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TMI Blog1983 (1) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... h, chemical cotton canvas and cotton cloth and of manufacturing from goods so purchased articles such as handbags, beddings, chair cloth and tarpaulin. The petitioners have set out in the petition the processes of manufacture carried out by them. According to the processes so described, handbags or "thailis" are manufactured by stitching the raw material of selected sizes out of cotton canvas cloth or cotton niwar and attaching thereto by stitching cotton niwar straps for being used as handles and two pieces of select size of such cotton canvas cloth are stitched together to make a handbag or a "thaili". Similarly in the manufacture of beddings or hold-alls, the cotton canvas or the cotton niwar cloth of select sizes are stitched together for manufacture of beddings or hold-alls and cotton niwar straps are provided to fasten such beddings or hold-alls. Two pieces of such cloth of select sizes are joined together to make a hold-all or bedding with pockets and a flap and cotton niwar straps are provided. The petitioners manufacture tarpaulin or "tadpatri" by stitching the borders of the chemical cotton canvas cloth pieces of various sizes and providing in the border aluminium eyele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial so long as the commodity so created continued to have the essential characteristic of cotton fabric. Mohta, J., however, held that by the process of manufacture to which the petitioners subjected the cotton fabric purchased by them, the cotton fabric so purchased lost its identity and altogether a new commercial commodity came into being and the said entry No. 15 in Schedule A did not apply to the said articles and the said articles were taxable under the residuary entry No. 22 in Schedule E. In view of this difference of opinion between the two learned Judges, with the consent of Advocates on both sides, this writ petition was thereafter transferred for being heard at Bombay in exercise of the power conferred upon the Chief justice of this High Court by the proviso to rule 1 of Chapter XXXI of the Bombay High Court Appellate Side Rules, 1960. Schedule A to the Act contains a list of goods, the sale or purchase of which is free from all taxes, either absolutely or subject to the fulfilment of conditions set out in the relevant entry. Entry 15 as in force from 15th June, 1962, to 16th June, 1972, read as follows: "15. Cotton fabrics as defined in the First Schedule to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohta, J., on the other hand pointed out that there was nothing uncommon in a statute containing a provision that certain words should bear a particular meaning. He further held that though the word "include" was undisputably a word of enlargement, but it, like any other word, has to be understood against the background and context in which it was used. On well-recognised principles of interpretation of statutes, the meaning given by Padhye, J., to the word "include" cannot be accepted. As pointed out in Craies on Statute Law, Seventh Edition, page 213: "There are two forms of interpretation clause. In one, where the word defined is declared to 'mean' so and so, the definition is explanatory and prima facie restrictive. In the other, where the word defined is declared to 'include' so and so, the definition is extensive, e.g., sheriff includes under-sheriff." An extensive definition by using the word 'includes' extends the normal and natural meaning of the word defined by including within its scope what would otherwise be not comprehended within it. The things so included by extending the definition are however, not by way of illustrations. When a definition is an extensive one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act with effect from 1st March, 1955, it is on the basis of this amended definition that the present writ petition would fall to be decided. Unfortunately the attention of the learned Judges was not drawn to this amending Act. Before considering the effect that this amended definition has on the petitioners' case, it would also be convenient to refer to certain provisions of the Act to which also unfortunately the attention of the learned Judges was not drawn, namely, clauses (17) and (26) of section 2 of the Act. Section 2 of the Act is the interpretation clause, and clauses (17) and (26) thereof respectively defined the terms "manufacture " and "resale". These clauses are as follows: "(17) 'manufacture', with all its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." "(26) 'resale', for the purposes of sections 7, 8, 9, 10, 12 and 13, means a sale of purchased goods(i) in the same form in which they were purchased, or (ii) without doing anything to them which amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercially the same as it was before the activity was applied to it. In a given case, it may be that the ingredients are totally transformed and in another given case, it may be that they undergo some change, alteration or transformation and yet retain their essential character and properties. The test in all cases, therefore, is to ascertain whether the result is commercially a different commodity and it is irrelevant whether this result is produced by a mechanical or chemical process or otherwise. Even under the very wide definition of 'manufacture' to be found in clause (17) of section 2 of our Act the various activities set out therein must result in a different commercial commodity in order that such activities may amount to manufacture of goods. This definition must be interpreted bearing in mind the fact that it has been inserted in the setting and context of a sales tax legislation of which the pith and substance is a tax primarily on the sales of goods and subsidiarily on the purchases of goods. The various activities enumerated in the definition, namely, producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting, have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a price not exceeding ten rupees per article. Appendix: (1) Cotton bags (Thellies) (2) Baby blanket (3) Kiddle cloth (Zoli) (4) Baby bedsheet (Godhadi) (5) Pillow cover (6) Napkin (7) Bibs." The Government has given this exemption by inserting sub-entry (2) in entry 68 of the parent notification under section 41 of the Act, This notification, however, does not help the petitioners, so far as the present petition is concerned, because the period in question in this writ petition is prior to the date of the coming into force of the said notification. The petitioners, however, would not be liable to pay any tax on the sales of cotton handbags or "thailis" on and from 1st May, 1973. So far as tarpaulin is concerned, it is unnecessary to consider whether the tarpaulin sold by the petitioners is commercially a different commodity from the goods purchased by the petitioners, for in Pokardas Brothers v. State of Gujarat [1982] 51 STC 88 in a very detailed and considered judgment the Gujarat High Court has taken the view that in view of the retrospectively amended definition of "cotton fabrics" in item No. 19 of the First Schedule to the Excise Act, tarpaulin sold by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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