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Commissioner of Sales Tax, Gujarat State Vs. India Cutlery Stores, Surat - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtGujarat High Court
Decided On
Case NumberSales Tax Reference No. 30 of 1969
Judge
Reported in[1971]27STC548(Guj)
ActsBombay Sales Tax Act, 1959 - Sections 6, 7 and 61
AppellantCommissioner of Sales Tax, Gujarat State
RespondentIndia Cutlery Stores, Surat
Appellant Advocate B.R. Shah,; R.M. Gandhi, Advs. and; H.V. Chhatrapati
Respondent Advocate S.L. Mody, Adv.
Cases ReferredCommissioner of Sales Tax v. Ratilal Nanchand
Excerpt:
.....sales tax act, 1959 - whether matches and paper caps are 'fireworks' covered by entry 44e - bengal light matches exempted from operation of relevant law relating to explosives suggests that said article has been treated as 'fireworks' - licence for manufacture, possession and sale of paper caps required to be taken under law - bengal light matches and paper caps are covered by entry 44e. - - 3. the tribunal, in arriving at its decision, considered the dictionary meaning of the word 'fireworks' and was of the opinion that the meaning given to the word 'fireworks' in the dictionary could not be 'stretched to include such harmless non-explosive articles' like bengal matches and paper caps in the category of 'fireworks'.the tribunal, applying the test of popular parlance as enunciated..........dated 31st december, 1968 :- 'whether on the facts and in the circumstances of the case the bengal light matches and paper caps are 'fireworks' covered by entry 44e of schedule c to the bombay sales tax act, 1959, or covered by the residuary entry 22 of schedule e to the said act ?' 2. the facts giving rise to this reference may be briefly stated : the assessee is a firm carrying on business as a dealer in sewing thread, cutlery, fireworks, bengal light matches, paper caps etc. the assessee was assessed to sales tax for the period kartak sud 1 of s.y. 2019 to aso vad 30 of s.y. 2020. the assessee had undertaken the sales of bengal light matches and paper caps during the said assessment period and the sales tax officer assessed sales tax on the sales of those items at the rate specified.....
Judgment:

Desai, J.

1. The Gujarat Sales Tax Tribunal (hereinafter referred to as 'the Tribunal') has referred to this court under section 61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the Act'), the following question of law arising out of its judgment and order dated 31st December, 1968 :-

'Whether on the facts and in the circumstances of the case the Bengal light matches and paper caps are 'fireworks' covered by entry 44E of Schedule C to the Bombay Sales Tax Act, 1959, or covered by the residuary entry 22 of Schedule E to the said Act ?'

2. The facts giving rise to this reference may be briefly stated : The assessee is a firm carrying on business as a dealer in sewing thread, cutlery, fireworks, Bengal light matches, paper caps etc. The assessee was assessed to sales tax for the period Kartak Sud 1 of S.Y. 2019 to Aso Vad 30 of S.Y. 2020. The assessee had undertaken the sales of Bengal light matches and paper caps during the said assessment period and the Sales Tax Officer assessed sales tax on the sales of those items at the rate specified in entry 44E of Schedule C to the Act holding that the said two articles were 'fireworks' within the meaning of the said entry. The assessee being aggrieved by the said order of assessment, preferred an appeal to the Assistant Commissioner of Sales Tax and contended that the said two articles were not fireworks within the meaning of entry 44E of Schedule C but were covered by the residuary entry 22 of Schedule E and were liable to sales tax at the rate specified in the latter entry. The Assistant Commissioner of Sales Tax negatived the contention of the assessee and dismissed the appeal. The assessee thereupon preferred a second appeal before the Tribunal which allowed the appeal holding that the said two articles were not covered within the meaning of the word 'fireworks' and the sales of those two items were liable to be taxed under the residuary entry 22 of Schedule E.

3. The Tribunal, in arriving at its decision, considered the dictionary meaning of the word 'fireworks' and was of the opinion that the meaning given to the word 'fireworks' in the dictionary could not be 'stretched to include such harmless non-explosive articles' like Bengal matches and paper caps in the category of 'fireworks'. The Tribunal, applying the test of popular parlance as enunciated by the Supreme Court in Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola, and Another ([1961] 12 S.T.C. 286 (S.C.)), came to the conclusion that persons using and dealing in Bengal light matches and paper caps know fully well 'that these are not fireworks as such'. It further observed that 'merely because they give some scenic coloured lights and some amusing noise in toy pistols used by children, they cannot be termed as 'fireworks'.' The Tribunal also relied upon the fact that no licence was required for the sale of Bengal light matches and paper caps used in toy pistols and they were exempted from the operation of the relevant law relating to explosives and explosive substances by the Explosives Rules, 1940. It is on these grounds that the Tribunal took the view that the said two articles were not 'fireworks' within the meaning of the relevant entry but were covered by the residuary entry and the sales thereof were liable to be taxed accordingly.

4. The revenue, being dissatisfied with the determination of the Tribunal, made an application to the Tribunal under section 61 of the Act and the Tribunal has thereupon referred the question set out above to this court for its opinion.

5. The relevant portion of entry 44E of Schedule C to the Act reads as under :

'-----------------------------------------------------------------------Sr. Description of goods. Rate of sales tax. Rate of purchase tax.No.1 2 3 4------------------------------------------------------------------------ 44E Fireworks Ten naye paise Ten Naye paisein the rupee. in the rupee. -----------------------------------------------------------------------'

The question which arises for our determination is whether Bengal light matches and paper caps are included within the aforesaid entry. The term 'fireworks' has not been defined in the Act. It is now well settled that the names of articles, sales and purchases of which are liable to be taxed, given in a statute, unless defined in the statute, must be construed not in a technical sense but as understood in common parlance and in its popular sense meaning thereby 'that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it' (vide Ramavatar Budhiprasad v. The Assistant Sales Tax Officer, Akola, and Another ([1961] 12 S.T.C. 286 (S.C.)). We shall, therefore, have to ascertain how the word 'fireworks' is understood in common parlance. But before we do so, we would refer to the nature and character of the two articles in question and its ordinary use in the day to day life.

6. It is common ground that Bengal light matches are a kind of matches which emit colours when rubbed on rough surface or specially prepared surface. These matches are commonly known as 'Baporia'. Paper caps are small, tablet-like, round, flat articles which are used in toy pistols and they have the effect of producing noise by combustion. These paper caps are commonly known as 'Tikdis'. Both these devices are used mostly by children for excitement and pleasure during festivities.

7. We must now consider as to what is the popular meaning of the word 'fireworks' and whether these two articles are 'fireworks' according to the said meaning. It appears to us that in popular parlance, 'fireworks' mean and include all those devices which, when exploded or burned, produce noise or brilliant light and which are usually displayed or exhibited for celebrating occasions of national, religious or social rejoicing or family festivals. According to its popular meaning, therefore, fireworks would mean and include any contrivance used on a festive occasion which, when exploded or burned, has the effect of producing noise or amusing and alluring lighting effect. If this is the popular meaning of the word 'fireworks', we see no reason why Bengal light matches or paper caps would not be included within the meaning of the word 'fireworks'. As stated above, Bengal light matches have the effect of emitting colourful light when rubbed on a rough or specially prepared surface and paper caps are used in toy pistols for producing noise by combustion. Both these articles are admittedly used by children on festive occasions - whether the festive occasion be Diwali or a marriage or any other celebration in the family. We are, therefore, of the opinion that both these articles would prima facie fall within the ambit of the word 'fireworks'.

8. We are fortified in the view that we are taking by the dictionary meaning of the word 'fireworks' which also broadly accords with its popular meaning. In Shorter Oxford English Dictionary, Third Edition, at page 703, various meanings of the word 'fireworks' are given and the meaning which is in our opinion relevant for the purpose of this case is the meaning at item No. 4 which is as under :

'Any contrivance for producing with fire a pleasing or scenic effect; esp. a rocket, squib, etc.'

In Webster's new Twentieth Century Dictionary, Second Edition, Volume 1, at page 690, the following meanings of the word 'fireworks' are given :

'1. devices, as firecrackers, rockets, sparklers, etc. which are exploded or burned for celebrations or as signals to produce loud noises or brilliant lighting effects. 2. a display of or as of fireworks; a pyrotechnic display.'

9. In Stroud's Judicial Dictionary, Third Edition, at page 1099, we find the following observations under the heading 'fireworks' :

'Fireworks. (1) In Bliss v. Lilley (32 L.J.M.C. 3), Wightman, J., held that fog-signals were 'fireworks' within Gunpowder and Fireworks Act, 1860 (23 & 24 Vict., c. 139), ss. 6 and 7 - but see now Explosives Act, 1875 (38 & 39 Vict., c. 17), s. 122; but Cockburn, C.J., said that ''fireworks' must refer to things that are made for amusement,' and Blackburn, J., was of the same opinion. Cockburn, C.J., also asked, 'Take the case of a shell or a rocket used in war, could you call that a 'firework' ?' Cp. Explosive.'

It will thus appear that even according to the dictionary meaning, both the aforesaid articles would be included within the ambit of the word 'fireworks' and there is nothing in the dictionary meanings which persuade us to take a different view.

10. The Tribunal has observed that the meaning given to the word 'fireworks' by the dictionaries 'cannot be stretched to include such harmless non-explosive articles like Bengal matches and paper caps into the category of fireworks'. It has also observed that 'merely because they give some scenic coloured lights and some amusing noise in toy pistols used by children, they cannot be termed as fireworks. To place these articles in the category of fireworks would be stretching the meaning of the word 'fireworks' beyond its reasonable ambit.' We are unable to agree with the view taken by the Tribunal. The fact that both these articles are normally used during festivities and have the effect of producing either noise or amusing lighting effect, brings the said articles within the purview of the term 'fireworks' and merely because they may be harmless non-explosive articles used by children, they cannot cease to be fireworks. In our opinion, it would be stretching the case too far in favour of the assessee to say that both these articles, which even according to the Tribunal 'give some scenic coloured lights and some amusing noise', would not be included within the meaning of the word 'fireworks'. The Tribunal has also observed that persons using and dealing in both these articles 'know fully well that these are not fireworks as such' meaning thereby that these two articles would not be known as 'fireworks' in popular parlance. We are unable to agree with the said observations of the 'Tribunal because in our opinion (sic) fireworks are covered also within the meaning of the word 'fireworks' as understood in popular parlance as would be evident from the very meaning ascribed to that word in common parlance as stated above.

11. There is also an internal indication in the framework of the Act itself of the legislative intent so far as Bengal light matches are concerned. Entry 9 of Schedule C reads as under :

-----------------------------------------------------------------------Sr. Description of Rate of sales Rate of purchase No.goods. tax. tax.1 2 3 4----------------------------------------------------------------------- 9. Safety matches Three naye Three naye(excluding matches paise in the paise in theordinarily used as rupee. rupee.fireworks). -----------------------------------------------------------------------

It is thus evident that the Legislature wanted to exclude from the purview of entry 9 of Schedule C those matches which are ordinarily used as fireworks. The exclusion thus contemplated in entry 9 of Schedule C must necessarily relate to articles like bengal light matches which, though they are prima facie matches, are by their use liable to be classified as fireworks. Mr. S. L. Mody, appearing on behalf of the assessee however contended that mere exclusion of matches which are ordinarily used as fireworks from entry 9 of Schedule C will not be determinative of the question whether such matches would be included within the ambit of 'fireworks' as contained in entry 44E of Schedule C because the Legislature has not specifically included Bengal light matches in the latter entry. It is true that by mere exclusion of matches which are ordinarily used as fireworks from the operation of entry 9 of Schedule C, such matches would not necessarily be included within the meaning of the word 'fireworks' as contained in entry 44E of Schedule C, but if such matches by their character, composition and use prima facie fall within the description and meaning of the word 'fireworks', by virtue of their exclusion from the category of safety matches the scope of controversy is considerably limited and that is how the legislative intent as evidenced by entry 9 of Schedule C becomes relevant.

12. The Tribunal, in arriving at its decision, has also relied upon the circumstance that no licence is required for storing and selling Bengal light matches or paper caps under the relevant law governing explosives and explosive substances and further that both the articles are exempted from the operation of the relevant law under the Explosives Rules, 1940. In our opinion, the Tribunal was in error in relying upon the circumstance that under some other law governing explosives and explosive substances, the aforesaid two articles were exempted for selling and storing them. As pointed out by the Supreme Court in Commissioner of Sales Tax v. Jaswant Singh Charan Singh ([1967] 19 S.T.C. 469 (S.C.)), it would not be proper to discard the meaning of a word given in a statute as understood in its commercial or popular sense and to adopt its connotation from other statutes passed for different purposes or in context of different objects. At page 475 of the report, we find the following pertinent observations of the Supreme Court :

'As Lord Loreburn stated in Macbeth v. Chislett ([1910] A.C. 220, 224), 'it would be a new terror in the construction of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone.' The strict sense in which such a word is to be found in another statute may mean the etymological or scientific sense and would not in the context of another statute be applicable ... Nor can we infer that there is a legislative policy consistently followed by the Legislature merely because the word 'coal' has been used as meaning a mineral product in the context of these statutes. It would not, therefore, be possible to discard the meaning of the word 'coal' in this statute as understood in its commercial or popular sense and to adopt its connotation from other statutes passed for different purposes or in context of different objects.'

13. But apart from the inadvisability of referring to the provisions of another statute in construing the word 'fireworks' appearing in entry 44E of Schedule C of the Act, we find that even if a reference is made to the provisions of the relevant law, the conclusion which the Tribunal has ultimately arrived at on the strength of the said circumstance is not well-founded. Section 4(1) of the Indian Explosives Act, 1884, defines the word 'explosive' as under :

'(1) explosive

(a) * * * (b) includes fog-signals, fireworks, fuses, rockets, percussion caps, detonators, cartridges, ammunition of all descriptions, and every adaptation of preparation of an explosive as above defined.'

It is thus clear that 'fireworks' are explosives within the meaning of the relevant statute. Now whether bengal light matches would be included within the meaning of 'fireworks' and if so, whether they will be explosives within the meaning of the relevant statute, is made further clear by rule 5 of the Explosives Rules, 1940, which provides for general exemptions. The relevant portion of the said rule reads as under :

'B. General exemptions - (1) Nothing in these rules shall apply -

(i) * * * (ii) to the manufacture, possession, sale, transport or importation of coloured matches known as Bengal Lights or Star Matches, under such conditions and in such quantities as the Chief Inspector, or in the case of transport by rail, the Railway Board, on the recommendation of the Chief Inspector, may from time to time determine or to the possession, sale, transport or importation of snaps when contained in fully manufactured Christmas or bonbon crackers; * * *

The very fact that bengal light matches are exempted from the operation of the relevant law relating to explosives suggests that, in the first instance, the said article has been treated as 'fireworks' and but for the exemption granted to the said article under rule 5 of the Rules aforesaid, licence for manufacture, possession, sale etc. of the said article would have been required to be taken out under the relevant law. It appears, however, that as a matter of policy or for some other reason, the said article has been given exemption from the operation of the relevant law subject to the fulfilment of certain conditions. It is thus clear that the circumstance that Bengal light matches are exempted under rule 5 of the Explosives Rules, 1940, from the requirement of obtaining licence to manufacture, store or sell the said article is really of no consequence because, but for the exemption, the article in question, being fireworks, would have been governed by the provisions of the relevant law relating to explosive substances. In our opinion, therefore, the Tribunal was in error in inferring from the said circumstance that Bengal light matches are not 'fireworks' within the meaning of the said expression. We may also observe that exemption granted under the said rule 5 relates only to Bengal light matches and not to paper caps. Under the circumstances, there was no warrant to assume that no licence for manufacture, possession and sale of paper caps is required to be taken under the law relating to explosive substances and, in making the said assumption, the Tribunal is even factually in error.

14. The Tribunal has next relied upon the judgment of the Saurashtra High Court in Commissioner of Sales Tax v. Ratilal Nanchand ([1955] 6 S.T.C. 714) in support of its view that Bengal light matches would not fall within the meaning of the word 'fireworks'. The Saurashtra High Court was there concerned with the question whether Bengal light matches were covered within the meaning of the expression 'crackers and fireworks of all kinds' appearing in entry 5 of Schedule to the Saurashtra Sales Tax Ordinance (XVIII of 1950). The Saurashtra High Court observed that it was common ground that the said matches were only used during the Diwali festivals. It further observed that under Schedule I of the Railway Rules referring to 'fireworks', Bengal light matches were specifically excluded from the category of 'fireworks' and were included in the category of 'non-safety matches'. The Saurashtra High Court also referred to rule 5 of the Explosives Rules, 1940, and pointed out that they were also exempted from the operation of the said Rules. The Saurashtra High Court, therefore, took the view that Bengal safety matches were not fireworks but were matches within the meaning of the Saurashtra Sales Tax Ordinance. We are unable to agree with the view taken by the Saurashtra High Court, because, in our opinion, it would not be proper to ascertain the meaning of the word 'fireworks' by reference to some other statute passed for different objects. The meaning of the word must be found from the definition given in the statute or from other indication, if any, given in the statute or, in the case of a taxing statute where the word is not defined, from its use in popular parlance. In this context, it may also be borne in mind that when the Saurashtra High Court decided the aforesaid case, the Supreme Court judgment in Ramavatar's case ([1961] 12 S.T.C. 286 (S.C.)). We are, therefore, of the opinion that the Tribunal was in error in holding on the strength of that decision that Bengal light matches and paper caps are not 'fireworks' within the meaning of entry 44E of Schedule C.

15. Our answer to the question referred to this court for its opinion, therefore, is that Bengal light matches and paper caps are covered by entry 44E of Schedule C to the Bombay Sales Tax Act, 1959. The opponent-assessee to pay costs of the reference to the State of Gujarat.

16. Reference answered accordingly.


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