1997 (2) TMI 474 - SC - VAT and Sales Tax

Whether agarbathis were liable to sales tax under item No. 36 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957? Held that - Appeal allowed. We are of the view that the High Courts of Kerala, Bombay and Punjab and Haryana were right in not giving an expanded meaning to perfume or perfumery and the Orissa High Court was in error in including agarbathis within the definition of perfumery . In our judgment neither in common parlance nor by the dictionary meaning nor having regard to the context of item 36 of the First Schedule of the Andhra Pradesh General Sales Tax Act can it be said that perfumes would include agarbathis for the purpose of imposition of sales tax. In view of the aforesaid, the judgment under appeal dated September 29, 1989 is set aside.

Summary

Issues:
Interpretation of sales tax liability on agarbathis under item No. 36 of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
The Supreme Court addressed the issue of sales tax liability on agarbathis under item No. 36 of the Andhra Pradesh General Sales Tax Act, 1957. The Court examined the amendment to the Act which included scents and perfumes under the said item. The department argued that "perfumes" encompass agarbathis, relying on a previous judgment related to a similar issue. However, the Court noted that the context of the Andhra Act differs from the Uttar Pradesh Act, as the former deals with "cosmetics and toilet preparations." Agarbathis do not fall under these categories, and the inclusive definition provided in the Act clarifies that items like scents and perfumes are related to personal application, unlike agarbathis.

The Court highlighted the modern meaning of the word "perfume," emphasizing its fragrant or pleasant smell connotation. Despite the historical origin of the term, in contemporary usage, it refers to sweet-smelling liquids used on the body. The judgment discussed various High Court decisions on similar tax entries, such as the Kerala, Bombay, Punjab and Haryana, and Orissa High Courts. These cases provided insights into interpreting terms like "perfumery" and "cosmetics" within the context of sales tax laws.

The Supreme Court concluded that the term "perfumes" in item No. 36 cannot be expanded to include agarbathis based on common parlance, dictionary meanings, and the context of the Act. The Court overturned the High Court's decision and ruled in favor of the appellants, directing that agarbathis should not be taxed under item 36 of the First Schedule to the Andhra Pradesh General Sales Tax Act. The appeals and writ petition were allowed with no order as to costs, aligning with the interpretation that agarbathis do not fall within the ambit of taxable "perfumes" under the relevant tax entry.