2000 (3) TMI 1048 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 29 of the Fifth Schedule for exemption of firewood or charcoal sold for domestic use excluding sales to hotels.

Analysis:
The controversy in the appeals revolved around the interpretation of entry 29 of the Fifth Schedule, exempting firewood or charcoal sold for domestic use excluding sales to hotels. The assessing authority initially did not accept the assessee's claim, but the appeal before the Joint Commissioner of Commercial Taxes (Appeals) was allowed based on later exemptions granted by the assessing authority and the finding that firewood was sold to the Central prison. The appellate authority ruled that unless sales were made to hotels, no tax could be levied, setting aside the tax levied on sales to the Central prison for domestic use.

The revising authority took a different view, considering supplies made to M/s. HAL and M/s. MPM Ltd. for use in their canteens as taxable, contrary to the domestic use exemption. Legal precedents were cited, emphasizing that the plain natural meaning of language used in statutes must prevail, and courts cannot add, alter, or modify words unless necessary to prevent absurdity or inconsistency. The appellate authority's decision was supported by the argument that the intention of the Legislature was to grant exemption only for domestic use.

The assessee argued that the term "domestic use" had been previously considered in legal cases, highlighting its general application to supplying services or comforts commonly found in homes. The court delved into the etymology of the word "domestic" and referenced previous judgments to support the interpretation of "domestic electrical appliances" as items generally used for household purposes, even if not exclusively used in homes.

The court concluded that the legislative intent behind entry 29 was to exempt firewood or charcoal sold for domestic use, with hotels being the only exception subject to tax. The revising authority's decision to tax supplies to institutions like M/s. HAL and M/s. MPM was deemed inconsistent with the law, as the entry specifically excluded sales to hotels from the domestic use exemption. The court emphasized that the canteens of such institutions could not be equated with hotels for tax purposes based on previous legal interpretations.

By providing an exception for hotels in the entry, the legislature aimed to differentiate between domestic use and commercial use, clarifying that without this exclusion, even hotel use would have been considered domestic. The court ultimately allowed the appeals, ruling that supplies made to the Central prison for domestic use could not be subjected to tax, in line with the legislative intent and legal principles governing statutory interpretation.