jeera, dhania, panmohuri, methi and postak are oil-seeds, but not pippali within the meaning of Section 14 of the Central Act.

(2) The communication No. 4(8)-ST/57 dated the 31st January, 1958, of the Government of India is not legally binding on the State Government, but may be taken into consideration as any other piece of evidence for deciding whether a particular article is or is not an oil-seed.

8. The reference is accordingly answered. In the circumstances, we make no order as to costs.

G.K. Misra, C.J.

9. I entirely agree.


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