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Deputy Commissioner of Agricultural Income-tax and Sales Tax Vs. Kerala Premo Pipe Factory Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberT.R.C. No. 54 of 1971
Judge
Reported in[1974]33STC305(Ker)
AppellantDeputy Commissioner of Agricultural Income-tax and Sales Tax
RespondentKerala Premo Pipe Factory Ltd.
Appellant AdvocateGovernment Pleader
Respondent Advocate K.V.R. Shenoi,;P.K. Kurian; and K.A. Nayar, Advs.
DispositionPetition dismissed
Cases ReferredIndian Hume Pipe Co. Ltd. v. State of Uttar Pradesh
Excerpt:
- - but it is now well-settled that while interpreting items in statutes like the sales tax acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. there the allahabad high court took the view that that expression takes in items like wash-basin, commodes, cistern tanks and other articles which are commonly used in private and public buildings. we are clearly of the opinion that the pipes of the type, which the petitioner manufactures and supplies, are not covered by the entry relating to sanitary fittings in the notification in question......uses, namely, for pillars, for channels, for engineering and construction purposes, for water supply schemes, road culverts, under tunnels, spouts of irrigation channels, cross masonry works, drainage schemes, etc. during the assessment year the factory had a gross and net turnovers of rs. 11,94,086.69 and rs. 11,76,395.14 respectively. there is no controversy over the turnover. but, according to the sales tax officer, the sale of the manufactured products fell within item 35 of the first schedule to the kerala sales tax act. this levy was disputed. item 35 of the first schedule of the act [as it stood prior to the kerala general sales tax (amendment) act (6 of 1967) (sic)] runs thus;35. water supply and sanitary fittings-point of levy: at the point of first sale in the state.....
Judgment:

G. Viswanatha Iyer, J.

1. In this revision petition against the decision of the Sales Tax Appellate Tribunal, the question to be considered is whether the turnover of the petitioner-company consisting of the price of sales of concrete pipes amounting to Rs. 11,76,395.14 is liable to payment of sales tax at 5 per cent or at 3 per cent only.

2. The respondent-company is the Kerala Premo Pipe Factory Ltd., a Government undertaking. The main business of the factory consists of the manufacture of prestressed and reinforced concrete pipes of various sizes and length. During the assessment year 1965-66, they manufactured 700 mm. pipes, 16 ft. in length and weighing 11/2 tons. These pipes are put to multifarious uses, namely, for pillars, for channels, for engineering and construction purposes, for water supply schemes, road culverts, under tunnels, spouts of irrigation channels, cross masonry works, drainage schemes, etc. During the assessment year the factory had a gross and net turnovers of Rs. 11,94,086.69 and Rs. 11,76,395.14 respectively. There is no controversy over the turnover. But, according to the Sales Tax Officer, the sale of the manufactured products fell within item 35 of the First Schedule to the Kerala Sales Tax Act. This levy was disputed. Item 35 of the First Schedule of the Act [as it stood prior to the Kerala General Sales Tax (Amendment) Act (6 of 1967) (sic)] runs thus;

35. Water supply and sanitary fittings-Point of levy: At the point of first sale in the State by a dealer who is liable to tax under Section 5- Rate of tax: 5 per cent.

On appeal, the Appellate Assistant Commissioner accepted the assessee's contention and held that the pipes manufactured and supplied by the assessee do not come under item 35 and can be taxed only as unclassified goods. This finding was accepted by the Tribunal and this revision petition is filed against that by the revenue.

3. The only question is whether these products can be classified under item 35 of the First Schedule. The term 'water supply and sanitary fittings' has not been defined anywhere in the Act or in the Rules. This term, therefore, has to be interpreted and understood in a popular and commercial sense. In Commissioner of Sales Tax v. Jaswant Singh Char an Singh [1967] 19 S.T.C. 469 (S.C.), the Supreme Court observed:

But it is now well-settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense.

4. This decision refers to an earlier decision of the Supreme Court in Ranta-vatar Budhaiprasad v. Assistant Sales Tax Officer [1961] 12 S.T.C. 286 (S.C.), where betel leaves were held not to come within the category of 'vegetables'. Following the latter decision, this court in Krishna Iyer v. State of Kerala [1962] 13 S.T.C. 838 and in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Mammootty 1970 K.L.T. 142 held that green ginger and pine-apple are not vegetables. Both sides agree to this approach to find out the answer. These pipes are used for taking water from reservoirs to storage tanks and from there to various distributing centres and, therefore, they are essential for water supply. These pipes are also used for drainage and sewage disposals and, therefore, come under the category of sanitary materials. So the revenue includes these pipes under the item 'water supply and sanitary fittings'. In support of this contention the counsel for the revenue also relied on the decision in Model Sanitary House v. Commissioner, Sales Tax [1970] 26 S.T.C. 82, where the term 'sanitary fittings' came up for consideration. There the Allahabad High Court took the view that that expression takes in items like wash-basin, commodes, cistern tanks and other articles which are commonly used in private and public buildings. But, we feel that these concrete pipes of such dimensions as are stated earlier cannot be understood to have been comprehended by item 35. All articles connected with water supply and sanitation are not generally called 'fittings'. Though concrete pipes of these specifications may be used for water supply and drainage and sewage purposes, they are put to other uses also. The uses to which these pipes are put to, stated by the assessee, are not in controversy. Further, the section of trade dealing in such pipes is different from the section of trade dealing in water supply and sanitary fittings. In common parlance in the commercial world, these concrete pipes are never understood as water supply and sanitary fittings. The latter term is understood usually to comprehend such articles which are used for water supply and sanitary purposes in private and public buildings. A similar question arose for consideration in Indian Hume Pipe Co. Ltd. v. State of Uttar Pradesh[1972] 29 S.T.C. 487. In that case, the assessee was engaged in the manufacture and supply of pipes which were marketed under the trade name 'hume pipes'. The bulk of the pipes produced by the petitioner was reinforced cement concrete pipes. They also manufactured prestressed concrete pipes for water supply. These products were sought to be taxed by the sales tax department as sanitary fittings at 7 per cent. The assessee contended that the pipes manufactured and supplied by it are not sanitary fittings, but are unclassified goods taxable at the rate specified under the charging Section 3 of the Act. The Allahabad High Cout accepted the assessee's contention. Their Lordships held at page 494 thus:

The expression 'sanitary fittings' must be confined, in our opinion, to such articles as are commonly understood as belonging to that category in common parlance and in the commercial sense. We are clearly of the opinion that the pipes of the type, which the petitioner manufactures and supplies, are not covered by the entry relating to sanitary fittings in the notification in question....

5. The position here is exactly similar. These pipes do not come within item 35 of the First Schedule and they can be taxed only as unclassified goods at the general rate specified in S]ection 5. The majority decision of the Tribunal is correct. The revision petition is not sustainable. It is dismissed with costs.


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