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TMI Blog2009 (3) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Civil Writ Petition No. 3455 of 1998. Both these letters patent appeals have been filed by the State of Haryana challenging a common judgment, dated October 22, 2002, passed by a learned single judge of this court, allowing the aforementioned writ petitions filed by the respondents, involving similar questions of law and fact. In view of same judgment, dated October 22, 2002 Reported as Haryana Organics v. State of Haryana [2003] 132 STC 397 (P H)., being under challenge in both the appeals, we dispose of both the appeals by a common judgement. However, for the facility of reference, the facts are taken from L.P.A. No. 412 of 2003. The brief facts are that both the present respondents manufacture ethyl alcohol from molasses. They applied for eligibility certificate for exemption of sales tax under rule 28A of the Haryana General Sales Tax Rules, 1975 (for short, the Rules ). However their claims for exemption were rejected by the authorities, at various levels on different dates, on the ground that their units fell within the scope of entry 10 of negative list contained in Haryana Government notification dated February 11, 1994 (annexure P 4B). Feeling aggrieved, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this list as redundant besides leading to absurd results. On the question as to whether ethanol (ethyl alcohol) based industries includes industries manufacturing ethanol or ethyl alcohol, like the respondents herein, learned single judge, answering the question in the negative, held that it refers to only industries which are based on ethanol or ethyl alcohol, which is a stage subsequent to the manufacture of ethanol or ethyl alcohol. The entry was held to refer to only such industries which consume ethyl alcohol as an input and not industries which manufacture ethyl alcohol. It was further held that if the interpretation sought to be placed by present appellant, State of Haryana, to the contrary, is accepted it would render the word based in the entry totally redundant, which would be contrary to the well-settled principles of interpretation. The learned single judge relied upon the judgment of the honourable Supreme Court in Aswini Kumar Ghose v. Arabinda Bose reported in [1953] SCR 1, wherein it was held that it is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage, if they can have appropriate application in circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. We have heard the learned counsel for the parties at great length. Apart from addressing oral arguments at the bar, the learned counsel for the parties have also placed on record detailed written arguments, which have been perused by us. Ms. Ritu Bahri, learned D.A.G., appearing on behalf of the appellantState of Haryana, has vehemently argued that the relevant entry was modified and made clear by subsequent notification dated December 17, 1997, wherein the entry 8 read, manufacturer of ethyl alcohol and industries based on ethyl alcohol from which it is apparent that the intention of the Department was to always include manufacture of ethyl alcohol in the negative list. Relying on the judgment of the honourable Supreme Court in the case of Manickam and Co. v. State of Tamil Nadu reported in [1977] 39 STC 12; [1977] 1 SCC 199, learned counsel argued that the subsequent notification can be looked into to interpret and construe the earlier provision. We are not impressed by the argument of the learned D.A.G. In Manickam and Co.'s case [1977] 39 STC 12 (SC); [1977] 1 SCC 199 what the honourable Supreme Court held is that subsequent legislation can be looked into, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, one has to keep in mind the object and purpose of exemption. On January 27, 1992, a new industrial policy of the State was introduced for achieving new dimensions of industrial growth and thereby making it necessary to review the negative list, leading to notification dated March 9, 1992. The reason for aforesaid entry 10, was short supply of certain raw material, i.e., molasses and therefore, its consumption was sought to be discouraged and this intendment was required to be kept in view by the learned single judge while interpreting the aforesaid entry. It has been further argued on behalf of State of Haryana that the respondents-assessees claiming the relief under the exemption provision have to show that they come within the language of the exemption. In order to deal with contention of the learned counsel we deem it proper to refer to the following observations of the honourable Supreme Court in the said case: (page 230 of 82 STC) 6. We are of opinion that the view taken by the excise authorities as well as by the Tribunal proceeds upon too narrow in interpretation of the notification. It is true, as Mr. Ganguli contended, that an assessee claiming relief under an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to encourage the utilization of rice bran oil in the process of manufacture of soap in preference to various other kinds of oil (mainly edible oils) used in such manufacture and this should not be defeated by an unduly narrow interpretation of the language of the notification even when it is clear that rice bran oil can be used for manufacture of soap only after its conversion into fatty acid or hydrogenated oil. 7.. ... We are, therefore, of opinion that, construing the notifications literally but reasonably in the light of the process of manufacture as explained by the Tribunal, the soap manufactured by the assessee is 'soap made from indigenous rice bran oil' and is entitled to the exemption under the notifications to the extent permissible thereunder. (emphasis Here italicised. supplied) We are of the considered opinion that what the honourable Supreme Court held in the aforementioned case is that while ordinary meaning of the words used should be taken into account and words should be construed literally but they should be given their fullest amplitude and interpreted in the context in which they are used. Further in trying to understand the language used by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle judge rightly held that the exception takes out industries, based on alcohol manufactured from non-molasses, from the ambit and scope of the main clause and the entry includes industries based on ethanol or ethyl alcohol manufactured from molasses. The honourable Supreme Court in the judgment in S. Sundaram Pillai's case AIR 1985 SC 582 relied upon by the learned counsel, itself has made following observations in the para 26 thereof, which in our view are applicable to the present case: 26. . . . Normally, a proviso is meant to be an exception to something within the main enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. In other words, a proviso cannot be torn apart from the main enactment nor can it be used to nullify or set at naught the real object of the main enactment. The learned counsel for the State further argued that as per the law laid down by the honourable Supreme Court in the case of Pardeep Aggarbatti v. State of Punjab reported in [1997] 107 STC 561; AIR 1998 SC 171, when some articles are grouped together in the list under the Schedule of sales tax, each word of the entry dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gued that the word based is of a wider connotation as compared to the word manufacture . The word based would include all industries which are manufacturing ethyl alcohol by using molasses as an input. The learned counsel relied on the judgment of honourable Supreme Court in Collector of Central Excise, Jaipur v. Rajasthan State Chemical Works, Deedwana, Rajasthan reported in AIR 1991 SC 2222, wherein it was held that in determining what constitutes 'manufacture' no hard and fast rule can be applied and each case must be decided on its own facts having regard to the context in which the term is used in the provision under consideration . Leaned counsel emphasized that it must be inferred that any industry which is based on the fundamental ingredient used in the industries, i.e., molasses, cannot be exempted from the liability of paying sales tax. We cannot accept this contention of the learned counsel for the appellant-State of Haryana. The words based is derived from word base which as per Oxford Dictionary means main or important ingredient . Thus literally construed the entry means an industry of which the main or important ingredient is ethanol or ethyl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference in facts or additional facts may make a lot of difference in the precedential value of a decision. Even a single significant detail may alter the entire aspect. There is always peril in treating the words of a speech or a judgment as though they were words in a legislative enactment, and it is to be remembered that judicial utterances are made in the settings of the facts of a particular case. The learned counsel further contended that the appeal deserves to be dismissed in view of the fact that the appellants failed to point out any illegality or infirmity in the judgment of the learned single judge. Mr. Mohan Jain, learned Senior Counsel for the respondent in LPA No 413 of 2003, has supported the judgment of the learned single judge by arguing that words in taxing statute have to be interpreted as such and there is no scope for presumptions, assumptions or intendments as was sought to be done by the appellant, State of Haryana. He relied upon the following observations of the honourable Supreme Court in different cases in this regard: 11. . . . In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarify its meaning by the use of appropriate language, the benefit thereof must go to the tax-payer. It is settled law that in case of doubt , that interpretation of a taxing statute which is beneficial to the tax-payer must be adopted'. Federation of Andhra Pradesh Chambers of Commerce and Industry v. State of Andhra Pradesh AIR 2000 SC 2905. Learned counsel further argued that interpretation of statute cannot be done on the basis of the proviso, when the main enactment is clear, relying on the following observations of the honourable Supreme Court in the case of Commissioner of Income-tax, Mysore, Travancore-Cochin and Coorg, Bangalore v. Indo-Mercantile Bank Ltd. reported in [1959] 36 ITR 1 (SC); AIR 1959 SC 713: 10. The territory of a proviso therefore is to carve out an exception to the main enactment and exclude something which otherwise would have been within the section. It has to operate in the same field and if the language of the main enactment is clear it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a fiscal provision, if benefit of exemption is to be considered, this should be strictly considered. But the strictness of the construction of exemption notification does not mean that the full effect to the exemption notification should not be given by any circuitous process of interpretation. After all, exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade. . . We find merit in the contentions of the learned counsel for the respondents, which also formed the basis of the judgment of the learned single judge, that words in taxing statute have to be interpreted as such and there is no scope for presumptions, assumptions or intendments. In the present case, the words of the entry are clear and unambiguous and cannot be given a different meaning than what is evident from its literal and plain reading merely on the basis of the intention of the State Government. The learned single judge has rightly held that a proviso cannot be referred to as being independent of the subject-matter of main clause and is always subordinate to the main enactment. In view of the above, we are of the considered opi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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