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Atlantis (East Limited) Vs. Additional Member, Board of Revenue - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case Number Matter No. 433 of 1969
Judge
Reported in[1975]36STC210(Cal)
AppellantAtlantis (East Limited)
RespondentAdditional Member, Board of Revenue
Appellant Advocate B.C. Dutt, Adv.
Respondent Advocate G.N. Roy, Adv.
Cases ReferredLakshminarayan Rice Mills v. Assistant Commissioner of Commercial Taxes
Excerpt:
- a.n. sen, j. 1. in this reference under section 21(1) of the bengal finance (sales tax) act, 1941, the following question has been referred to this court:whether, on a true and proper construction of item no. 2 of schedule i of the bengal finance (sales tax) act, 1941, as it stood before its amendment by west bengal act 14 of 1963, the word 'flour' occurring in the said item included 'barley powder' and as such barley powder was exempt from sales tax or whether barley powder was included in item no. 1 of the said schedule and taxable.2. the facts which give rise to the present reference have been fully set out in the statement of the case. the facts material for the purpose of this reference may be briefly stated. m/s. atlantis (east limited) was a registered dealer under the bengal.....
Judgment:

A.N. Sen, J.

1. In this reference under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, the following question has been referred to this court:

Whether, on a true and proper construction of item No. 2 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941, as it stood before its amendment by West Bengal Act 14 of 1963, the word 'flour' occurring in the said item included 'barley powder' and as such barley powder was exempt from sales tax or whether barley powder was included in item No. 1 of the said schedule and taxable.

2. The facts which give rise to the present reference have been fully set out in the statement of the case. The facts material for the purpose of this reference may be briefly stated. M/s. Atlantis (East Limited) was a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, having its Registration Certificate No. B. H/327B. In respect of the assessment for the 4th quarter ending on 31st October, 1959, the assessee raised the contention that the sum of Rs. 17,80,028 realised by the assessee from sale of barley powder in sealed containers should be exempted from tax as barley powder comes within flour mentioned in item No. 2 of the schedule of exemptions appended to the Act. It is to be noted that this contention was raised for the first time in appeal preferred by the assessee before the Assistant Commissioner against the order of the Commercial Tax Officer. The Assistant Commissioner did not accept the contention of the assessee and by his order dated 16th January, 1965, held that 'flour' mentioned in item No. 2 of the schedule did not include 'barley powder'. Against the aforesaid order of the Assistant Commissioner of Commercial Taxes, the assessee filed a petition for revision before the Commissioner of Commercial Taxes, West Bengal. The Additional Commissioner of Commercial Taxes observed in his order dated 25th April, 1966, that nobody would include barley in the term 'flour' either in common parlance or in trade circles and dismissed the assessee's petition. The assessee then filed a further revision petition before the Board of Revenue, West Bengal. After citing certain case-law, the assessee urged before the Board that the recognised meaning of the expression 'flour' which it carried in the English speaking world should be attributed to it when used in the schedule of the Bengal Finance (Sales Tax) Act, 1941, and that the substance 'barley powder' which was nothing but fine soft powder of barley or finely-ground meal of barley grain, should fall within the recognised meaning of the expression 'flour' as used in the said schedule. The Board of Revenue observed by its order dated 19th July, 1968, that the fact remained that item No. 2 in question was later amended by the legislature to read 'wheat flour including atta and suji' which showed that the intention of the taxing authority was really to exempt 'wheat flour' at the time and not to exempt any other kind of soft powder. The Board also held by its order that in this State, as a commercial commodity barley powder sold in sealed containers never was or is understood, in common parlance to be a type of flour and therefore cannot be exempted from tax as flour under item No. 2 of the said schedule. The Board, therefore, rejected the revision petition filed before the Board. On the application of the dealer, the assessee in question, the Board has referred to this court the question, which has already been set out.

3. The real question that falls for determination in the instant reference is whether, on a true interpretation of the Act and the schedule and in particular the word 'flour' occurring in item No. 2 thereof, it can be said that the legislature intended to include 'barely powder' within the said item No. 2 and the said item No. 2 'flour' can be construed to mean 'barley powder'.

4. Mr. B. C. Dutt, the learned counsel appearing on behalf of the dealer, the assessee-applicant in the reference, has submitted before us that on a true construction of the word 'flour' appearing as item No. 2 in the schedule, flour must necessarily be held to mean and include all kinds of 'finely-ground meal of wheat or other grain', which is the dictionary meaning of the word and must, therefore, necessarily include powdered barley, which is indeed the finely-ground meal of barley, which is undoubtedly a kind of grain. Mr. Dutt submits that it cannot be disputed that barley is a kind of grain or cereal. Mr. Dutt argues that all cereals which necessarily include barley are dealt with in item No. 1 of the schedule. Item No. 2, according to Mr. Dutt, makes provision for all kinds of cereals which have been crushed into powder resulting in 'flour', which really means 'finely-ground meal of the cereal'. It is the argument of Mr. Dutt that the word 'flour' in item No. 2 has been used to include the finely-ground meal of every cereal and is not intended to remain confined to only the finely-ground meal of wheat, as, according to Mr. Dutt, if that had been the intention of the legislature, the legislature would have specifically mentioned 'wheat flour'. Mr. Dutt submits that it is undoubtedly well-settled that these words in the schedule should normally be given the popular meaning and should not be construed in any botanical or technical sense. Mr. Dutt, however, contends that if it is not possible to attribute the popular meaning to the word or if there be something in the enactment which goes to show that the legislature did not intend to attribute the popular meaning to the word used, the popular meaning should not be given and, in such a case, the dictionary meaning of the word should be adopted. Mr. Dutt argues that there is really no popular meaning of the English word 'flour' in this State, where most of the people speak Bengali, and are not sufficiently literate to understand English and the English word 'flour'. Mr. Dutt has further argued that among the educated class of persons, who understand English, the word 'flour' is understood to mean 'maida' which is a kind of finely-ground wheat and wheat in this powdered form is known as 'maida' or 'flour' in this State. Mr. Dutt further argues that by mentioning in item No. 2 'flour (including atta, suji and bran)' the legislature clearly intended that flour could not be and should not be understood in the sense, meaning 'maida', in which sense it is generally understood in this State. It is the argument of Mr. Dutt that 'atta and suji' need not necessarily be made of wheat, and bran undoubtedly may be of any cereal. The contention of Mr. Dutt, therefore, is that the popular meaning of the word 'flour' cannot be and should not be given and the legislature by mentioning in item No. 2 that 'flour' will include 'atta, suji and bran' clearly intended to exclude the popular meaning of the word 'flour' in the said schedule. Mr. Dutt further submits that it cannot be said that the use of the words 'atta, suji and bran' are intended to narrow down the meaning of the word 'flour' in the schedule as the legislature by including the said words, intended to give the said word 'flour' an inclusive meaning and not an exhaustive meaning.

5. Mr. Dutt has submitted that the word 'flour' occurring in the schedule also occurs in the schedules of the Sales Tax Acts of other States. The said word 'flour' occurring in the schedules of the various Sales Tax Acts has been construed by the High Courts and in construing the said words the courts have adopted the dictionary meaning of the said word 'flour' and has construed the word to mean 'finely-ground meal of any grain'. In this connection Mr. Dutt has referred to the decision of Banerjee, J., in the case of Lakshminarayan Rice Mills v. Assistant Commissioner of Commercial Taxes (1962) 66 C.W.N. 1 and also to the decisions reported in Harbans Lal v. Punjab State [1953] 4 S.T.C. 391, Industrial Chemical Corporation v. Commissioner of Sales Tax [1972] 30 S.T.C. 172 and Commissioner, Sales Tax, U. P. v. Nihal Chand Hans Raj [1970] 26 S.T.C. 140. Mr. Dutt submits that in view of the construction already given to the said word by this court and the other High Courts, this court should construe the said word to mean 'finely-ground meal of wheat or other grains' and the word flour should therefore include powdered barley. Mr. Dutt contends that if the said word 'flour' is capable of having both the meanings, namely, its popular meaning of 'maida' and its dictionary meaning of 'finely-ground meal of wheat or any other grain'-and it is the contention of Mr. Dutt that, in view of the construction already given by the High Courts, the said word should be construed to be capable of both the said meanings-the said word occurring in a taxing statute should be so construed as will give relief to the dealer and will be beneficial to the assessee. In support of this submission that if any word in a taxing statute is capable of two constructions, that construction which is beneficial to the taxpayer should be given, Mr. Dutt has relied on the following decisions : Commissioner of Income-tax, Bombay City v. Elphinstone Spinning and Weaving Mills Co. Ltd. [1960] 40 I.T.R. 142 (S.C.), Commissioner of Income-tax v. Jalgaon Electric Supply Co. Ltd. [1960] 40 I.T.R. 184 (S.C.), Hansraj Gordhandas v. Dave A.I.R. 1970 S.C. 755, Rattan Lal and Co. v. Assessing Authority A.I.R. 1970 S.C. 1742, Central India Spinning and Weaving and ., The Empress Mills v. Municipal Committee A.I.R. 1958 S.C. 341 and 1894 All E.R. 625. Mr. Dutt in this connection has also referred to Craies on Statute Law, 6th edition, page 162.

6. Mr. Dutt has further argued that the subsequent amendment introduced in 1963 amending the said word 'flour' including 'atta, suji and bran' in item No. 2 of the schedule and substituting in its place 'wheat flour including atta and suji,' clearly indicates that prior to the said amendment flour was capable of being construed to mean flour of any other grain than wheat and would include any other grain in its powdered form and would, therefore, include powdered barley. It is the argument of Mr. Dutt that this subsequent amendment introduced in 1963 clearly indicates that the expression 'flour, including atta, suji and bran' in item No. 2 of the schedule before the amendment was wide enough to include powdered barley on the basis of the dictionary meaning of the word 'flour', which means 'finely-ground meal of wheat or any other grain' and the amendment became necessary to take away from the word 'flour' this wide meaning and to give the word 'flour' the restricted meaning limited to wheat products only. Mr. Dutt has submitted that the notification dated 26th April, 1968, introducing item No. 52 in the schedule which reads 'item 52-sales of barley products, namely, 'flour, suji, atta and dalia' made from barley, except when such sales are made in sealed containers' with effect from 1st May, 1968, clearly indicates that there can be 'flour', 'suji' and 'atta' of barley. It is the submission of Mr. Dutt that as flour can be made of barley, the word 'flour' in item No. 2 of the schedule before amendment should necessarily be construed to mean flour of barley and in the absence of any limitation which was subsequently introduced by the amendment of 1963 restricting flour in item No. 2 to wheat products, the word 'flour' in the said schedule must include barley flour as well, as barley flour is nothing but powdered barely. Mr. Dutt has, therefore, submitted that powdered barley sold in tin containers by the assessee must be considered to be exempt from sales tax, being an item covered within the meaning of flour occurring as item No. 2 in the schedule.

7. Mr. G. N. Roy, the learned Advocate appearing on behalf of the revenue authority of the State, has submitted that the sales tax authorities have rightly imposed tax on powdered barley sold by the dealer-assessee, the applicant herein, in sealed containers, as powdered barely can never be understood to mean flour within the meaning of the said word in item No. 2 of the schedule containing the exemptions and powdered barley cannot be considered to be covered by the said item of exemption. Mr. Roy submits that it is well-settled that in construing any word occurring as an item of exemption in any Sales Tax Act, the word unless otherwise defined in the Act should be construed neither in the technical sense nor from the botanical point of view but it should be understood as in common parlance. In support of this submission, Mr. Roy has referred to the recent decision of the Supreme Court in the case of Mangulu Sahu Ramahari Sahu v. Sales Tax Officer, Ganjam A.I.R. 1974 S.C. 390 at 391, and he has placed particular reliance on the following observations:

This court had occasion to consider the meaning of the expression 'vegetables' in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 S.T.C. 286 (S.C.). Therein this court observed that the word 'vegetables' must be construed neither in a technical sense nor from the botanical point of view ; it should be understood as in common parlance. A word which is not defined in the Act but which is a word of everyday use must be construed in its popular sense.

8. Mr. Roy argues that the word 'flour' occurring as item No. 2 in the schedule is not defined in the Act but is a word of everyday use and the said word therefore must be construed in its popular sense. It is the argument of Mr. Roy that though the said word is an English word, the said word in common parlance is understood to mean 'maida' (flour of wheat) and the said word according to Mr. Roy is a word of everyday use and is used in its popular sense of 'maida' (wheat flour). Mr. Roy has argued that as the said word has a definite popular meaning and is understood in common parlance to mean 'maida' (wheat flour), the said meaning must necessarily be given to the said word and the sales tax authorities have rightly attributed the said meaning to the said word. Mr. Roy argues that the words 'including atta, suji and bran' after the word 'flour' in item No. 2 emphasise the popular meaning 'maida' (wheat flour) of the said word 'flour', and atta, suji and bran which in common parlance are all understood to be wheat products have been specifically mentioned and included as the said items would not otherwise be covered by the word 'flour' in its popular sense of 'maida'. Mr. Roy contends that flour in common parlance and in its popular sense can never be understood to mean powdered barley. It is the argument of Mr. Roy that as the said word 'flour' has the definite popular meaning and is understood in common parlance to mean 'maida' (wheat flour) only, there can be no question of attributing any other meaning to the said word and of including powdered barely within the meaning of the said word. Mr. Roy has commented that even the dictionary meaning of the word 'flour' is that in modern times flour is understood to mean wheat flour only and in this connection Mr. Roy has referred to Shorter Oxford English Dictionary, third edition. Mr. Roy has contended that the subsequent amendment of the said words in item No. 2 in the schedule in 1963 is indeed of no consequence and the said amendment has been introduced by way of abundant precaution to make the position absolutely clear.

9. Mr. Roy has argued that the introduction of item No. 52 in the schedule by the notification dated 26th April, 1968, has really no bearing in construing item No. 2, and the said item No. 52 deals specifically with barley products and, in dealing with barley products, mentions ' 'flour', suji, atta and dalia made from barley'. Mr. Roy argues that in view of the specific mention of barley products in the said item there is no question of giving any other meaning to the said word and the said item No. 52 refers to barley and the different products of barley and indicates that there may be flour of barley and also atta, suji and dalia of barley. Mr. Roy has submitted that though the dictionary meaning of the word 'flour' has been referred to in the decision cited by Mr. Dutt, in no case the meaning which is not in accord with the meaning in its popular sense or in which it is understood in common parlance has been given to the said word 'flour'. Dealing with the decision of Banerjee, J., in Lakshminarayan Rice Mills v. Assistant Commissioner of Commercial Taxes (1962) 66 C.W.N. 1, Mr. Roy has argued that the question for determination in the said case was whether 'husk of rice' could be considered to be a cereal within the meaning of item No. 1 and could be said to be exempted as covered by the said item No. 1. In deciding the said question, Banerjee, J., considered items Nos. 1 and 2 of the schedule and in considering item No. 2 referred to the dictionary meaning of the word 'flour'. Mr. Roy comments that the said decision is of no authority for the proposition that flour includes any kind of finely-ground meal of any grain including barley and the said case does not deal with and decide any such question. Mr. Roy in this connection has also pointed out that even, according to the dictionary meaning, 'flour' in modern times means wheat flour only. Mr. Roy has submitted that in other cases though dictionary meaning has been referred to, the meaning that has been attributed by the court is the popular meaning of the word in which it is understood in common parlance. Mr. Roy has argued that in common parlance or in popular sense flour can never mean and is never understood to mean powdered barley or any product of barley. It is the submission of Mr. Roy that as the said word 'flour' has a definite popular meaning and is well-understood in common parlance to mean 'maida' (wheat flour only), there is no question of any other interpretation being given to the said word. Mr. Roy has submitted that as there is no question of any other meaning being given to the said word 'flour' on its construction in view of the meaning in its popular sense and the sense in which it is understood in common parlance, the question of applying the principles of beneficial construction in favour of the taxpayer does not and cannot arise in this case. He, however, does not dispute the proposition that if there be any question of two possible constructions of the said word the construction which favours the assessee should be adopted by the court.

10. Mr. Roy contends the inclusive clause in the said item No. 2, which provides 'flour including atta, suji and bran', does not exclude the original meaning of the word 'flour' which is the popular meaning, namely, 'maida' (wheat flour), 'atta, suji and bran' which would otherwise not come within the popular meaning of the word 'flour'. It is the contention of Mr. Roy that though these items of atta, suji and bran, which are known and recognised in this State to be types of wheat products but are not understood to come within the popular meaning of the word 'flour', would not otherwise enjoy exemption from sales tax as these items would not be covered by the word 'flour', and the legislature to grant exemption to these items has specifically provided that flour will also include these three items. Mr. Roy argues that the provision in the schedule that flour includes also these three items clearly emphasises that the legislature intended that the word 'flour' should be understood in its popular sense of 'maida' (wheat flour) only, as otherwise there would be no necessity of including these three items which will all necessarily be 'finely-ground meal of wheat or other grain', according to the particular meaning of the dictionary, relied on by Mr. Dutt.

11. It is to be noted that the word 'flour' is not defined in the Act. The said word, though an English word, is a word of everyday use. The said word should therefore be construed in its popular sense. The said word must be construed neither in a technical sense nor from the botanical point of view. It should be understood as in common parlance. The proposition that such a word which is not defined in the Act but which is a word of everyday use must be construed in its popular sense and must not be construed in a technical sense or from the botanical point of view and should be understood as in common parlance, is to my mind, well-established. The decision of the Supreme Court in the case referred to by Mr. Roy and reported in Mangulu Sahu Ramahari Sahu v. Sales Tax Officer A.I.R. 1974 S.C. 390, and the earlier decision of the Supreme Court in Ramavatar Budhai Prasad v. Assistant Sales Tax Officer, Akola A.I.R. 1961 S.C. 1325, referred to by the Supreme Court in the said decision in Mangulu Sahu Ramahari Sahu's case A.I.R. 1974 S.C. 390 clearly establish this proposition.

12. There is no doubt in my mind that the word 'flour' has a popular meaning and in common parlance it is understood to mean only ''maida' (wheat flour). The word 'flour' is undoubtedly an English word and it may be true that in this State people may not be sufficiently literate to understand English. To my mind, however, the legislature, which has enacted the legislation in English and has used the said English word, must be understood to reflect the will of the people arid to use the said word 'flour' in its popular sense in which the members of the legislature who represent the people understand the said word and the said word must be considered to have been used in the sense in which the said word 'flour' is understood in common parlance by persons who understand English. Though the said word is an English word, it cannot, in my opinion, be said that the said word does not have a popular meaning and is not understood to have a particular meaning in common parlance. The word 'flour' in common parlance is clearly understood to mean 'maida' which is wheat flour and the said word 'flour' clearly bears this popular meaning. It is in this popular sense the said word has, therefore, to be understood and construed. The contention of Mr. Dutt that by providing in item No. 2 'flour' including 'atta, suji and bran' the legislature intended not to give the said word 'flour' its popular meaning of 'maida' (wheat flour) is, in my opinion, not sound. In my opinion, the legislature by providing in the said item that 'flour' will include 'atta, suji and bran' has indeed intended to emphasise on the popular sense of the word 'flour', namely, 'maida' (wheat flour) and as the said three items could not come under flour in its popular sense of 'maida' (wheat flour), the legislature with the intention of exempting these three items from tax has specifically included these three items to come under the item 'flour', as otherwise these three items would not be covered by the word 'flour' and would not be included within the popular meaning of the word 'flour'. Powdered barley in common parlance is never considered to be flour and flour in its popular sense never means powdered barley. The dictionary meaning referred to and relied on by Mr. Dutt is also of no great assistance. The dictionary meaning gives the meaning or sense in which it is understood in the English speaking world and even, according to the dictionary meaning in modern times, flour is understood to mean only wheat flour. In Shorter Oxford English Dictionary, 3rd edition, at page 720, the word 'flour' is stated, inter alia, to mean : 'Orig. the finest quality of meal; hence, the finer portion of meal (wheat or other) which is separated by bolting. Also, in mod. use, the meal of wheat as opp. to that from other grain.' Similar meaning of the word 'flour' is also to be found in other dictionaries. The decisions relied on by Mr. Dutt are of little assistance in the instant case. In the case of Lakshminarayan Rice Mills v. Assistant Commissioner of Commercial Taxes (1962) 66 C.W.N. 1, Banerjee, J., was concerned with the question whether husk could be considered to be an item exempt from sales tax and in considering the said question, Banerjee, J., referred to items Nos. 1 and 2 in the schedule and while dealing with item No. 2, Banerjee, J., incidentally referred to the dictionary meaning of the word 'flour'. The said judgment of Banerjee, J., is no authority for the proposition that flour in item No. 2 must necessarily include in its form every kind of powdered grain including powdered barley. In the other cases, though the dictionary meaning of the word 'flour' has been referred to, the meaning in which the word is popularly understood has been given and the dictionary meaning was also in accord with the popular sense in which the word is understood. In none of the decided cases, the word 'flour' has been given the meaning in which it is not understood in common parlance. In view of the established legal proposition, the word 'flour' must be construed in the sense in which it is understood in common parlance and must be given its popular meaning. In the instant case, even if the dictionary meaning of the word 'flour' as stated in Shorter Oxford English Dictionary that in modern times the word 'flour' means flour of wheat only as opposed to flour of any other grain is given to the said word, the dictionary meaning will be in accord with the popular sense of the word 'flour' and will have the same sense in which it is understood in common parlance. Had there been any doubt as to the meaning of the word 'flour' in its popular sense and in the sense in which it is understood in common parlance on its true construction, the question of alternative construction would arise and, in such a case, undoubtedly, the construction which would benefit the assessee would have to be accepted. As, however, in the instant case, there is no room for any doubt as to the meaning of the word 'flour' on its true construction and as on true construction of the word 'flour' , the said word means 'maida', i. e., wheat flour, the question of interpreting the said word to mean 'finely-ground meal of any powdered grain', which may include powdered barley, does not arise. The subsequent amendment introduced in 1963, amending the said words 'flour, including atta, suji and bran' in item No. 2 of the schedule and substituting in its place, 'wheat flour including atta and suji' does not establish that the word 'flour' in item No. 2 before its amendment was capable of being construed in the wider sense to mean 'finely-ground meal of any grain' including powdered barley. In common parlance, as we have already indicated, nobody will ever understand flour to mean powdered barley. The said amendment, to my mind, has been introduced by way of abundant precaution as contended for by Mr. Roy and is really of no material consequence. The subsequent introduction of item No. 52 in the schedule providing for barley products, namely, flour, suji, atta and dalia made from barley merely describes the various kinds of barley products. The said item only indicates that there may be flour of barley also. The said item No. 52 is, however, of no assistance, in construing the word 'flour' in item No. 2. On the other hand, the specific mention of barley and the various products of barley in item No. 52 indicates, to my mind, that unless used in the particular context of barley, the said items in common parlance could not be understood to mean products of barley. The word 'flour' in item No. 2, as I have already held, has a definite popular meaning and is understood in common parlance to mean 'maida', i. e., wheat flour only. As the word 'flour' in item No. 2 has a definite popular meaning and is understood in common parlance to mean 'maida', i.e., wheat flour only, specific provision has been made in item No. 52 with regard to barley products which contain types of powdered barley and describe them as 'flour', suji, atta and dalia of barley, to avoid any confusion with the popular meaning of the word 'flour' used in item No. 2.

13. I must, therefore, hold that on a true and proper construction of item No. 2 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941, as it stood prior to its amendment by West Bengal Act 14 of 1963 the word 'flour' occurring in the said item did not include barley powder and barley powder was not exempt from sales tax. Barley powder which is not covered by item No. 2 must, therefore, be considered to be a kind of cereal included in item No. 1 and must, therefore, be held to be taxable. I answer the question referred accordingly.

14. In the facts and circumstances of the case, I do not propose to make any order as to costs.

S.K. Hazra, J.

15. I agree.


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