1991 (7) TMI 337 - HC - VAT and Sales Tax

Summary

Issues:
Whether artificial silk yarn is included within the expression "silk yarn" under the Orissa Sales Tax Act, 1947.

Analysis:
The petitioner contended that the expression "silk yarn" includes both artificial silk yarn and pure silk yarn, as used in a generic sense. The petitioner argued that interpreting "silk yarn" narrowly would violate ordinary principles of interpretation. The Standing Counsel for the department argued that artificial silk is not silk at all and that "silk yarn" refers only to pure silk yarn. The relevant entries in the tax-free and taxable goods lists were examined, showing that silk yarn was excluded from taxation. The court emphasized the cardinal rule of interpreting statutes in their ordinary sense, unless context suggests otherwise.

The court referred to the principle of statutory interpretation, stating that words should be understood in their natural meaning unless context suggests otherwise. The court noted that the expression "silk yarn" was used in a generic sense and should not be given a restricted meaning. The court disagreed with the Tribunal's interpretation, citing various case laws to support its conclusion that artificial silk yarn falls within the scope of "silk yarn."

The court analyzed previous decisions related to artificial silk and silk fabrics but found them irrelevant to interpreting the term "silk yarn." The court referred to the ordinary meaning of "yarn" and concluded that "silk yarn" encompasses both pure silk yarn and artificial silk yarn. The court also considered the industry's understanding and common parlance in determining that the term "silk yarn" includes artificial silk yarn.

The court examined other items in the goods lists to support its conclusion that "silk yarn" was intended to cover both pure silk yarn and artificial silk yarn. Ultimately, the court held that artificial silk yarn was exempted from tax during the assessment year 1980-81, as per the relevant entries in the tax-free and taxable goods lists. The judgment was delivered by both Justices G.B. Patnaik and S.K. Mohanty, with the reference being answered accordingly.