1974 (9) TMI 103 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the definition of 'liquor' and 'denatured spirit' under the Orissa Sales Tax Act for tax exemption.

Analysis:
The case involved a reference under section 24(1) of the Orissa Sales Tax Act regarding the interpretation of certain points of law arising from the Sales Tax Tribunal's order. The main issue was whether 'denatured spirit' falls under the tax exemption category of serial No. 12 of the Act. The Tribunal had ruled in favor of the assessee, considering denatured spirit as tax-free, leading to the State of Orissa seeking clarification on this matter.

The Tribunal's decision was based on the interpretation of serial No. 12, which includes categories like country liquor, potable foreign liquor, opium, ganja, and bhang as tax-free items. The State argued that the Tribunal erred in importing the definition of 'liquor' from the Bihar and Orissa Excise Act, contending that denatured spirit does not qualify for tax exemption under serial No. 12.

The assessee's counsel argued that 'spirit' encompasses liquor, suggesting that denatured spirit should be considered tax-free based on the common meaning of the term. However, the court emphasized that in fiscal Acts, the common parlance view should be adopted in the absence of a specific definition. The court rejected the notion that denatured spirit automatically qualifies for tax exemption under serial No. 12, as it is not explicitly listed and does not align with the intended tax-free items like country liquor and opium.

The court referenced the popular meaning of terms in sales tax statutes and emphasized that denatured spirit, used for varnishing and painting purposes, does not inherently qualify for tax exemption unless expressly stated. Ultimately, the court ruled against the assessee, holding that denatured spirit does not fall under the tax-free category of serial No. 12. The judges concurred on this decision, and the reference was answered in favor of the revenue.