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TMI Blog1990 (1) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... he State Legislature as Karnataka Act No. 27 of 1979 was brought into force with effect from 1st October, 1980. The object of the Act is levy the tax on entry of goods into the local areas for consumption, use or sale therein. Section 3 is the charging section which empowers the levy and collection of tax on entry of the scheduled goods at the rates specified therein. Originally, the Schedule consisted of only three items: "SCHEDULE [See section 2(7)] 1.. All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon whether manufactured in mills, power-looms or handlooms and hosiery cloth in lengths. 2.. Tobacco and all its products. 3.. Sugar other than sugar candy, confectionery and the like." By Act 38 of 1984, the Act was amended to include several other items and entry 7 reads thus: "7. Industrial machinery and parts and accessories thereof." Sewing machines were not subjected to tax under Entry Tax Act, under entry 7 which was inserted with effect from 1st April, 1982. Such an attempt was made by the Department pursuant to a clarification issued by the Commissioner on 21st December, 1987, directing all the assessing authorities t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry" which is used or which is capable of being used in an industry and sewing machines dealt with by the petitioners do not answer the descriptions by their use, design and purpose. The learned counsel has also placed reliance on explanation III as inserted by Act 18 of 1989 which is declaratory in nature and makes it explicit what is meant by industrial machinery for purposes of entry 7. The said explanation is reproduced below for ready reference: "Explanation III.-'Industrial machinery' for the purpose of entry 7 of the Schedule shall mean such machinery which are generally used by an industrial unit whether or not such unit is a factory as defined under the Factories Act, 1948, for manufacturing or processing of goods and includes earth moving machinery and such other machinery used for mining, building, construction (including laying of roads), fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property." On the basis of this explanation, Sri Prasad has contended that the explanation virtually supports the case of the petitioners. In support of this argument, Sri Prasad has relied upon certain pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is an agricultural implement. The learned counsel relied upon another decision of the Supreme Court in Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh [1988] 68 STC 324, in which it was observed by their Lordships that, "in a taxing statute, words which are not technical expressions or words of art, but are words of every day use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance. The particular terms used by the legislature in the denomination of articles are to be understood according to the common commercial understanding of those terms used and not in their scientific and technical sense." A decision of this Court in Additional Commissioner of Incometax, Mysore v. A.L.N. Rao Charitable Trust [1976] 103 ITR 44, was also cited in support of the proposition that subsequent amendment can be utilised by court as an aid in arriving at the correct meaning of prior enactments. Commenting on the explanation itself, the learned Counsel has argued that the ingredients set out in the explanation to answer the description of "industrial machinery" must be satisfied before the department proposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of his proposition that the normal and ordinary meaning attached to a particular article or goods should be adopted and has cited the following decision in support of this contention: Nat Steel Equipment Pvt. Ltd. v. Collector of Central Excise [1988] 69 STC 58 (SC). That was a case which arose under the Central Excises and Salt Act. The Supreme Court was dealing with "domestic electrical appliances". Their Lordships agreed with the observations of Shri Bhagwathi, Chief Justice of Gujarat High Court (as he then was), made in Viswa & Co. [1966] 17 STC 581, that the expression, "domestic electrical appliances" must be understood as necessarily of a kind which is generally used for household purposes, was accepted by the High Court. Dealing with explanation III and its application, the learned counsel has cited some decisions. He has relied upon the decision of the Supreme Court in Nagar Mahapalika, Bareilly v. State of U.P. [1988] 70 STC 97. That was a case arising under the U.P. Nagar Mahapalika Adhiniyam. Dealing with the principle of interpretation of entries in the Schedule, the Supreme Court held (Shri Sabyasachi Mukherji, J. as he then was), that the court should normall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion on these arguments is: whether sewing machines are exigible to levy of entry tax as industrial machinery under entry 7? Let me first analyse the entries in the Entry Tax Act, which gives an indication as to the object of the legislature to tax the entry of certain goods into a local area. To start with, the Schedule contained only three goods, viz., textiles, sugar and tobacco and its products. Later, the Schedule included items 1 to 16 as substituted by Act 72 of 1981 with effect from 1st October, 1980. Number of other items and goods were added from time to time, to the Schedule. "Industrial machinery" falling under entry 7 is in the Schedule since 1st October, 1980. As already stated, sewing machines were not being taxed under entry 7 treating them and classifying them as "industrial machinery", under entry 7 till the Commissioner issued instructions in the year 1987. The Schedule gives the classification and description of goods on which entry tax is levied. The Schedule gives a clue to the object of the legislature and the scheme of levy. For example: Entry 1. All varieties of textiles, namely, cotton, woollen or artificial silk including rayon or nylon and other man- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation, it must be understood in a different way and sewing machines should, therefore, be taxed under entry 7. But the levy is sought to be supported with reference to the explanation itself. I reject this line of argument as wholly untenable. Apart from what the explanation has purported to explain the dictionary meaning or the technical meaning, "the industry and machinery" have and are understood, may be noticed. Corpus Juris explains, "industry" as an antithesis of "domestic". In Webster's New International Dictionary, "industrial" is defined as one that is employed in a manufacturing industry and produced by employing systematic labour. As per Stroud's Judicial Dictionary, "machinery" implies application of mechanical means and "industry" implies a manufacturing activity. Explanation III to the Schedule for the purpose of entry 7 should be applied by the department even to cases arising before the explanation was inserted. Otherwise, it leads to inconsistent view and discrimination in the matter of levy of tax on similar goods. That the later amendment to a statute should act as a guide in the interpretation of a provision which admits of doubt or debate is a well-settled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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