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TMI Blog1970 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, and on behalf of the dealers of Punjab, the arguments have been addressed by Shri H.L. Sibal. On behalf of the respondents, Shri D.S. Tewatia, learned Advocate-General for the State of Haryana has addressed the arguments which have been adopted by the learned Advocate-General of the State of Punjab. The petitioners in all these petitions carry on the business of buying paddy and after getting it husked, either in their own mills or in the mills of others, sell the rice to the Government and other registered dealers. On the purchase of paddy they pay purchase tax and they claim that while determining their taxable turnover, they should be allowed deduction to the extent of the purchase price of paddy under section 5(2)(a)(vi) of the Punjab General Sales Tax Act as applicable to both the States. The said Act as applicable to the State of Haryana will hereinafter be called as Haryana Act and as applicable to the State of Punjab, it will be called as Punjab Act. The provisions of the Haryana Act, which are relevant for the decision of the writ petitions, are as under: "Section 2(ff). Definition of purchase.-'Purchase' with all its grammatical variations or cognate expressions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-State trade or commerce or in the course of export out of the territory of India: Provided that in the case of a sale referred to in paragraph (A) or in sub-paragraph (i) of paragraph (B) to a registered dealer, a declaration in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold is furnished by the dealer claiming deduction: Provided further that the purchase of goods referred to in paragraph (A) or in sub-paragraph (ii) of paragraph (B) remaining unsold within the period specified in those paragraphs shall be deemed to be the purchase of the dealer claiming deduction during the year following." Schedule 'C', as substituted by the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967, enumerates the following goods: 1.. Resin (crude pine-gum). 2. Paddy. 3. Groundnut. Schedule 'B' to the Act enumerates tax-free goods, i.e., goods on the sale of which no tax is payable. The State Government can amend this Schedule by adding or deleting therefrom entries relating to goods after giving, by notification, not less than 30 days' notice of its intention so to do. In this Schedule "rice when husked from paddy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in which goods are actually not delivered, shall not be included in the turnover. Section 4(2-A). Notwithstanding anything contained in sub-sections (1) and (2), no tax on the sale of any goods shall be levied if a tax on their purchase is payable under this Act. Section 5(2). In this Act the expression 'taxable turnover' means that part of a dealer's 'gross turnover during any period which remains after deducting therefrom- (a) his turnover during that period on- * * * (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of interState trade or commerce, or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction." Schedule 'C' to the Act enumerates the goods on which purchase tax is payable. This schedule can be amended by adding or deleting therefrom any goods by notification issued by the State Government after giving not less than two months' notice of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice grows chiefly on low, moist land, which can be overflowed." According to the Oxford English Dictionary, "paddy" means "rice in the straw, or (in commerce) in the husk", while "rice" is "the seed of the plant Oryza Sativa forming one of the important foodgrains of the world". According to Chambers's Twentieth Century Dictionary, "paddy" is "growing rice: rice in the husk" while "rice" is "a grass (Oryza Sativa) much grown in the tropics: its grain, a valuable food". In Encyclopaedia Britannica under the heading "preparation of rice", the following sentences occur: "The kernel of rice as it leaves the thresher is enclosed by the hull or husk, and is known as paddy or rough rice. Rough rice is used for seed and feed for live-stock, but most of it is milled for human consumption. Rice is a good energy food and is consumed in vast quantities in the orient." On the basis of these meanings in the dictionaries the learned counsel submits that rice in general is known as paddy and, therefore, paddy means rice whether in husk or without husk. He goes on to submit that paddy had been included in Schedule 'C' by the Legislature, while enacting the Punjab General Sales Tax (Haryana Amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalysis, pays the tax. Parliament would not suppose in an Act of this character that manufacturers, producers, importers, consumers, . and others who would be affected by the Act, would be botanists. The object of the Excise Act is to raise revenue, and for this purpose, to class substances according to the general usage and known denominations of trade. In my view, therefore, it is not the botanist's conception as to what constitutes a 'fruit' or 'vegetable' which must govern the interpretation to be placed on the words, but rather what would ordinarily in matters of commerce in Canada be included therein. Botanically, oranges and lemons are berries, but otherwise no one would consider them as such............. Counsel for the plaintiff suggested a test which I think apposite. Would a householder when asked to bring home fruits or vegetables for the evening meal bring home salted peanuts, cashew-nuts or nuts of any sort? The answer is obviously 'no'." The principle set out above in the judgment of Cameron, J., was approved and followed by their Lordships of the Supreme Court again in Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh[1967] 19 S.T.C. 469 (S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has greatly relied upon the judgment of their Lordships of the Supreme Court in Messrs Tungabhadra Industries Ltd., Kurnool v. The Commercial Tax Officer, Kurnool[1960] 11 S.T.C. 827 (S.C.); A.I.R. 1961 S.C. 412., in which it was held that raw groundnut oil when converted into refined oil or hydrogenated oil remains groundnut oil and does not become a different "goods" so that the deduction provided in clause (k) of sub-rule (1) of rule 5 and rule 18 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, is allowable to a dealer who manufactures groundnut oil from the groundnut and/or kernel purchased by him. The facts of that case are clearly distinguishable and the learned counsel, in my opinion, cannot derive any help from that judgment. According to rules 5(1)(k) and 18(2) of the Madras Rules, the deduction was allowable if groundnut oil was manufactured from groundnut or groundnut kernel purchased by the manufacturer. The further refinement did not convert groundnut oil into any other oil. Only the form of the oil was changed by some process in order to make it more suitable for marketing. The observations of their Lordships, as stated in head-note (a), clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e put to the use for which rice can be used or that rice can be put to the use for which paddy can be used. This judgment, therefore, does not help the learned counsel for the petitioners. It is not of much importance whether the process by which paddy is husked for the extraction of rice is a manufacturing process or not. Whatever be the process, it results in producing a commodity different from paddy as is generally and popularly known to the trade and the consumers. The process is certainly a manufacturing process as has been variously defined and interpreted by their Lordships of the Supreme Court and by the learned Judges of the High Courts. In The State of Punjab and Others v. Messrs Chandu Lal Kishori Lal[1970] 25 S.T.C. 52 (S.C.)., Civil Appeals Nos. 2516 to 2519 of 1966, decided by their Lordships of the Supreme Court on 27th February, 1969, it was held that the ginning process is a manufacturing process and that the dealer is not entitled to deduction in regard to the turnover of cotton seeds out of the turnover with regard to raw cotton. It was also held that ginned cotton and cotton seeds are "two distinct commercial goods though before the manufacturing process the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which shows that the traders and others concerned also thought likewise as no objection was taken thereto. It has not been alleged in any of the petitions that any objection was taken to the said notification by the dealers, merchants or consumers. This fact also leads to the conclusion that everybody who is concerned with rice and paddy considers them to be two different commodities. Shri H.L. Sibal, the learned counsel for the Punjab dealers, has submitted that in case of ambiguity in a taxing statute, the benefit must go to the subject and not to the revenue. There is no quarrel with this proposition. In order to bring out the ambiguity in the Punjab Act, he has referred to the Punjab Rice Dealers' Licensing Order, 1964. In this Order, section 2(f) defines rice as under: "'Rice' includes paddy and products of rice and paddy other than husk and rice-bran." From this definition, he infers that rice and paddy are one and the same commodity and, therefore, the petitioners who carry on their business in paddy and rice understand both these commodities to be one and the same commodity and, therefore, when they buy paddy and sell rice after extracting it from the paddy by husking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well-known commercial commodity and for this reason as paddy in its original form as purchased is not sold by the petitioners, they are not entitled to the deduction under section 5(2)(a)(vi) of the Punjab Act or the Haryana Act. By way of illustration, he has placed reliance on various judgments which support his argument. In Devgun Iron and Steel Rolling Mills, Gobindgarh v. The State of Punjab and Others[1961] 12 S.T.C. 590., a Division Bench of this court held that 'when steel is rolled into rolled steel sections, the outcome is a different and a new commodity and when it is sold, there is a sale of a different commodity and not a sale of steel over again. Therefore when sales tax is levied on the sale of rolled steel sections it is not levied a second time or at the second stage on the same commodity in the same condition." In Puran Chand Gopal Chand Bazar Saraf v. The State of Punjab and Others [1963] 14 S.T.C. 252., a Division Bench of this court held that " the word 'manufacture' has various shades of meaning, but as used in section 2(ff) of the East Punjab General Sales Tax Act, 1948, it involves a process of manual labour by which one object is changed into another for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice and paddy were used in the same notification as two different commodities on which tax was leviable at the rate of one and a half paise in a rupee. Subsequently, this notification was amended on 15th January, 1968, by the Punjab Government whereby rice and paddy were deleted from the said notification and were added to Schedule 'C' (Punjab Act) on which purchase tax was leviable. The Government of Haryana issued another notification dated 1st April, 1968, in supersession of the Punjab Government notification dated 30th June, 1966, wherein rice was retained on which tax was leviable at two paise in a rupee and paddy was omitted. The omission of paddy was probably for the reason that it had been included in Schedule 'C' to the Haryana Act on which purchase tax was leviable. The Haryana Government inserted item 76 in Schedule 'B' so as to provide that no sales tax was to be levied on the rice when husked from paddy in respect of which a certificate to the effect that purchase tax has been paid is furnished in the prescribed form by the assessing authority. If paddy and rice are considered as one and the same commodity, there was no necessity of including item 76 in the Second Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Production and Distribution) Order, 1941, under which the Controller issued certain orders directing a company to deliver to certain parties the goods, viz., the iron and the steel products, ordered by the respective parties subject to any general or special directions of the Controller. There were, however, no such directions issued except the fixing of the base price by the Controller. The company would supply the goods in question at its convenience and it was open to the company to agree with its customers as to the date on which the goods were to be supplied. From the works order sent by the company to its customers, it was clear that all orders booked were subject to the company's terms of business and general understanding in force at the time of booking the orders and despatch of goods. It was also open to the company to fix the time and mode of payment of the price of the goods supplied. On these facts, it was held that "it could not be contended that the transactions were completely regulated and controlled by the Controller leaving no room for mutual assent. In view of the orders of the Controller the area within which there could be bargaining between the prospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arcane under the agreement can be taxed by the State Legislature under entry 54, List II." Their Lordships noticed the decision of their own court in Messrs New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar[1963] 14 S.T.C. 316 (S.C.); A.I.R. 1963 S.C. 1207., and distinguished it on facts. In my opinion, the sale of rice to the Government by the petitioners in these cases is covered by the judgments of their Lordships of the Supreme Court in Indian Steel and Wire Products Ltd. v. The State of Madras[1968] 21 S.T.C. 138 (S.C.); A.I.R. 1963 S.C. 478. and Andhra Sugars Ltd. and Another v. State of Andhra Pradesh and Others [1968] 21 S.T.C. 212 (S.C.); A.I.R. 1968 S.C. 599. and not by the judgment in Messrs New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar[1963] 14 S.T.C. 316 (S.C.); A.I.R. 1963 S.C. 1207. It has nowhere been alleged by the petitioners that they were not willing parties to the sales of their rice to the Government or that their consent was obtained by coercion, fraud, undue influence or mistake. The fact that they are bound to sell 82 per cent. of their production to the Government can only be termed as the compulsion of law which, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the parties, will dispose of L.P.A. No. 37 as well as L.P.A. Nos. 59, 61, 62, 75, 76, 81, 82, 83, 84 and 145 of 1970 and Civil Writs Nos. 2816, 2772, 2478 and 3085 of 1969 against the State of Haryana and L.P.A. No. 77 of 1970 and Civil Writs Nos. 293, 313, 356, 622, 1196, 1267 and 1362 of 1970 against the State of Punjab as a common question of law arises in all these cases. The Letters Patent Appeal No. 37 of 1970 was argued by Mr. Anand Swaroop, Senior Advocate, and his arguments were adopted by the learned counsel in other cases. The appellants or the petitioners, as the case may be, in all these cases carry on the business of buying paddy and after getting it husked either in their own mills or in the mills of others, sell the rice to Government and other registered dealers. On the purchase of paddy they pay purchase tax; their claim is that while determining their taxable turnover, they should be allowed deduction to the extent of the purchase price of paddy under section 5(2)(a) of the Punjab General Sales Tax Act, as applicable to the States of Punjab and Haryana (hereinafter referred to as Punjab Act and Haryana Act). Thus the specific question that ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at year, to a registered dealer, or in the course of inter-State trade or commerce or in the course of export out of the territory of India; (B) at any time after the commencement of the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967,- (i) which are specified in Schedule 'C' and are sold during the year to a registered dealer, or in the course of inter-State trade or commerce or in the course of export out of the territory of India; (ii) which are referred to in Schedule 'D' and are sold during the year in the course of inter-State trade or commerce or in the course of export out of the territory of India: Provided that in the case of a sale referred to in paragraph (A) or in sub-paragraph (i) of paragraph (B) to a registered dealer, a declaration in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold is furnished by the dealer claiming deduction: Provided further that purchase of goods referred to in paragraph (A) or in sub-paragraph (ii) of paragraph (B) remaining unsold within the period specified in those paragraphs shall be deemed to be the purchase of the claiming deduction during the year following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are sold not later than six months after the close of the year, to a registered dealer, or in the course of interState trade or commerce or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction." Schedule 'C' as in force in Punjab State enumerates the following goods (only relevant items are reproduced): "(8) Paddy. (9) Rice." The contention in all these cases has been that paddy and rice are one and the same goods and in support of this proposition reference was made to meanings of these words in the various dictionaries, but it is not necessary to reproduce the dictionary meanings of these words as certain guiding principles have been laid down in various decisions as well as in the "Treatise on Statute Law" by Craies as to how a: particular word occurring in a statute has to be construed. The first case is Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola, and Another[1961] 12 S.T.C. 286 (S.C.). In that case the question inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance. Viewed from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'. It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal and charcoal; otherwise, both of them would in ordinary parlance as also in their commercial sense be spoken as coal. " The next case that needs mention is reported in State of Punjab and Others v. Chandu Lal Kishori Lal[1970] 25 S.T.C. 52 (S.C.); A.I.R 1969 S.C. 1073. In that case, the question involved was whether on the sale of ginned cotton and cotton seeds after ginning, the taxable turnover was to be determined after deducting the purchase price of the goods sold from the gross turnover. This court has taken a view as is evident from the decision reported in Patel Cotton Company Private Ltd. v. The State of Punjab and Others[1964] 15 S.T.C. 865., that no manufacturing process is involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious and popular meanings of the language should, as a general rule, be followed. Reference is also made to a decision in Cargo ex Schiller[1877] 2 P.D. 145, 161., where James, L.J., expressed the same ideas in these words: "I base my decision on the words of the statute as they would be understood by plain men who know nothing of the technical rule of the Court of Admiralty, or of flotsam, lagan and jetsam." From the various decisions, referred to above, the guiding principle deducible is that the words of an Act which are not applied to any particular science or art, are to be construed as they are understood in the popular sense. In other words the word must be construed not in any technical sense nor from the mechanical point of view, but as understood in common parlance. It is also clear that if a word is not defined in the Act but is a word of everyday use, then it must be construed in its popular sense which the subject-matter, with which the statute is dealing, would attribute to it. Applying the aforesaid principle to the question involved in these cases, we have no manner of doubt that paddy and rice are two different commodities and are not considered to be one and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 14,307.72 P. should have been allowed under section 5(2)(a)(vi) of the Act and a refund of Rs. 858.42 P. should have been allowed on this score." In substance, the contention of Mr. N.L. Dhingra, learned counsel for the petitioners, was that "chokar" was covered by item No. 15 of Schedule 'B' of the Punjab Act which reads "husk of all foodgrains and pulses" and thus its sale was to be treated as tax-free. According to the learned counsel, "chokar" is included in the word "husk". In our view, there is considerable force in the contention of the learned counsel for the petitioners. The word "husk" has not been defined in the Act. However, its dictionary meaning as given in the Shorter Oxford English Dictionary reads thus: "The dry outer integument of certain fruits and seeds; a glume or rind; the outer covering of an ear of maize or Indian corn." Now we have to see whether "chokar" is included in the word "husk". For that purpose we have to look to the definition of the word "chokar" which is available in Hindi-Punjabi Kosh, published by the Department of Punjabi, Patiala, in its edition 1953, where it is defined to mean "Atte da chhanas, kanak, jaon ade da chhilka, chhan, b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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