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Commissioner of Income Tax and ors. Vs. Swastik Gum Industries and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax/VAT
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil Sales Tax Case No. 60 of 1968
Judge
Reported in1985(2)WLN168
AppellantCommissioner of Income Tax and ors.
RespondentSwastik Gum Industries and ors.
DispositionRevision dismissed
Cases ReferredTilok Chand Prassan Kumar v. Sales Tax Officer
Excerpt:
rajasthan sales tax act, 1954 - section 4(1) and entry 9 in schedule--gowar churi being cattle fodder is exempted from payment of tax.; the board was right when it held the gowar churi being a cattle food, is exempt from the payment of tax as per entry 9 of the schedule under section 4(1) of the act.;revision dismissed - section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed the age of 16 years and 13 days on the date of alleged occurrence - appellant was arrested on 30.11.1998 when the 1986 act was in force and under clause (h) of section 2 a juvenile was described to mean a child who..........j.1. dealer non-petitioner no. 1, at the relevant time, carried on business of gowar gum and gowar churi. the assistant commercial taxes officer, ward 'c' pali (assessing authority), by his assessment order dated 22, 1972 for the period: october 22, 1960 to october 30, 1970, charged tax on the sale of gowar churi at rate of 2%. he did not accept the claim of the dealer that gowar churi was exempt from payment of tax under item no. 9 of the schedule to the rajasthan sales tax act, 1954 (act no. xxix of 1954) (for short 'the act'). the dealer (assessee) filed appeal and the deputy commissioner (appeals). commercial taxes, jodhpur, by his order dated january 9, 1974, allowed the appeal and held that the gowar churi being cattle feed and being item different from gowar, falls under.....
Judgment:

Kishan Mal Lodha, J.

1. Dealer non-petitioner No. 1, at the relevant time, carried on business of Gowar Gum and Gowar Churi. The Assistant Commercial Taxes Officer, Ward 'C' Pali (Assessing Authority), by his assessment order dated 22, 1972 for the period: October 22, 1960 to October 30, 1970, charged tax on the sale of Gowar Churi at rate of 2%. He did not accept the claim of the dealer that Gowar Churi was exempt from payment of tax under item No. 9 of the Schedule to the Rajasthan Sales Tax Act, 1954 (Act No. XXIX of 1954) (for short 'the Act'). The dealer (assessee) filed appeal and the Deputy Commissioner (Appeals). Commercial Taxes, Jodhpur, by his order dated January 9, 1974, allowed the appeal and held that the Gowar Churi being cattle feed and being item different from Gowar, falls under Entry 9 of the Schedule and is. therefore, exempt from tax. The Assessing Authority filed revision before the Board of Revenue, Ajmer ('the Board' here in). The Division Bench of the Board, by its order dated February 16,1979, rejected the revision holding that the Gowar Churi is fodder and as such exempt from the payment of tax according to Entry 9 of the Schedule. We may read the material part of the order of the Board dated February 16, 1979:

We are of the opinion that the Gowar Churi is used mostly for cattle feed purposes. Gowar has perhaps been deleted from the totally exempted items of fodder from the payment of tax Under Section 4(1) of the RST Act as it is also used as raw materials for preparation of Gowar which is a commercial item. The intention of the legislature for exempting pulses and fodder is to give relief to the consumers and agriculturists. As has been certified by the different firms and is well known, Gowar Churi cannot be used for any other purposes and as has been held in the above referred two cases, the best test for considering any item as fodder is the extensive uses to which that commodity is put to.

The Commercial Taxes Officer (Revisions), Ajmer filed an application under Section 15(1) of the Act for referring the question of law arising out of the order dated Feb. 16, 1979 of the Board. As that application was not disposed of within the period of 180 days from the date of the application, the petitioners have filed the application under Section 15(3A) of the Act for a direction to the Board to refer the following question of law to this Court for decision:

Whether on the facts and circumstances of the case involving an assessee who runs a Gum Industry and has no connection with cattle, the Board was right in holding that Gowar Churi is cattle feed and exempt from tax under Entry No. 9 of the Schedule to the Rajasthan Sales Tax Act, 1954?

During the pendency of this application, the Rajasthan Sales Tax(Amendment) Act, 1984 (No. XX of 1984) (for short 'the Amendment Act') came into force from May 1, 1985. According to Section 13(10) of the Amendment Act, this application is to be heard as a revision under Section 15 of the Act, as substituted by the Amendment Act and discussed of as such. Accordingly, we have treated this application under Section 15(3A) of the Act, as revision under Section 15 of the Act, as substituted by the Amendment Act.

2. We have heard Mr. K.C. Bhandari for the petitioners and Mr. Rajendra Mehta, for the delear assessee.

3. The question of law that arises is whether Gowar Churi is not included in Gowar, which is mentioned in Entry 9 of the Schedule appended to the Act, for, it is a cattle feed. The relevant portion of the Schedule is as follows:

No tax shall be payable on the sale or purchase of the following goods:Description of goods Conditions and exectionssubject to which exem-ption is allowed:________________________________________________________________9. Cattle feeds excludingGowar, cotton-seeds andall cakes - '________________________________________________________________

4. According to Entry 9 of the Schedule, which is material for the relevant period, the cattle feeds, which do not include Gowar, cotton seeds, and oil cakes tax was payable on sale or purchase, even if they might have been used as cattle feeds.

5. Learned counsel for the petitioners contended that 'Gowar Churi' in not exempt from payment of sales tax in accordance with Entry 9, Cattle feeds exclude Gowar. which includes Gowar Churi and Gowar Musk. On the other hand, Mr. Rajendra Mehta, learned counsel for the dealer-assessee strenuously contended while supporting the order of the Board, that Gowar Churi is used as cattle feed and is not included in the word 'Gowar' and so no sales tax is payable on the sale or purchase of Gowar Churi in accordance with Entry 9 as it stood at the relevant time. We have given our most-anxious and thoughtful consideration to the rival contentions of the learned counsel for the parties. In this connection, we shall consider the meaning of 'Gowar' as used in Entry 9,as is understood by the dealer when it sells it and by the purchaser when he purchases it. In other words, what is the meaning of the word 'Gowar', as commonly understand by persons dealing in that commodity.

6. It was ruled in Annapurna Carbon Industries Co. v. State of A.P. (1976) 37 STC 378, while construing Entry No. 4 of the Andhra Pradesh General Sales Tax Act, (Act No. VI of 1957) that for determining the meaning of a particular commodity the deciding factor is the predominant or ordinary purpose or use.

7. The question that cropped up in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan (1980) 46 STC 256 before the Supreme Court, was whether the word 'Fabric' includes tire cord fabric, for the purposes of exemption from tax under the Act. His Lordship Pathak, J., speaking for the Court, made the following weighty observations:

In determining the meaning or connotation of words and expressions describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairely well-settled, it is that the words of expressions must be construed in the sense in which they are understood in the trade by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted.

(Italics is ours)

8. A question arose in Indo International Industries v. Commr. of Sales Tax (1981) 47 STC 359 whether hypodermic clinical syringes could be regarded as 'glassware' under Entry 30 of the First Schedule to the U.P. Sales Tax Act, 1948. While examining the question, V.D. Tulzapurkar, J., expressed him self in the following words:

It is well settled that in interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object to raise revenue and for which purpose they classify diverse products, resort should be had not to the scientific and technical meaning of the terms or expressions used, but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any terms or expression has been defined in the enactment then it must be under stood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.

In that case, reference was made to CST v. Jaswant Singh (1967) 19 STC 469, wherein it was observed:

Now, there can be no dispute that a while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. 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 to say, to their commercial sense.

It will serve no useful purpose to multiply the authorities, as the position appears to be well settled and there appears to be no room for any debate what so ever, that if the term has not been defined under the Sales Tax Act, its common parlance meaning or common sense meaning should be given to it having regard to the persons who deal in that.

9. In Entry 9, Gowar has been specifically mentioned, Gowar has not been defined any where in the Act.

10. The question involved in Maman Chand Kundanlal v. State of Haryana (1970) 25 STC 458, was whether Gram Chhilka was gram husk or fodder and so was exempt from the liability of sales tax under the Punjab General Sales Tax Act, 1948 (No. XLVI of 1948). It was held that the Gram Chhilka is exempt from payment of sales tax.

11. It was observed in Express Dairy Co. Ltd. v. Assessing Authority (1971) 28 STC 37, by the Punjab and Haryana High Court as under:

It is, thus, clear that the 'guar giri' or the 'guar meal' produced by the petitioners cannot be termed as flour of 'guar' meal as it is a pulvarized substance, which is not in the fine powder form. It is a substance in the form of small crystals and is not produced as a result of grinding but as a result of the process which separates the outer portion from the inner one. It is really a bye product of the primary manufacturing process to which the whole grain is subjected for commercial purposes. For this reason, it cannot be termed as 'guar flour' nor can be taxed as such.

Before the Allahabad High Court, the question in Umrao Industrial Corpora-tion Ltd.v s. Safes Tax Officer (1974) 33 STC 343 was whether De-oiled rice bran, used as cattle fodder, was covered by the expression 'cattle fodder' and was exempt from the sales tax. According to the Notification, in that case, cattle fodder including green fodder was exempt from sales tax. Therefore, the State Government issued another Notification modifying the earlier one and under it, cattle fodder including green fodder, churi, bhusi, chhilka, chokar, cotton seed, gowar and oil-cake were all exempted from tax. It was held that de-oiled rice was covered by the expression 'cattle fodder' and as such was covered by the expression 'cattle fodder' and as such was exempt under the Sales Tax Act.

12. A similar question arose in CIT v. Prayag Tea and Oil Mills (1985)12 STL 108, wherein the learned Judge took the view that the De-oiled rice bran had a direct link with and could be used only as a cattle fodder and, therefore, it was nothing but cattle fodder which was exempt from tax. It may be mentioned that this view is in conformity with the view taken in Umrao Industrial Corpris case (7), but no reference was made there in.

13. Bearing in mind the reasons given in the aforesaid decision of the Allahabad and Punjab and Haryana High Courts, we have to consider whether in Entry 9, the word 'Gowar', which has been excluded, includes gowar churi or not. It is not in dispute and rightly so as held in Motilal Sumermal v. Union of India and Ors (S.B. Civil Writ Petition No. 1501/79, decided on February 2, 1980 by one of us (S.K. Mal Lodha, J.) that Gowar Churi is derivative of Gowar and the was reiterated in Lohiya Mwlidhar Maghraj v. State of Rajasthan (S.B. Civil Writ Petition No. 177 of 1980) and M/s Phoosaram Manaraj v. State of Rajasthan (SB Civil Writ Petition No. 178/80) decided on February 2, 1980.

14. A careful examination of Entry 9 makes it abundantly clear that the cattle-feeds have been exempt from tax all alone, Gowar has been specifically excluded from cattle feeds. It is a common ground between he parties that it is Gowar, which has been excluded from exemption as 'cattle feed'. But the dispute, as stated above, is whether Gowar Churi is the very same thing as Gowar as finds mention in Entry 9 of the Schedule. It is also not disputed that Gowar Churi is cattle feed though it is derivative or product of Gowar. It is altogether a different product when purchase and sale of Gowar Churi takes place, dealers who do its business do not mean Gowar, as such. The ordinary purpose or use of Gowar Churi is not the very same as that of Gowar. Common parlance meaning or commercial sense meaning of Gowar and 'Gowar Churi' is not the same and as such exclusion of Gowar in Entry 9 does not mean exclusion of Gowar Churi. Dealer (non-petitioner No. 1) has purchased Gowar as raw-material and, therefore, has not paid any sales lax at the time of purchase. As soon as from Gowar, gum is manufactured then under the Schedule, it is liable to payment of tax. As Gowar Churi can be used for no other purpose except as cattle feed, the Board was justified in holding that Entry 9, while excluding Gowar does not include Gowar Churi. Learned counsel for the Assessing Authority has invited our attention to Tilok Chand Prassan Kumar v. Sales Tax Officer (1970) 25 STC 118 where the question arose whether Arhar Dal, purchased by Dal Mills converted into broken pieces is the same commodity or not. It was held that the Dal purchased by the petitioner could not be said to be a commodity essentially different from the Arhar Dal purchased by the Dal mills and accordingly the purchase effected by the petitioner.in that case, could not be regarded as the first purchase and the petitioner is, therefore, not liable to the levy of purchase tax Under Section 3-D(1) of the U.P. Sales Tax Act, 1948 (No. XV of 948) on the turnover of such purchase. The case has been decided on its own facts and in view of Section 3-D(1) of the U.P. Sales Tax Act, 1948.

15. Mr. M.C. Bhandari, learned counsel for the petitioner wanted to derive support from the reasons given by the Division Bench of the Board in Mahaveer Industries v. ACTO Merta City 1985 RRD 239, wherein it was held that the Gowar Churi or Korma was not cattle-feed and so ceased to be exempt from payment of tax under Entry 9 of the Schedule appended to the Act. Mr. Rajendra Mehta, learned counsel informed that, that case has not been correctly decided and that it has been challenged in revision Under Section 15 of the Act as substituted by the Amendment Act. We are not inclined to express any opinion about the correctness or otherwise of the decision in Mahaveer Industries' case 1985 RRD 239. Suffice it to say that it is not applicable to the case on hand.

16. In view of the discussion made here in above, the Board was right when it held the Gowar Churi being a cattle feed, is exempt from the payment of tax as per Entry 9 of the Schedule Under Section 4(1) of the Act.

17. The application Under Section 15(3A) which has been treated as revision is, therefore, dismissed and the order of the Board dated February 16, 1979 is affirmed.

18. There will be no order as to costs of this application.


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