1991 (9) TMI 333 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "electric fans" for sales tax levy during the assessment year 1979-80.

Analysis:
The dispute revolved around whether air-circulators and exhaust fans fell under the category of "electric fans" for sales tax purposes during the assessment year 1979-80. Rule 93-1 of the Orissa Sales Tax Rules, 1947, mandated that "electrical fans" were subject to tax at the first point of sale. However, a subsequent amendment introduced 93-K, which specifically taxed air-circulators and exhaust fans among other goods. The Tribunal considered the broad interpretation of the term "electric fans" to include air-circulators and exhaust fans based on evidence presented by the assessee, such as advertisements and brochures showcasing the versatility of electric fans. The Tribunal reasoned that if a multi-purpose fan could be considered a fan, there was no reason to exclude air-circulators and exhaust fans. This view was supported by a previous decision of the Tribunal that had not been challenged by the Revenue.

The definition of "fan" from various sources like Webster's New International Dictionary and Encyclopedia Britannica was examined to understand the common understanding and technical aspects of the term. Fans were described as devices for setting air or gases in motion, essential for various manufacturing processes, ventilation, and cooling purposes. The judgment emphasized that words in a taxing statute should be interpreted based on common or commercial parlance unless there is a conflict with a technical or scientific meaning. In this case, the common understanding aligned with the technical and dictionary meanings of the term "fan."

The High Court, concurring with the Tribunal's conclusion, upheld that air-circulators and exhaust fans were indeed encompassed within the definition of "electric fans" for sales tax purposes during the assessment year 1979-80. The Court reasoned that the Tribunal's decision was well-founded considering the evidence presented and the functional aspects of fans as devices for moving air. The judgment answered the reference in the affirmative, affirming the Tribunal's decision without imposing any costs. Both judges, Pasayat A. and Mohanty S.K., agreed on the resolution of the reference in favor of the assessee.