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TMI Blog1987 (4) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... material and deposited the tax amount accordingly with the State exchequer. During the same financial year, the appellant-firm effected sales of PVC bags worth Rs. 27,353 and of poly propylene bags worth Rs. 7,999.85 at Jodhpur and further effected sale of poly propylene bags worth Rs. 15,503.51 at its branch office at Pali and charged the sales tax at the same rate of 4 per cent and deposited the tax accordingly with the Government exchequer. The Assistant Commercial Taxes Officer, Jodhpur, made assessment under section 10(3) of the Rajasthan Act for the financial years 1978-79 and 1979-80, on February 28, 1984 and after having gone through the books of account, purchases and sales vouchers, etc., maintained by the appellant-assessee, the turnover from the sale of waterproof paper (bituminised paper), PVC bags and poly propylene bags were assessed to sales tax at 4 per cent in accordance with the rate of tax prescribed for these goods by the State Government by its Notification No. F. 2(8)FD/Gr. IV/75-9 dated July 1, 1975. However, on the basis of an audit report, the Assistant Commercial Taxes Officer, jodhpur, on May 27, 1985, issued a notice under section 12 of the Rajasthan A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Officer under section 13 of the Rajasthan Act. The question whether the goods under consideration were packing material within the meaning of item 8 of the State Government notification dated July 1, 1975 was a disputed question of fact which has to be decided by the assessing authorities and the petitioner had an alternative remedy by way of appeal to the Deputy Commissioner (Appeals) under the Rajasthan Act and, therefore, he did not consider it to be a case for interference under article 226 of the Constitution. As regards the validity of the provisions contained in sections 11B, 12, 13, 23, proviso to section 23-B and section 23-C, which was also challenged by the appellant in his writ petition, the learned single judge held that the provisions contained in sections 11B and 12 of the Rajasthan Act did not suffer from the vice of discrimination or arbitrariness. As regards the validity of section 23, proviso to section 23-B and section 23-C, the learned single judge held that the question did not arise in that case. He accordingly dismissed the writ petition filed by the appellant summarily on October 7, 1985. Mr. Bilam Chand Mehta, strenuously contended before us that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of packing material specified under item No. 8 of the State Government notification dated July 1, 1975 and it was also a technical question and the learned single judge was right in not going into the question in the extraordinary jurisdiction of this High Court under article 226 of the Constitution. Mr. Bhandari proceeded further to argue that the list of goods mentioned as packing materials in the Government notification is exhaustive and not illustrative and the goods in question do not fall within any subitems of item No. 8 of the list annexed to the said notification. We may mention that the State Government, by its Notification No. F. 5(21) FD/(CT)171-3 dated March 27, 1971, exercising its powers under section 5 of the Rajasthan Act, notified with immediate effect 3 per cent as the rate of tax payable by a dealer in respect of packing material, that is to say (i) gunny bags and hessian (ii) jute twine (iii) brown paper and other paper adapted for use in packing goods (iv) empty tins and empty barrels (v) wooden boxes (khokhas) and tin boxes (vi) empty bottles and corks (vii) polythene and alkathene packing materials and (viii) bituminised packing material. By an amending No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and sale to the tune of Rs. 7,999.85 of poly propylene bags. It was also mentioned that sale to the tune of Rs. 15,503.51 of poly propylene bags was effected at the branch office at Pali. For these sales it was stated that tax has been realised only at the rate of 4 per cent while it was taxable at the rate of 7 per cent. It was further mentioned that the appellant had made sale of waterproof paper and butter paper to the tune of Rs. 2,32,074.50 at jodhpur and of Rs. 25,757.10 through Pali branch for which tax had been paid at the rate of 4 per cent while the said goods did not fall within the category of packing material and was not liable to tax at 4 per cent but was liable to tax at 7 per cent. The respondent No. 2 proposed to create additional demands for the difference of tax and interest under section 11B by the notice under section 12 of the Rajasthan Act. It may be stated here that during the financial year 1979-80 the general rate of tax had increased from 7 per cent to 8 per cent. For the financial year 1979-80, therefore, the respondent No. 2 issued notice, exhibit 3, to the appellant under section 12 of the Rajasthan Act creating a demand for the difference of tax wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of waterproof paper at Jodhpur and through branch office at Pali was determined as Rs. 91,199 and the difference of tax at 4 per cent was assessed at Rs. 3,648 and interest amounting to Rs. 3,064.32 under section 11B of the Rajasthan Act was created. There was, further found, sale of butter paper in jodhpur amounting to Rs. 19,665.65 and on its taxable turnover also difference of tax at 4 per cent amounting to Rs. 786.60 was levied and an amount of Rs. 660.80 was also imposed as interest under section 11B of the Rajasthan Act. Thus a total demand of Rs. 26,860.40 was created against the appellant and a notice of demand, exhibit 7, was served upon him. Thus it would appear that the dispute relates to the rate of tax leviable on waterproof paper, PVC bags, poly propylene bags and butter paper and this dispute has to be decided on the basis whether the aforesaid kind of paper and bags fall within any of the packing material specified in sub-items (a) to (h) of item No. 8 in the list annexed to the State Government notification dated July 1, 1975, referred to above and reproduced by the appellant in para No. 7 of his writ petition. The appellant's contention in reply filed by him be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittee observed: "As to item 21, 'land', the governing word is followed by the rest of the item, which goes on to say, 'that is to say'. These words introduce the most general concept-'rights in or over land'. 'Rights in land' must include general rights like full ownership or lease-hold or all such rights. 'Rights over land' would include easements or other collateral rights, whatever form they might take. Then follow words which are not words of limitation but of explanation or illustration, giving instances which may furnish a clue for particular matters; thus there are the words 'relation of landlord and tenant and collection of rents'. These words are appropriate to lands which are not agricultural equally with agricultural lands." The Federal Court in Bhola Prasad v. Emperor AIR 1942 FC 17 had to consider the powers of the Provincial Legislature to legislate under entry No. 31 in List II of the Seventh Schedule of the Government of India Act, 1935, which set out "'intoxicating liquors and narcotic drugs', that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs". Gwyer, C.J., speaking for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il can be extracted for any of the purposes mentioned in the clause, the latter Division Bench of the Kerala High Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Sreedhara Shenoy [1973] 32 STC 181 (187), agreeing with its earlier Division Bench decision in State of Kerala v. Moidoo [1972] 29 STC 373 and dissenting from the decision of the Orissa High Court in State of Orissa v. Dinabandhu Sahu [1969] 24 STC 233 and its own decision in C.M. Hamsa Haji v. Sales Tax Officer, Tirur [1967] 20 STC 470, held that section 14(vi) of the Central Act did not contain any definition clause and should be construed by applying the "common parlance theory" and it was held that in common parlance, coriander and "methi" were not oil-seeds in this section 14(vi) of the Central Act and did not agree with the technical construction placed by the Orissa High Court and by applying "common parlance theory" held these goods as oil-seeds. The Gujarat High Court in State of Gujarat v. Mahavir Oil Mills [1973] 32 STC 385 adopted a mid line approach. It did not adopt the Orissa view treating clause (vi) of section 14 of the Central Act as definition clause because their Lordships of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d steel sections, } rolling mill." (v) tool alloy steel. } It may be mentioned that section 15 of the Central Act had placed three restrictions upon State enactment imposing sales tax on the sale or purchase of goods declared to be "of special importance in inter-State trade or commerce" and these restrictions at the relevant time were: (a) rate of tax shall not exceed 3 per cent of the sale or purchase price thereof, (b) such tax shall not be levied at more than one stage, and (c) when a tax has been levied under the State enactment as intra-State sale or purchase of such goods and such goods are sold in the course of interState trade or commerce and tax has been paid under the Central Act in respect of sale thereof in the course of inter-State trade or commerce, the tax levied under the State enactment shall be reimbursed to the person making such sale in the course of inter-State trade or commerce. Section 4 of the Tamil Nadu General Sales Tax Act, 1959 gave full effect to section 15 of the Central Act. It may further be mentioned that by the Central Sales Tax (Amendment) Act 61 of 1972, clause (iv) of section 14 of the Central Act was redrafted and thereby "iron a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be without any purpose behind it. (e) The ordinary meaning to be assigned to a taxable item in a list of specified items is that each item so specified is considered as a separately taxable item for purpose of single point taxation in a series of sales unless the contrary is shown. The more natural and normal interpretation which follows plainly from the fact of separate specification and numbering of each item, is that each item so specified forms a separate species for each series of sales although they may all belong to the same genus. (f) Sales tax law is intended to tax sales of different commodities and not to tax the production or manufacture of particular substance out of which these commodities may have been made. As soon as separate commercial commodities are made or come into existence, they become separately taxable goods or entities for purposes of sales tax and so long as they retain their identity as goods of a particular type, they cannot be taxed again in a series of sales. In such cases where one commercial commodity is transformed into another, it becomes separate commodity for purposes of sales tax. The object of a single point taxation is the commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obsolete. It means, "by name, that is to say". A difference in grammatical sense, in strictness exists between the words, "namely" and "including ". "Namely" imports interpretation, i.e., indicates what is included in the previous term; but including imports some thing not included. If a videlicet is repugnant to what has gone before, it shall be rejected, but if it can be reconciled and made restrictive, it shall be so. Strictly and grammatically, the expression "that is to say" imports interpretation which explains the meaning of the principal clause. It would thus appear that whenever a statute or document is to be construed, it must be construed not according to the mere ordinary general meaning of the words, but according to the ordinary meaning of the words as applied to the subject-matter with regard to which they are used, unless there is something which renders it necessary to read them in a sense which is not their ordinary sense in the English language as so applied [see Lion Insurance Co. v. Tucker [1883] 12 QBD 176 per Brett, M.R.]. The decision of their Lordships of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319; AIR 1976 SC 800 did not lay down any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empty barrels" and "hollow barrels" for the purpose of this case although we feel that an empty thing is that which can have something within it and a hollow thing is a hole, a cavity or having an empty space within or below and that in a hollow barrel, articles cannot be contained within the barrel but outside it. It is, therefore, no longer res integra that each item specified in the entry forms a separate species for each series of sales although they may all belong to the genus "packing material" and the law is very well-settled by the decision of their Lordships of the Supreme Court in the case of State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319; AIR 1976 SC 800. We may state that the Board of Revenue, which was previously revisional authority under the Sales Tax Act had earlier in its decision reported in 1980 RRD 136 interpreted the words "that is to say " as illustrative, but after the decision of their Lordships of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319; AIR 1976 SC 800, the larger Bench of the Board of Revenue in the case of Assistant Commercial Taxes Officer v. Deepak Agency 1984 RRD 466 held that the words "that is to say" occurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bilam Chand Mehta, learned counsel for the appellant, urged before us that when the assessing authority had already assessed the appellant's turnover from the sale of PVC bags, poly propylene bags, bituminised waterproof paper and butter paper at 4 per cent, it had no jurisdiction to issue a notice under section 12 of the Rajasthan Act merely on account of change of opinion or the audit objection. On this basis, it was urged that reassessment made by the Assistant Commercial Taxes Officer, jodhpur was without jurisdiction and in such cases this Court should interfere in writ petition even though alternative remedy was available to the appellant. The learned counsel for the appellant relied upon the decision of this Court in Indian Hume Pipe Company Ltd. v. State of Rajasthan ILR [1968] 18 Raj 188 in this respect. In Indian Hume Pipe Company's case ILR [1968] 18 Raj 188 the notices for reassessment and the orders of the reassessment under section 12 of the Rajasthan Act were challenged on the grounds (1) that Shri Jai Kumar Jain who issued the two notices of reassessment and eventually reassessed the assessee under section 12 of the Rajasthan Act was never invested with the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make reassessment under section 12 of the Rajasthan Act. What has been challenged by the appellant in the present case is that it was not a case of escapement of turnover or business from tax and that the respondent No. 2 had on a mere change of opinion, no jurisdiction to initiate proceedings under section 12 of the Rajasthan Act. To the first part of the above challenge, answer was given in Indian Hume Pipe Company's case ILR [1968] 18 Raj 188 in this way that section 12 of the Rajasthan Act empowered the assessing authority to reassess a turnover even if the escapement is on account of the tax being computed at too low a rate in any year and this sufficiently answers the first part of the challenge made by the appellant regarding lack of jurisdiction. In Indian Hume Pipe Company's case ILR [1968] 18 Raj 188, it was also held that on the facts in that case, it could not be said that the reassessment proceedings had been initiated or commenced on account of a mere change of opinion. Reference may be made to the decision of this Court in Akbarali Amanatali v. Assistant Commercial Taxes Officer, 'C' Ward, Pali 1976 RLW 648. In this case, His Lordship Sen, J. (as he then was), af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling with section 12(8) of the Orissa Sales Tax Act, 1947 wherein the opening words "if for any reason" where the same as in section 12(1) of the Rajasthan Act, but the difference lay in the fact that form VI appended to the Rules framed under the Orissa Act, which had been prepared in pursuance of rule 23, used the words "whereas I have reason to believe". Under the Orissa Sales Tax Act, therefore, the words "if for any reason" and "whereas I have reason to believe" were used more or less in the same sense and the expressions were interchangeable. His Lordship Khanna, J., speaking for the court, observed that there was nothing in the language of section 12(8) of the Orissa Act which either expressly or by necessary implication postulated the recording of reasons in the notice which is issued to the dealer under the provisions of law. To hold that reasons which led to the issue of the notice should be incorporated in the notice and that failure to do so would invalidate the notice would be tantamount to reading something in the statute which, in fact, was not there. His Lordship referred to the decision of their Lordships of the judicial Committee in Commissioner of Income-tax v. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the assessee's tax liability. " In Indian Eastern Newspapers Society's case AIR 1979 SC 1960, in the course of auditing the income-tax records pertaining to the assessee for the assessment years 1960-61 to 1963-64, the internal audit party of the income-tax department expressed the view that the money realised by the assessee on account of the occupation of its conference hall and rooms should not have been assessed as income from business and should have been assessed under the head "Income from property". The Income-tax Officer treated the contents of the report as "information" in his possession for the purpose of section 147(b) of the Income-tax Act, 1961. In the case before the Supreme Court, the internal audit party of the Income-tax department, expressed the view that the receipts from the occupation of the conference hall and rooms did not attract section 10 of the Act and that the assessment should have been made under section 9. That part alone of the note of an audit party which mentioned the law which escaped the notice of the Income-tax Officer constituted "information" within the meaning of section 147(b); the part which embodied the opinion of the audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason or simply based on whims or caprice or merely on a change of opinion. It is clear from the assessment order dated February 29, 1984 that originally the assessing authority had made assessment for the accounting years April 1. 1978 to March 31, 1979 and April 1, 1979 to March 31, 1980 on November 30, 1983 as best judgment assessment under section 10(4) of the Rajasthan Act. On the filing of application by the assessee under section 10 of the Rajasthan Act, the best judgment assessment was resorted by the assessing authority and without any examination whether the above items of goods fell within any specific sub-item of item No. 8 of the list, it taxed the taxable turnover from the sales of butter paper, waterproof paper, PVC bags and poly propylene bags at 4 per cent in a four line order which reads as follows: *"4 per cent se kar yogya bikri rupye (3,21,021.26 + 2,30,768.92) rupye 5,51,790.18 Vyavasayi dwara dono varsho men ukta bikri kar yogya saaman packing material ki ki hai jis par lekha pustako se bad ashik janch kar 4 per cent se rupye 22,071.60 vasooli yogya hai." When it was brought to the notice of the assessing authority that aforesaid various categories of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also not a case where tax was being levied without due legal authority of law as was the case in Kailash Nath v. State of U.P. [1957] 8 STC 358 (SC). In Maharaj Kumar Kamal Singh v. Commissioner of Income-tax AIR 1959 SC 257, Gajendragadkar, J., observed at page 262: "We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been submitted, if the Income-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment." Section 12(1) authorised reassessment even in cases where any part of the business of a dealer has been assessed at too low a rate in any year. His Lordship R.S. Pathak, J. (as he then was), in Allahabad Milling Company Pvt Ltd. v. Sales Tax Officer II, Allahabad [1965] 16 STC 888 (All.), while dealing with section 21 of the U.P. Sales Tax Act, 1948, which contained the words "reason to believe" held that the assessing authority must have, as Das Gupta, J., observed in the maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ground. The assessee filed an appeal before the Division Bench of this Court under section 18 of the High Court Ordinance against the judgment of the learned single judge of the court dismissing the writ petition. The Division Bench of this Court, following the decision of the Supreme Court in Maharajadhiraj Sir Kameshwar Singh v. State of Bihar AIR 1959 SC 1303 and of this Court in Bhanwarlal Binjaram v. Assistant Commercial Taxes Officer, jodhpur 1976 WLN (UC) 459 held that the view of the learned single Judge was based on just and proper reason and called for no interference in special appeal as there was no patent lack of jurisdiction of the assessing authority in issuing notice under section 12 of the Rajasthan Act. Now while Mr. K.C. Bhandari, appearing for the Revenue, has contended that waterproof paper, poly propylene bags, PVC bags and butter paper did not fall within any sub-items (a) to (h) of item No. 8 of the list annexed to the notification of the State Government dated July 1, 1975, Mr. Bilam Chand Mehta, urged that so far as waterproof paper is concerned, it was made of two layers of craft paper, bituminised with each other and it was covered either within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acking materials, it was only on March 5, 1979 that the State Government amended sub-item (g) of item No. 8 of the list by substituting the words "plastic packing materials" in sub-item (g) for the expression "polythene and alkathene packing materials" existing during the period from March 27, 1971 to March 4, 1979. With effect from March 5, 1979, wide and generic term "plastic material" was used which is comprehensive enough to include processed polyvinyl chloride and other polyvinyl derivative resins and plastic materials. Mr. K.C. Bhandari urged on behalf of the Revenue that it is true with effect from March 5, 1979, the expression "plastic packing materials" has been substituted in sub-item (g) of item No. 8 of the list, but there is nothing to show that polyvinyl chloride (PVC) and poly propylene bags are made from plastic. Suffice it to state that it is elementary that anything prepared, polymerised and co-polymerised (for example polythene, polyterahaloethylenes, polyvinyl chloride and other polyvinyl derivatives) are plastics. This fact finds ample support from Tariff item No. 15A-Plastic in Central Excise Tariff (Cen-Cus Publications) (Budget Edition 1985-86) by D.N. Kohli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity Coated Products v. Government of India 1980 ELT 589. As a matter of fact, waterproof paper is nothing but craft paper subjected to various processes and treatment. The base paper is craft paper. Bituminised waterproof paper is obtained by the bonding together the layers of craft papers with bitumin. It is with a view to make the craft paper strong and durable to be used for wrapping and packaging that bitumin is applied to it as a bonding agent. Bituminised packing material is clearly specified in sub-item (h) of item No. 8 of the list appended to the State Government notification dated July 1, 1975 and its turnover was liable to be taxed at the concessional rate of 4 per cent during both the accounting years and not at the general rate of 7 per cent and 8 per cent applied by the respondent No. 2. Thus we hold that waterproof paper is bituminised packing material falling within sub-item (h) of item No. 8 of the list appended to the Notification No. F. 2(8) FD/Gr. IV/75-9 dated July 1, 1975 and its turnover was liable to sales tax at the concessional rate of 4 per cent during both the accounting years in question. PVC bags and poly propylene bags were correctly taxed at the ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act are meant for speedy and prompt collection of revenue." Reference may also be made to the decision in Haji Lal Mohd. Biri Works v. State of U.P. [1973] 32 STC 496 (SC) which says that the liability to pay interest is automatic and arises by operation of law and that of the Delhi High Court in Ram Body Builders v. Sales Tax Officer [1984] 56 STC 118 (121). Question as to what rate of interest could be charged in relation to the period from April 1, 1978 to March 31, 1979 may be agitated before the assessing authority who is competent to decide it. Resultantly, we partly allow this special appeal and modify the order of the learned single judge dated October 7, 1985 in this manner that the reassessment order under section 12 of the Rajasthan Sales Tax Act, 1954, dated June 17, 1985 of the non-petitioner No. 2 (assessing authority) is quashed to the extent he has levied difference of tax at the rate of 3 per cent on the turnover of waterproof paper amounting in all to Rs. 2,57,381.60 effected at the head office at Jodhpur and branch office at Pali during the accounting year April 1, 1978 to March 31, 1979 and at 4 per cent on the turnover amounting in all to Rs. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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