1967 (2) TMI 65 - SC - VAT and Sales Tax

Whether charcoal is covered under entry 1 of Part III of Schedule II to the M.P. General Sales Tax Act, 1958, and is taxable at the rate of 2 per cent. or will be taxable at the rate of 4 per cent. under entry 1 of Part VI of Schedule II to the M.P. General Sales Tax Act, 1958? Held that - Appeal dismissed. 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 per cent. only.

Summary

Issues Involved
1. Whether charcoal falls under entry 1 of Part III of Schedule II to the M.P. General Sales Tax Act, 1958, and is taxable at 2% or under entry 1 of Part VI of Schedule II and is taxable at 4%.

Detailed Analysis

Issue 1: Classification of Charcoal under the M.P. General Sales Tax Act, 1958

Background:
The appellant, a dealer in firewood and charcoal, was assessed to sales tax for the period from March 29, 1962, to April 29, 1962. The Additional Sales Tax Officer and the Additional Appellate Assistant Commissioner determined that charcoal did not fall under entry 1 of Part III of Schedule II but under the residuary entry 1 of Part VI, making it liable for a 4% tax. The Board of Revenue, however, relying on dictionary definitions, held that charcoal was included in the term "coal" under entry 1 of Part III, thus taxable at 2%. The High Court affirmed this view, leading to the present appeal.

Key Statutory Provisions:
- Entry 1 of Part III of Schedule II: "Coal, including coke in all its forms 2 per cent."
- Entry 1 of Part VI of Schedule II: "All other goods not included in Schedule I or any other part of this Schedule. 4 per cent."
- Entry 8 of Part III of Schedule II: "Firewood 2 per cent."

Arguments:
- Respondent's Argument: Charcoal is a species of coal and should be taxed at 2% under entry 1 of Part III.
- State's Contentions:
1. Coal and charcoal are distinct products; coal being a mineral product and charcoal being manufactured from wood.
2. The popular or commercial meaning should be preferred over the dictionary meaning.
3. Legislative policy shows that "coal" does not include charcoal.

Court's Analysis:
1. Popular vs. Technical Meaning:
- The Court emphasized that terms in taxation statutes should be interpreted in their popular or commercial sense rather than their scientific or technical meanings. Citing previous judgments, the Court reiterated that words in sales tax statutes should be construed as they are understood in common parlance by those dealing in or consuming the products.

2. Dictionaries and Common Parlance:
- The Court reviewed various dictionary definitions, noting that "coal" includes "charcoal" in common usage. It concluded that both merchants and consumers would consider charcoal as a type of coal in ordinary and commercial contexts.

3. Legislative Intent and Context:
- The Court examined the legislative intent, noting that Section 14 of the Central Sales Tax Act, 1956, lists "coal including coke in all its forms" as goods of special importance, subject to a 2% tax. The Court inferred that the state legislature intended to tax all forms of coal, including charcoal, at 2%, similar to firewood, which is also taxed at 2%.

4. Other Statutory Provisions:
- The Court rejected the State's reliance on the Colliery Control Order, 1945, and other statutes where "coal" is used in a strict technical sense. It emphasized that meanings from other statutes should not be imported unless explicitly referenced.

Conclusion:
The Court agreed with the High Court's interpretation that "coal" in entry 1 of Part III of Schedule II includes "charcoal." Consequently, charcoal is taxable at 2%. The appeal was dismissed with costs.

Final Judgment:
The appeal is dismissed, affirming that charcoal is taxable at the rate of 2% under entry 1 of Part III of Schedule II to the M.P. General Sales Tax Act, 1958.