1998 (7) TMI 665 - HC - VAT and Sales Tax

Issues Involved:
1. Imposition of entry tax on glass and plastic bangles under the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979.
2. Clarification issued by the Assistant Commissioner of Commercial Taxes regarding the applicability of entry tax on glass and plastic bangles.
3. Interpretation of entries 30 and 54 in the notification dated April 30, 1992, and their applicability to glass and plastic bangles.
4. Applicability of the rule of construction "noscitur a sociis" in interpreting the relevant entries.
5. Relevance of common parlance test in interpreting tax statutes.

Detailed Analysis:

1. Imposition of Entry Tax on Glass and Plastic Bangles:
The respondents, dealers in glass and plastic bangles, challenged the imposition of entry tax under the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979. They contended that glass and plastic bangles were not covered under entries 30 and 54 of the notification dated April 30, 1992, which specified taxable goods.

2. Clarification Issued by the Assistant Commissioner of Commercial Taxes:
The assessment orders for the years 1992-93 and 1993-94 were based on a clarification issued by the Assistant Commissioner of Commercial Taxes, stating that glass and plastic bangles attract entry tax at the rate of 2% as per entries 30 and 54. This clarification was challenged by the respondents.

3. Interpretation of Entries 30 and 54:
Entries 30 and 54 of the notification read as follows:
- Entry 30: "Glass sheets and all articles made of glass."
- Entry 54: "Plastic sheets, granules and articles made from all kinds of and all forms of plastics including articles made of polypropylene, polyesterene and the like materials."

The respondents argued that glass and plastic bangles were not included in these entries. The single Judge accepted this argument, interpreting that the expression "glass sheets or plastic sheets and articles made of glass or plastic" did not intend to include bangles.

4. Applicability of the Rule of Construction "Noscitur a Sociis":
The single Judge applied the rule of construction "noscitur a sociis," which means that words take color from each other, to interpret the entries. The Judge relied on the Supreme Court's judgment in State of Bombay v. Hospital Mazdoor Sabha, which stated that this rule applies when the intention of the Legislature in using wider words is doubtful. The single Judge held that the clarification by the Commissioner was inept and quashed the levy of tax on plastic and glass bangles.

5. Relevance of Common Parlance Test:
The appellants argued that the entries were clear and unambiguous, and the common parlance test was not applicable. They contended that the Legislature intended to levy tax on both raw materials (glass and plastic sheets) and finished products (articles made of glass and plastic). The respondents relied on various judgments to support their argument that the common parlance or commercial meaning should be adopted.

High Court's Judgment:
The High Court disagreed with the single Judge's application of "noscitur a sociis," stating that the entries were clear and unambiguous. The Court held that the Legislature's intention was to levy tax on both glass/plastic sheets and articles made from them. The common parlance test was deemed inapplicable as the entries explicitly included all articles made of glass and plastic. The Court emphasized that the words used by the Legislature were clear, and there was no ambiguity.

The Court also noted that during the relevant period, certain commodities were exempted from entry tax as per the Second Schedule, but glass and plastic bangles were not listed among the exempted items.

Conclusion:
The appeals were allowed, and the order of the single Judge was set aside. The assessment orders and the clarification by the Assistant Commissioner of Commercial Taxes were upheld. The Court confirmed that glass and plastic bangles were subject to entry tax under the relevant entries of the notification.

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