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TMI Blog1977 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Authority. Accordingly, its liability was fixed under both the Acts with effect from 26th April, 1971. The order of the Assessing Authority is annexure A. Dissatisfied by the order of the Assessing Authority, the assessee-firm filed two revision petitions before the Deputy Excise and Taxation Commissioner on the ground that they were not liable to pay tax as their manufactured goods fell in the category of tax-free goods covered by item 30 of Schedule B of the Act. These revision petitions were dismissed and the copies of the orders are annexures B and C. The assessee-firm then unsuccessfully appealed before the Tribunal. The Tribunal also held that the products manufactured by the assessee-firm were taxable as they were not covered by item 30 of Schedule B of the Act. The Tribunal's order is annexure D. The assessee then moved an application to the Tribunal for making a reference to the High Court which was allowed and reference in the following terms was made to this court: "Whether, on the facts and circumstances of the case, the products manufactured by the petitioner are not covered by item 30 of Schedule B of the Punjab General Sales Tax Act, 1948, and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onverts the yarn into felt. These felts are used by paper mills in the manufacture of paper. The learned counsel thus makes out a case that this process of manufacturing dryer felts answers the definition of "textile". In support of his contention, he relied upon the dictionary meaning of the word "textile". According to Webster's New International Dictionary, Second Edition, the meaning of "textile" is as under: " 'textile' adj. 1. Pertaining to weaving or to woven fabrics; as textile arts, textile machinery. 2. Woven or capable of being woven; formed by weaving; as cotton and wool are textile fibres; textile fabrics. 'textile' n. That which is, or may be, woven, a woven fabric or a material for weaving." In the Shorter Oxford English Dictionary on Historical Principles, Third Edition, the meaning of "textile" is as under: "A. 'textile' adj. 1. That has been or may be woven. 2. Of or connected with weaving. B. sb. 1. A woven fabric; any kind of cloth. Of or pertaining to weaving or to woven fabrics. 2. Fibrous material, as flax, cotton, silk, etc., suitable for being spun and woven into yarn, cloth, etc." In Encyclopaedia Britannica, Volume 22, the meaning of "textile" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n parlance do not include "betel leaves" although from the botanical point of view and the technical point of view betel leaves may come from the same family as the vegetables. In Ganesh Trading Co., Karnal v. State of Haryana[1973] 32 S.T.C. 623 (S.C.)., their Lordships of the Supreme Court held that the dictionary meaning is not relevant; what is relevant is how those articles are understood in common parlance by the commercial community. In that case, the assessee carried on the business of buying paddy and after getting it husked either in their own mills or in other mills sold the rice to Government and other registered dealers. On the purchase of paddy the assessee paid purchase tax as provided in the Punjab General Sales Tax Act, 1948. In computing the total turnover of the assessee for levying sales tax, the assessee claimed exclusion of the turnover relating to paddy over which purchase tax had been paid. Their Lordships of the Supreme Court held that the assessee was not entitled to the deduction. It was further observed by their Lordships that although rice is produced out of paddy, it is not true to say that paddy continued to be paddy even after dehusking; that rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h but the tarpaulin was sold as a separate finished product, it could not be treated as "textile" failing under item 4 of Schedule III to the Act. In Sharfaji Rao v. Commissioner of Sales Tax[1953] 4 S.T.C. 6., the facts were that cloth costing less than Rs. 3 per yard was exempt from the purview of the Hyderabad General Sales Tax Act, 1950, and the assessee, who had manufactured ready-made garments from cloth costing less than Rs. 3 per yard, had claimed exemption from payment of sales tax. It was observed by their Lordships of the Hyderabad High Court that all fiscal enactments should be interpreted strictly and the subject is not to be taxed unless the language of the statute clearly imposes the obligation, that the provisions relating to exemption from tax must also be strictly construed and limited to the exemption itself, and that where the intention of the Act is to levy sales tax on all articles generally other than those which are specified in the exempted list, the assessee must show that he comes within that exempted list. With this observation, it was held by their Lordships that readymade garments made of cloth costing less than Rs. 3 per yard do not come within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show that the dryer felt is a textile. He should have shown by producing evidence that in common parlance dryer felt is known as textile. If one goes to the bazaar for purchasing dryer felt and asks for textile, nobody would understand by the word "textile" that dryer felt is required. Admittedly, dryer felt is used for the purposes of belting and drying paper in the paper mills. Dryer felt is a product which is used only by the factories, it is not in use by the common man. The intention of the legislature in giving exemption to the textile goods seems to be to those goods which are in daily use by the common people, that is why druggets, carpets, cotton floor durees, etc., are excluded from the exemption. It is true that this exclusion has created some confusion and the dryer felt should also have been excluded. But it appears that the legislature never was in doubt that the dryer felt does not come within the definition of "textile". When the articles like carpets, durees, druggets, etc., also are not exempt although used by some people, it cannot be the intention of the legislature to exempt the dryer felt, which is not in use by common people except the factories. For the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process of manufacture of the "dryer felts" and having satisfied himself, it is too late in the day to raise a contention on behalf of the respondent that the petitioner-firm led no evidence to show that the "dryer felt" is a textile. Learned counsel for the petitioner then emphasised that as mentioned in the order of reference by the Sales Tax Tribunal, Haryana, the "dryer felt" has been considered as textile by the central excise authori. ties in regard to the levy of additional excise duty. There is no quarrel with the proposition that in construing fiscal enactments, in the absence of a technical term, or a term of science or art, the statute must be presumed to have used a term according to the meaning ascribed to it in common parlance. This principle of interpretation will apply to articles like rice and paddy, cloth and niwar, canvas cloth and tarpaulin, coal and charcoal, and betel and vegetables, as discussed in the judgment by my learned brother A. S. Bains, J., but it appears to me that this principle of interpretation cannot be applied to the term "textile". I, therefore, find myself in agreement with the view of the Madras High Court in State of Madras v. T. T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond his reach, for example, all expensive suitings, shirtings, saris, fine cloth, etc., which are doubtless textiles. What is left for the common man is by and large coarse cloth, both woollen and cotton. In the result, it appears to me that the "dryer felts" in question are textiles under item 30 of Schedule B of the Act and, consequently, exempt from sales tax. MITTAL and BAINS, JJ.-In view of the difference of opinion, the case may be laid before my Lord, the Chief Justice, for appropriate orders. In pursuance of the above order, the case came on for hearing before O. CHINNAPPA REDDY, J., and the learned Judge delivered the following judgment on 11th May, 1977. CHINNAPPA REDDY, J.-This sales tax reference has been placed before me on a difference of opinion between S. C. Mittal and A. S. Bains, JJ. The question for consideration is, whether cotton/woollen dryer felts fall within item 30 of Schedule B of the Punjab General Sales Tax Act and their sale is, therefore, exempt from the levy of sales tax. Item 30 of Schedule B of the Punjab General Sales Tax Act is as follows: "Item 30 of Schedule B.-All varieties of cotton, woollen or silken textiles, including rayon, artificia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascribed to the word in other Acts. (Craies on Statute Law, Seventh Edition, page 164). In Macbeth v. Chislett[1910] A.C. 220., it was observed by the House of Lords as follows: "It would be a new terror in the construction of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone." Nor do I think that I would be justified in giving to a word of common parlance like "textiles" a pedantic meaning based on meanings given in dictionaries. A word of common usage like "textiles" must be construed as it is understood in common language. The test of construction in the popular sense of words of ordinary use was adopted by the Supreme Court of India in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer[1961] 12 S.T.C. 286 (S.C.);, where the question arose whether betel leaves were vegetables. The Supreme Court held that the word "vegetables " as understood in common parlance denoted the class of vegetables which were grown in a kitchen garden or in a farm and were used for the table and did not include betel leaves. They o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n inflammable liquid produced by distillation, either pure or mixed only with ingredients which do not convert it into some article of commerce not known, in common parlance, under the genuine appellation of spirits ....... If, therefore, sweet spirits of nitre be 'spirits' within the true intent and meaning of the Excise Acts, it can only be sold by a licensed dealer in beer and spirits, and the same observation will apply to sal volatile, spirit varnish, and many other articles of commerce of which spirits are a principal component part. All these matters are notoriously sold, and indeed this case states that they are sold, not by licensed dealers in spirits, but by chemists, apothecaries, and other; and we consider this to be a strong confirmation of the view of the case which treats them as something distinct from spirits, however largely spirits may enter into their composition ......... Inasmuch, therefore, as sweet spirits of nitre Is itself a well-known article of commerce, not commonly known under the name of 'spirits', and not adapted for ordinary use as an intoxicating beverage, we think it is not 'spirits' within the meaning of that word as used in the information and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturers, producers, importers, consumers and others who would be affected by the Act, would be botanists. The object of the Excise Tax 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. I think it can be asserted that in Canada both the peanut and cashewnut are considered by almost everyone (except possibly by botanists) as falling within the category of 'nuts'. Like other nuts, such as the walnut, hickory, pecan and almond, they have a pod or shell enclosed in which is the edible seed. They are bought, sold and used in the same manner and can be found in any of the numerous 'nut shops.......... It is equally clear to me that when in Canada the words 'fruit' and 'vegetables' are used, their obvious and popular meaning would not include 'nuts' of any sort ..... X X X X Extracts X X X X X X X X Extracts X X X X
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