COMMISSIONER OF SALES TAX, MADHYA PRADESH versus JASWANT SINGH CHARAN SINGH

COMMISSIONER OF SALES TAX, MADHYA PRADESH

JASWANT SINGH CHARAN SINGH

February 23, 1967

(J. M. SHELAT AND G. K. MITTER, JJ.J

Madhya Pradcsli G•neral Sales Tax Act, 195S-Charcoal whether 'coal withit• meaning of Entry I Part III of Seil. II to the Act-Rat~ of tax applicable.

The r"'pondent was dealer in firewood and charcoal. In proceed· ings for assessment of sales tax under the \iadhya Pradesh General Sales Tax Act, 1958, the respondent claimed that charcoal was 'coal' witlun the meaning of Entry I of Part Ill of the Sch~dule II to the Act and there-fore was taxable at the rate of 2 % . The sales tax au:horities however held that charcoal was not 'cool' and was taxable at 4% as it fell under the residuary Entry I of Part VI of Schedule JI. The Board of Revenue and the High Court held in favour of the respondent relying on the dic-tionary meaning of the word 'coal'. The Commissioner of Sales-tax appealed. It was urged on behalf of the appellant that coal was mineral while charcoal was manufactured from products like wood and other things by human agency and therefore the dictionary meaning ought not to have been relied upon. Reliance was also placed on legislative practice which had treated co:J:I and charcoal as different items.

HELD : In interpreting items in >tatutes like the Sales Tax Acts re-.<ort should be had not to the scientific or technical meaning of the terms used but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, in their commucial sense. Viewed from this angle, both merchant dealing in coal and consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'. Under the Entries., 'coal' as well as 'firewood' were taxed at 291'>. It could not have been intended to tax charcoal a!one at 4%. Entry I of Part Ill of Sch. II must therefore be read broadly and held to include charcoal. It was not possible to adopt its connotation from other statutes pas..00 for different purposes or in the context of different objects.[713 B; ns A-E; 126 CJ

Ramavatar Budhaiprarad etc. v. Assistant Sales Ta:c Officer, Akola. ( 1962) I S.C.R. 279 and Hi• Majesty the King v. Pla11ters Nut and Chow-/ate Company Limited, (1951] C.L.R. (Ex.) 122, relied on.

Attorney-Ge11eral v. Winstanley, (1831) 2 & Cl. 302, Grenfell v. /11/and Re\•enue Co1n11Jissiot1er) ( 1876) 1 Ex. D. 24! Holt & Co. v. Col/ytr• ( 1881) 16 Ch. D. 718, referred to.

CIVIL· APPEi.LATE JUR1smcrro:; : Civil Appeal No. 2011 of

Appeal by special leave from the judgment and order dated

February 23, 1966 of the Madhya Pradesh High Court in M.C.C. No. 169 of 1965.

B. Sen and I. N. Shroff, for the appellant.

Rameshwar Nath and Mohinder Narain, for the respondent.

The Judgment of the Court was delivered by

Sbelat, J. The appellant has been carrying on business and is dealer in firewood and charcoal. For the period from March 29, 1962 to April 29, 1962, he was assessed to sales tax under s.18(6) of the Madhya Pradesh General Sales Tax Act, 1958 as he did not have any registration certificate in •espect of this period. The Additional Sales Tax Officer, Ujjain, and the Additional Appellate Assistant Commissioner, Indore, both held that charcoal in which the ;;ppellant. was dealing was not covered by Entry I of Pa : III of Sch. II to the Act, but that it felt under the residuary Entry I of Part VI of that Schedule; and consequently was liable to be assessed at the rate of 4 % of the price of charcoal. In fur-ther appeal before the Board of Revenue, the Board, relying on the dictionary meaning of the word 'coal' as given in Blackies' Concise Dictionary, held that charcoal would be included in the term 'coal'; and, ~herefore, Entry I in Part III of Schedule II would apply and the tax chargeable would be at 2 % only. At the in-stance of the Commissioner of Sales Tax, the Board referred the following question to the High Court :-

"Whether charcoal is covered under Entry I of Part III of Sch. II to the M.P. General Sales Tax Act, 1958, 'E a!'d is taxable at the rate of 2 ~~ or will be taxable at the rate of 4 % under Entry I of Part VI of Sch. II to the

M.P. General Sales Tax Act, 1958 ?"

T! .~ High Court held that while construing entries in sta-tute like the Sales Tax Acts, the court should prefer the popular meaning of the terms used in such entries and not their dictionary meanings and that so construed charcoal would be included in the word '.;oal'. Consequently, it answered the "Uestion in favour of the respondent. According to the High Court, charcoal would be covered by Entry I of Part Ill of Sch. II and was taxable at 2 %· Hence this appeal by special leave.

Entry I of Part III of Sch. II reads as follows :-

"I. Coal, including coke in all its forms .. 2 per cent"

Entry I of Part VI of the said Schedule reads as follows :-

" 1 <\ll other goods not included in Schedule I or any other part of this Schedule .. 4 per cent"

We may aim reproduce Entry 8 of Part III of Schedule II which is:-

"8. Firewood .. . . 2 per cent"

The meaning given to the word 'Coal' in Blackies' Concise Dictionary, New Edition, page 134 relied on by the Board reads as follows :-

"Coal : Kol : piece of wood or other combustible substance burning or charred; charcoal; cinder; now, usually solid black substance found in the earth, largely employed as fuel, and formed from vast masses of vege-table matter deposited through the luxurious growth of plants in former epochs of the eanh's history."

The Shorter Oxford English Dictionary at pages 330 and 331 gives the meaning of coal as follows :-

"I. -A piece of carbon glowing without flame. 2. piece of burnt wood, etc. that is still capable of combustion without flame, cinder, ashes, 3. Charcoal. 4. mineral, solid, hard, opaque black or blackish, found in seams in tlte earth, and largely used as fuel; it consists of carbonized vegetable matter".

Ai page 293, the said Dictionary gives the meaping of charcoal as follows >-

"The ~uggestion that Char=Chare v. or sb. as if turn-coal, i.e. wood turned into coal, lacks support. I. The black porous residue, consisting (when pure) wholly of carbon, obtained from partly burnt wood, hones, etc. Hence specified as wood, vegetable, animal etc.".

The Web;ter's New International Dictionary gives the following meaning of charcoal at page 452 :-

"(Char to burn, reduce to coal; Coal);

J. dark coloured or bla~k porous form of carbon prepared from vegetable or animal substance, as that made by charging wood in kiln, retort, etc., from which air is excluded."

According to these Dictionaries 'coal' would appear to in-clude 'charcoal'. The contention of the respondent was that charcoal is one of the species of coal, and, therefore, would be covered by Entry I of Part III, and, therefore, the answer given by the High Court is correct. Counsel for the State, however, raised three contentions; (l) that coal and charcoal are different products, one being mineral product and the other prepared from wood and other .irticles by human agency, and, therefore, the term 'coal' would not cover charcoal; (2) that while constru-ing such entries, the dictionary meaning should not he preferred to the popular meaning or the meaning in the commercial sense; and (3) that the Legislative policy in rderence to the term 'coal'

shows that it is not used by the Legislature in India so as to include charcoal.

Now, there can be no dispute that while coal is technically understood as mineral product, charcoal is manufactured by human agency from products like wood and other things. But it ·is now well-set.:ed 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. In Ramavt;tar Budhaiprasad etc. v. Assistant Sales Tax Officer, Ako/a,(') the pet1t10ners who were dealers in betel leaves were assessed to sales tax under the C.P. and Berar Sales Tax Act, 1947. They contended that under sec-tion 6 read with the Second Schedule of the Act betel leaves were not taxable. Section 6 provided that articles mentioned in that Schedule were exempt from sales tax and articles not mentioned were taxable. There were two items in the Schedule, namely, item 6, "vegetables", and item 36, "betel leaves", but s:ibsequently item No. 36 was deleted by an amendment of the Act. This Court held that the use of two distinct and different items i.e., 'vegetables' and 'betel leaves' and the subsequent removal of betel leaves from the Schedule were indicative of the Legislature's intention of not exempting betel leaves from taxation. The Court laid down that the word 'vegetable' must be interpreted not in technical sense but in its popular sense as understood in common language i.e., denoting class of vegetables which are grown in kitchen garden or on farm and are used for the table. The same principle was also laid down in His Majesty the King v. Plamers Nut and Chocolate Company Limited.(2), The question there was whether salted peanuts and cashew nuts fell within the category of either fruits or vegetables. considerable expert opinion was led in that case, but the- court ultimately found that the Parliament in enacting the Excise Tax Act, 1927, Part XIII and Schedule III was not using words which were applied to any particular science or art and, therefore, the words used are to be construed as they are understood in common language. It also held that what constitutes 'fruit' or 'vegetable' within the meaning of the Excise Tax Act is what would ordinarily in matters of commerce in Canada be included therein and not wlu:t would be botanist's conception of the subject matter. If statute uses the ordinary words in every day use, such words should be construed accord-ing to their popular sense. At page 128 of the Report Cameron, I. observed, ''The object of the Excise Tax Act is to raise revenue, and for this purpose to class substance according to the general usage and known denominations of trade. In my view, there-fore, it is not the botanist's conception as to what constitutes (I) [1962) I S.C.R. %79. (2) [1951] C.L.R. 122. M2Sup. CI/67-17'fruit' or 'vegetable' which must govern the i'1torpretatioo to be placed on the words, but rather what would ordinarily in matters of commerce in Canada be included therein. Botanically, oranges and lemons arc berries, but otherwise no one would consider them as such." This rule was stated as early as 1831 by Lord Tenterden in Attorney-General v. Winstanley(•). Similarly, in Grenfell v. Inland Revenue Commissioner(2) Pollock, B. observed, "that if statute contains language which is capable of being construed in popular sense such statute is not to be construed according to the strict or technical meaning of the lanfUage contained in it, but is to be construed in its popular : ense, meaning of course, by the words 'popular-sense', that sense which peoplr conve:-sant with the subject-matter with which the statute is deali.1g would attribute to it." But "if word in its popular sense and read in au ordinary way is capable of two constructions, it is wise to adopt such construction as is based on the assumption that Parli:-.ment 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 adapted to the fitness of the matter of the statute". On the other hand, as Fry, J. said in Holt & Co. v. Col/yer(')"Ifit is word which is of technical or scientific character then it must be construed according to that which is its primary meaning, namely, its tech-nical or scientific meaning."

Our attention was drawn to the decision in K. V. Varkey v, Agricultural /11come Tax and Rural Sales Tax Officer, Peelmedu Jnd others("), where gret"n leaves plucked from tea bushes were held to fall under the word \ca'. But this decision turned on ;!Je definitio'ls of turnover in s. 3 of the Travancore General Sales Tax Act, XVTII "f 1124 which while including sales of agricultural or horticultural produce included 'tea, coffee, rubber' etc. in the turnover. The court held there that 'tea' was not in the sta-tute in the sense in which it is used in commerce but in the sense of product of plant life, and, therefore, green leaves plucked from tea plants were covered by the term 'tea'.

The result emerging from these decisions is that while cons-truing the word 'coal' in Entry I of Part III of Sch. II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. sales tax statute is being one levying tax on aoods must in the absence of technical term or term of science or art, be presumed to havt used an ordinary term as coal accord-ing to the meaning ascribed to it in common parlance. Viewed

(I) [1~31) i a: CJ; 302.

(2) [1176) l Ex-D. 242, 248. (4) [19~ S S.T.C. 3M.

(3) [18111) 16 Ch. D. 718, 72/J.

from that angle both merchant dealing in coal and consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'char-coal' in the term 'coal'. It is only when the question of the kind or variety of coal would arise that distinction would be .made betwe<en coal and charcoal; otherwise, both of them would in or-B dinary parlance as also in their commercial sense be spoken as coal.

There is another aspect also from which Entry I of Part III may be considered. Section 14 of the Central Sales Tax Act, 1956 declares certain goods as goods of special importance in inter-State trade or commerce. One of these is 'coal including coke in an its forms'. Section 15 of that Act provides that the State Legislatures in their respective sales tax Jaws can impose only 2 % tax on these goods. That is why in Entry I of Part III 'coal' is stated to include 'coke in an its forms', and coal including coke in all its forms is charged at 2 % tax. The State Legislature, however, knew or must be presumed to know that firewood is also used by the people as fuel, but would not ran within that Entry, and, therefore, pro-vided 2 % tax on it by separate entry, namely, Entry 8 in Part III. Having taxed coal and firewood at 2 %, it does not appear to be possible that the Legislature deliberately left out charcoal from the connotacion of the word 'coal' and left it to be cha;ged at 4 % under the residuary Entry I in Part VI. The object of the Legislature clearly was to tax coal and firewood as articles used as fuel and did not make separate entry in regard to charcoal as it must be aware that coal fs understood in ordinary and com-mercial sense would include charcoal. Had that not been so, instead of leaving it to be dealt with under the residuary item, it would have enacted separate entry just as it did in the case of firewood which it knew would not in ics ordinary meaning fall under the term 'CJal'. In this view, the contention of counsel for the State must be rejected.

Counsel then relied upon s. 5 of the Colliery Control Order, 1945, in order to show that the Legislature there had dealt with coal in its strict and technical meaning. He also relied upon cer-G tain other statutory provisioris with view to show that the Legis-lature has an along been using the word 'coal' as mineral product only. The Colliery Control Order deals with collieries and obvi-ously, therefore, the term 'coal' there is used as rrineral product. It is well-settled principle that in construing word in an Act caution is necessary in adopting meaning ascribed to that word in other statutes. As Lord Loreburn stated in Macbeth v. Chis-H /ett,(I) 'it would be new terror in the construdion of Acts of Parliament if we were required to limit word to an unnatural

;cnse because •n some Act which is not incorporated or referred to such an interpretation is given to it for th~ purposes of that Act alone'. The strict sense in which such 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. From the Colliery Control Order, 1945 or the other provisions to which our attention was drawn, it would neither be possible nor safe to adopt the meaning of the word 'coal' given in those p~ovisions for the purposes of the Act under construction. Nor can we infer that there is Legislative policy consistently followed by the Legi;-lature merely because the word 'c-0al' has been used as meaning mineral product in the context of these statutes. It would no:. therefore, be possible to discard the meaning of the word 'c0al' in this statute as understood in its commercial or popular sense and to adopt its conn<1tation from other statutes passed for dif-ferent purposes or in context of different objects.

We agree with the meaning of the word 'coal' given by the High Court and hold that charcoal would be taxable at the rate of 2% only.