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Deputy Commissioner of Agricultural Income-tax and Sales Tax (Law), Board of Revenue (Taxes) Vs. Chandra Corporation - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberT.R.C. No. 73 of 1974.
Judge
Reported in[1976]37STC179(Ker)
AppellantDeputy Commissioner of Agricultural Income-tax and Sales Tax (Law), Board of Revenue (Taxes)
RespondentChandra Corporation
Appellant AdvocateGovernment Pleader
Respondent Advocate B.S. Krishnan and; V. Ramachandran, Advs.
DispositionPetition dismissed
Cases ReferredStar Trading Co. (P.) Ltd. v. State of Bombay
Excerpt:
- - the rule of interpretation applicable to such cases is well-recognised. 242, adopted the following principles in the matter of construction of entries in statutes like the sales tax acts: these popular words are well-understood as meaning different things and the legislature could not have intended to give them any meaning other than that which is prevalent in the commercial world......no. 9 of the first schedule to the kerala general sales tax act, 1963. according to the revenue, water-coolers fall within the scope of the said entry which deals with refrigerators and air-conditioning plants. the assessee, however, contends that they are not refrigerators or air-conditioning plants, but electrical goods falling under entry no. 26 of the same schedule. the relevant entries in the act are as follows:entry refrigerators and air-conditioning at the point of first 10 no. 9. plants and component sale in the state by (later)parts thereof. a dealer who is liable 12to tax under section 5.entry all electrical goods, instruments, do. 7.no. 26. apparatus, appliances and allsuch articles, the use of whichcannot be had except with the application of electrical energy,including fan.....
Judgment:

T. Kochu Thommen, J.

1. The short question which arises for consideration in this tax revision case is whether 'water-coolers' come within the scope of entry No. 9 of the First Schedule to the Kerala General Sales Tax Act, 1963. According to the revenue, water-coolers fall within the scope of the said entry which deals with refrigerators and air-conditioning plants. The assessee, however, contends that they are not refrigerators or air-conditioning plants, but electrical goods falling under entry No. 26 of the same schedule. The relevant entries in the Act are as follows:

Entry Refrigerators and air-conditioning At the point of first 10 No. 9. plants and component sale in the State by (later)parts thereof. a dealer who is liable 12to tax under Section 5.Entry All electrical goods, instruments, Do. 7.No. 26. apparatus, appliances and allsuch articles, the use of whichcannot be had except with the application of electrical energy,including fan and lighting bulbs,electrical earthenwares andporcelain and all otheraccessories and component partseither sold as a whole or in parts.

2. The assessee is a dealer in water-coolers and spare parts, among other things. It was assessed to sales tax for the year 1967-68 by order of the Sales Tax Officer dated 31st March, 1969. The assessee's turnover in respect of water-coolers and spare parts was assessed at the rate of 7 per cent which is the rate applicable to electrical goods under entry No. 26. The Deputy Commissioner by his order dated 27th March, 1973, set aside the assessment and remanded the case to the Sales Tax Officer with a direction to tax the turnover of water-coolers and spare parts at 10 per cent till 31st August, 1967, and at 12 per cent from 1st September, 1967, to 31st March, 1968, as according to him water-coolers and spare parts fall under entry No. 9. The Sales Tax Officer by his order dated 17th April, 1973, revised the original assessment by refixing the tax at 10 per cent and 12 per cent as directed by the Deputy Commissioner. On appeal by the assessee to the Kerala Sales Tax Appellate Tribunal, Trivandrum, the Tribunal by its order dated 7th May, 1974, set aside the order of the Deputy Commissioner and the consequent revised order of the Sales Tax Officer in respect of the assessment for 1967-68. The Tribunal observed that in common parlance water-coolers were not regarded as refrigerators. Referring to the dictionary meaning of the term, the Tribunal stated that although there was a process of cooling in both water-coolers and refrigerators and this process was by means of refrigeration, water-coolers were only small tanks containing cool drinking water, whereas refrigerators were cup-boards in which ice could be made and food and other things could be kept cooled or preserved by mechanical production of low temperature. The Tribunal said:

A customer who seeks to purchase a refrigerator will not be offered a water-cooler by any dealer and vice versa. Viewed in this light, we find that the water-coolers in question do not fall within the meaning of 'refrigerators and air-conditioning plants and component parts thereof under item No. 9 of the First Schedule. The turnover in dispute will therefore be taxed only at the rate applicable to electrical goods.

3. In Krishna Iyer v. State of Kerala [1962] 13 S.T.C. 838, a Full Bench of this Court had occasion to consider the principle of interpreting the provisions in the Sales Tax Act. Speaking through Govindan Nair, J., as he then was, this court said:

It is not the dictionary meaning of the term that will invariably prevail in the construction of a statute. The rule of interpretation applicable to such cases is well-recognised. It is the rule that particular words used by the legislature in the denomination of article should be understood according to the common commercial understanding of the term used and not in their scientific or technical sense, for, as stated in 9 Wheaten U. S. 435, the legislature does not suppose our merchants to be naturalists, or geologists, or botanists. (para 7).

4. The expression 'water-cooler' must be construed not in any technical or scientific sense but in the sense which people conversant with the subject-matter would attribute to it [1961] 12 S.T.C. 286 (S.C.). In Commissioner of Sales Tax v. Jaswant Singh Charan Singh [1967] 19 S.T.C. 469 (S.C.), the Supreme Court, (1951) C.L.R. (Ex.) 122, (1831) 2 D. & Cl. 302 and (1876) 1 Ex. D. 242, adopted the following principles in the matter of construction of entries in statutes like the Sales Tax Acts:

(1) If a statute uses the ordinary words in every day use, such words should be construed according to their popular sense.

(2) 'If a word in its popular sense and read in an ordinary way is capable of two constructions, it is wise to adopt such a construction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers. In other words, the construction of the words is to be adopted to the fitness of the matter of the statute.'

(3) On the other hand,...'if it is a word which is of a technical or scientific character then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning'.

5. Applying the above principles, one has to ascertain whether water-coolers and refrigerators are expressions which are ordinarily used in common parlance or they are expressions of a technical or scientific character so as to attribute to them only the technical or scientific meaning. In our opinion, both water-coolers and refrigerators are commonly understood in the commercial world as goods serving different purposes. These expressions are, as found by the Tribunal, now current having popular and distinct meanings. Being words in every day use in the commercial or popular sense they should not be interpreted according to any technical or scientific or dictionary meaning, but only in the sense in which they are understood in common parlance. No reasonable housewife is likely to accept a water-cooler for a refrigerator or buy a refrigerator when she only requires a water-cooler. These popular words are well-understood as meaning different things and the legislature could not have intended to give them any meaning other than that which is prevalent in the commercial world.

6. Counsel for the revenue brought to our notice a decision of the Bombay High Court in Star Trading Co. (P.) Ltd. v. State of Bombay [1962] 13 S.T.C. 102. It was held in that case that a cooling plant used by a textile mill for cooling caustic soda solution for mercerising processes was a refrigerator within the meaning of item 69 of Schedule B of the Bombay Sales Tax Act, 1953. Mr. Paripoornan, counsel appearing for the revenue, therefore contends before us that applying this principle a water-cooler cannot be regarded as anything other than a refrigerator. The Bombay High Court in that case followed the principle that articles mentioned in the relevant entries of the Sales Tax Act had to be construed in their commercial sense, and rejected the contention of the assessee that the expression 'refrigerator' was generally and commercially understood as a refrigerator used for domestic purposes only. There was clear evidence in that case to show that the cooling plant which was used for mercerising processes was capable of being used for refrigeration purposes also. It was not an apparatus solely and exclusively meant for mercerising processes. The facts of that case are not similar to those in the present case, although it may be pointed out that the Bombay High Court did adopt the principle of construction according to the commercial sense.

7. Viewed in this light, we are of the opinion that the Tribunal has rightly set aside the order of the Deputy Commissioner and the revised order of the Sales Tax Officer. Accordingly, we confirm the order of the Tribunal and dismiss the tax revision case. We direct the parties to bear their respective costs.


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