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TMI Blog1972 (8) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... the customers under section 5 of the Act treating them as general goods. The contention of the petitioners is that they deal in timber and since the sales which they effect are not the first sales, they are not therefore liable to pay any tax under item 63 of the First Schedule to the Act. They submit that since the transactions fall under item 63 as they deal in timber, they cannot be taxed under section 5 of the Act. Since the obligation to pay tax arises only from a legislative provision, the nature and extent of the liability is naturally measured by the legislative intent. All the relevant rules of statutory construction therefore become relevant in the interpretation of a tax measure. The first and most elementary rule of construction is that the words used in a statute have to be given their ordinary meaning unless that appears to be at variance with the intention of the Legislature or leads to manifest absurdity. Conspicuously important to the interpretation of a tax measure is also the rule that words are to be given their common and ordinary meaning. It is plain that in dealing with matters relating to the general public, statutes are presumed to use words in their p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the word "timber" may influence the interpretation to be placed on that word used in the Act. The general rule therefore is that in the absence of a legislative intent to the contrary, commercial terms when used in a statute relating to trade or commerce are presumed to have been used in their trade or commercial meaning. Of course the trade or commercial meaning of a particular word is a fact to be proved in each case and until such fact is proved, an alleged commercial or trade meaning of common terms is presumed to be the same as the common meaning. It must, however, appear that such commercial meaning is the result of established usage in commerce and trade and that such usage was definite, uniform and general and not partial, local or personal. We are fortified in this view of ours by a decision of the Supreme Court in Sales Tax Commissioner, Indore v. Messrs. Jaswant Singh[1967] 19 S.T.C. 469 (S.C.); A.I.R. 1967 S.C. 1454. Their Lordships said: "........while construing the word 'coal' in entry 1 of Part III of Schedule II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act were till recently treating the planks, rafters, square sticks, cut sizes, etc., as timber within the meaning of that term used in the Act. One of the most significant aids of construction in determining the meaning of a tax provision is the administrative interpretation given to it by the agency that is responsible for its administration and enforcement. The authority for such interpretation is usually traced to three distinct sources. One of the sources is the interpretation given by the administrative agency or its officers, appearing in less formal rulings such as the departmental rulings and the like. Such interpretation, it is true, is formal, or unauthoritative administrative construction. Nevertheless the courts have given weight to it in the construction of doubtful language. It may be that since such rulings or communications are made without the authority, care and deliberation with which ordinarily interpretative rules are promulgated, their efficacy is reduced. The courts, however, in interpreting a word used in a statute may have regard to the interpretation placed by those who are presumed to be acquainted with the economic significance of the tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sales Tax Officer. Evidence should, therefore, be led before that officer for the purpose of showing that the goods sold by the dealer was not commercially different from the goods like timber purchased by him." While the matters stood thus, the Accountant-General, Andhra Pradesh, in his letter dated 5th April, 1969, requested the Government to clarify the following two points: (1) the classification and rate of tax leviable on the cut sizes, planks, etc.; (2) whether in view of the decision of the Government past cases are to be reopened and assessed. In regard to the first question, the Government agreed with the view of the Board of Revenue that "the planks, rafters, cut sizes, etc., obtained from nascent timber have to be treated as falling under general goods liable to tax at 3 per cent at each point of sale in the State". In regard to the second question, the Government also agreed with the view expressed by the Board of Revenue that since in view of the Board's letter of 4th April, 1964, the dealers may not have collected sales tax, effect to this revised clarification should be given from 1st April, 1969, The clarification was issued by Memo. No. 1708/ST/69-11 dated 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion before the Supreme Court was whether the iron bars, flats and plates are not iron and steel within the meaning of item 39 of the relevant notification. It was observed: "So long as iron and steel continue to be raw materials, they enjoy the exemption. Scrap iron purchased by the respondent was merely re-rolled into bars, flats and plates. They were processed for convenience of sale. The raw materials were only re-rolled to give them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The dealer sold 'iron and steel' in the shape of bars, flats and plates and the customer purchased 'iron and steel' in that shape." In Commissioner of Sales Tax v. Harbilas Rai Sons[1968] 21 S.T.C. 17 at 19 (S.C.)., the Supreme Court agreed with the observation of the High Court. The High Court had said that: "It does not result in the production of a commercially different article; what is bought by it from Kanjars is bristles and what it exports for sale is also bristles." The Supreme Court said that the articles which they produced are known as bristles both in the form in which they are bought from Kanjars and the form in which they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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