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Commissioner of Sales Tax Vs. Puran Chand and Sons - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case Number S.T.R. Nos. 6 and 7 of 1973
Judge
Reported in[1981]48STC284(Delhi)
AppellantCommissioner of Sales Tax
RespondentPuran Chand and Sons
Excerpt:
- - importing of dictionary meanings is not justified, when a word or a term is of common use and well-understood. sugar is a well-known commodity both in common parlance and in the commercial world. the item which can be considered to be exempt is sugar simplicities and not sugar with any additives, like icing sugar, which has an additive of starch......its return of turnover on examination of which it was called upon to prepare a list of sales of icing sugar. a statement was prepared on 30th december, 1967. according to that statement, the dealer had sold icing sugar locally to the tune of rs. 2,396.45 during the assessment year. the dealer had contended that the sales of sugar were exempt from taxation, as sugar fell under entry no. 9 of the second schedule to the bengal finance (sales tax) act, 1941, as extended to the union territory of delhi. the sales tax officer, however, took the view that as starch was mixed with icing sugar it became a different commodity and the sales attracted taxation at 5 per cent. the dealer felt aggrieved by the order and went in appeal which was disposed of by the appellate assistant commissioner by.....
Judgment:

Prakash Narain, AG. C.J.

1. Both these references will be answered by the common judgment which we render.

2. The respondent-firm is doing the business of wholesale and retail distribution of general merchandise including sugar. It is registered as a dealer. For the year 1965-66, the respondent filed its return of turnover on examination of which it was called upon to prepare a list of sales of icing sugar. A statement was prepared on 30th December, 1967. According to that statement, the dealer had sold icing sugar locally to the tune of Rs. 2,396.45 during the assessment year. The dealer had contended that the sales of sugar were exempt from taxation, as sugar fell under entry No. 9 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi. The Sales Tax Officer, however, took the view that as starch was mixed with icing sugar it became a different commodity and the sales attracted taxation at 5 per cent. The dealer felt aggrieved by the order and went in appeal which was disposed of by the Appellate Assistant Commissioner by his order dated 2nd May, 1970. The appeals against the assessments were dismissed. Revisions preferred to the Commissioner were disposed of by an order dated 3rd December, 1971. The Commissioner held that icing sugar was not sugar under entry No. 9 of the Second Schedule to the aforesaid Act. However, commenting upon the contents of icing sugar and importing the definition of 'sugar' as given in the Central Act, it was observed that in view of Section 15 of the Central Act and the definition of 'sugar' in that Act, the rate of tax for icing sugar had to be 3 per cent. The dealer went up in further revision which was disposed of by the Financial Commissioner. By his order dated 17th December, 1971, the Financial Commissioner agreed that icing sugar was distinct from sugar, but in view of the definition given by the Central Act, held that that definition should govern the interpretation of the term 'sugar' in the local Act also. Thus icing sugar was treated as exempt by extending or importing the definition of the term 'sugar' from the Central Act to the local Act. This led the Commissioner to move the Lt. Governor of Delhi to make a reference to this Court under Section 21 of the Bengal Finance (Sales Tax) Act, as extended to the Union Territory of Delhi, and Section 9 of the Central Sales Tax Act, 1956. The questions referred to us for our opinion are as follows, being common in both the cases :

(i) Whether, on the facts and in the circumstances of the case, icing sugar constituted of 5 per cent of starch and 95 per cent of sugar was sugar simplicities so as to be covered by entry No. 9 of the Second Schedule to the local Act ?

(ii) Whether, on the facts and in the circumstances of the case, icing sugar constituted of 5 per cent of starch and 95 per cent of sugar was covered under the term 'sugar' as per entry No. (viii) of Section 14 of the Central Act read with item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944 ?

(iii) Whether, on the facts and in the circumstances of the case, the learned Financial Commissioner was right in holding that in the absence of any specific definition of 'sugar' in the local Act, the definition of 'sugar' under the Central Act should be adopted in preference to common parlance interpretation ?

It is settled law as far as taxing statutes are concerned that unless a term is otherwise specifically defined, words must be understood in the manner a common man would understand them and terms must be given a meaning which is given in the commercial world. Importing of dictionary meanings is not justified, when a word or a term is of common use and well-understood. Sugar is a well-known commodity both in common parlance and in the commercial world. By no stretch of imagination can icing sugar be termed as sugar. Indeed, all the authorities including the Financial Commissioner are agreed on that point. It is also a cardinal principle of interpretation of statutes that unless it is necessary or specifically provided, definition in one statute cannot be transferred to construe a word or a term in another statute. In taxing statutes, particularly, artificial definitions are sometimes given by the legislature in its wisdom to provide for contingencies which the legislature considers necessary to provide for. thereforee, when the legislature, in the present case, defined sugar in the Central Act, it was for the purposes of that Act and no other Act. To import that definition into the local Act is not warranted either on principles governing interpretation of statutes or on any other judicial principle. We are of the view that the definition of the term 'sugar' given in the Central Act is given for purposes of that Act. Sugar as used in the local Act in entry 9 of the Second Schedule must be understood to be sugar which is understood to be that commodity by the common man or by a shopkeeper or a trader or a customer. Even the contents of icing sugar make it clear that is not the same as ordinary sugar. thereforee, if under a local Act, tax is to be imposed on sale of sugar, it cannot be more than what is provided by Section 15 of the Central Act, but as far as exemption is concerned, the position is different. The item which can be considered to be exempt is sugar simplicities and not sugar with any additives, like icing sugar, which has an additive of starch. Our answers, thereforee, to the three questions are as follows :

Answer No. (i): Question No. (i) is answered in the negative.

Answer No. (ii): Answer to question No. (ii) is in the affirmative.

Answer No. (iii): The learned Financial Commissioner was. not right in holding that in the absence of any specific definition of 'sugar' in the local Act, the definition of 'sugar' under the Central Act should be adopted in preference to common parlance interpretation.


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