Bombay High Court
Commissioner Of Sales Tax, Maharashtra ... vs Ajay Industrial Packagings Pvt. Ltd. on 9 February, 1995
Author: D.K. Trivedi
Bench: D.K. Trivedi
JUDGMENT Dr. B.P. Saraf, J.
1. By this reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the Revenue, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion :
"Whether, on the facts and in the circumstances of the case, and on true and proper interpretation of the scope and ambit of the relevant entries of the Schedules appended to the Bombay Sales Tax Act, 1959, the Tribunal was correct in law in holding that 'surfane packing paper' does not fall under the scope of entry 19(c) of Schedule 'E ' but that the said goods fall under the scope of entry 24(2) of Schedule 'C' appended to the Act ?"
2. The assessee is engaged in the business of manufacture and sale of "surfane packing paper". On September 21, 1970, the assessee filed an application before the Commissioner of Sales Tax under section 52(1)(e) of the Bombay Sales Tax Act, 1959 ("the Act"), for determination of the correct rate of tax applicable to sales of "surfane packing paper". The Commissioner, by his order dated December 14, 1970, held that surfane packing paper was covered by entry 24(2) of Schedule C to the Act and liable to sales tax at the rate of 5 paise in a rupee. The assessee was collecting sales tax in accordance with the above determination of the Commissioner. Some time in the year 1975, the Sales Tax Officer, on the basis of some order passed by the Commissioner on applications filed by some other parties seeking determination of the very same issue wherein he had held to the contrary, expressed the opinion that surfane packing paper did not fall under entry 24(2) of Schedule C. The assessee thereupon made another application to the Commissioner under section 52(1)(e) of the Act on September 9, 1975, seeking fresh determination of the very same question, whether surfane packing paper was paper falling under entry 24(2) of Schedule C or not. The Commissioner, on reconsideration of the matter, departed from his earlier order and held that surfane packing paper was not "paper" falling under entry 24(2) of Schedule C. This time he held that it can be regarded as goods made primarily of plastics falling within the scope of entry 19A of Schedule E to the Act.
Against the above determination of the Commissioner, the assessee appealed to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Tribunal, on consideration of the nature of goods covered by entry 24(2) of Schedule C and entry 19A(c) of Schedule E, held that surfane packing paper was nothing but a kind of paper used for packing and hence it was covered by entry 24(2) of Schedule C to the Act. Hence this reference at the instance of the Revenue.
3. The sole controversy that falls for our determination in this case is whether surfane packing paper, manufactured and sold by the assessee, is a kind of paper falling under entry 24(2) of Schedule C to the Act or it is "goods made primarily from any kind of plastics" falling under entry 19A of Schedule E. To decide the same, it is necessary to pursue both the entries, viz., entry 24 of Schedule C and entry 19A of Schedule E, as they stood at the material time when determination was sought from the Commissioner. Entry 24 of Schedule C was in the following terms :
------------------------------------------------------------------------
Serial Description of goods Rate of sales Rate of
No. tax in paise purchase tax
in the rupee in paise in
the rupee
1 2 3 4
------------------------------------------------------------------------
24. (1) Art paper, lustra cote art Ten Ten paper, sun coat, art card, art board, ivory card, chromo coated paper, cheque paper, imitation art paper, bible paper and silver cote art paper.
(2) Paper of all other kinds Five Five including sand paper, straw-board, cardboard and duplex and triplex boards.
------------------------------------------------------------------------
Entry 19A of Schedule E read as follows :
------------------------------------------------------------------------
------------------------------------------------------------------------
Serial Description of Rate of Rate of Rate of
No. goods sales tax Central purchase
in paise sales tax tax in
in the in paise paise in
rupee in the the rupee
rupee
1 2 3 4 5
------------------------------------------------------------------------
19A Goods made primarily from
any kind of plastics
(other than those to
which entry 53 in
Schedule C or any other
entry in that or any
other Schedule applies,
but including roofing,
floor, or wall plastic
tiles) -
(a) If they are roofing, Eight Three Eight
floor or wall tiles
made from any kind
of plastic material.
(b) (i) If they are Nine Three Nine
laminates made from
the thermosetting
plastic material.
(ii) If they are other Eight Three Eight
goods made from
the thermosetting
plastic material.
(c) In other cases Five Three Five
According to the assessee, surfane packing paper is a kind of paper and hence falls under entry 24(2) of Schedule C. Though the fact that it is used for packing is not disputed by the Revenue, according to it, it is not "paper" in the true sense of the term. The case of the Revenue is that "surfane packing paper" is primarily made from a kind of plastic and hence falls under entry 19A(c) of Schedule E. The determination of the controversy, therefore, basically depends upon interpretation of the expression "paper of all other kinds" appearing in entry 24(2) of Schedule C to the Act. If on such interpretation it can be held to be a kind of paper, it would fall under entry 24(2), otherwise not.
4. Entry 24 of Schedule C, which covers paper, has classified paper in two categories set out in items (1) and (2). Item (1) refers to paper of the varieties or grades specified therein. The rate of tax applicable to the sales or purchases thereof is higher than that applicable to other kinds of paper which fall under item (2). Item (2) which is couched in very wide terms, covers not only "paper of all kinds" other than those specified in item (1), but also includes paper, commonly known as sand paper, straw board, card board and duplex and triplex board. The question that falls for determination is what is "paper", because once it is held to be paper, it would fall under entry 4(2) of Schedule C irrespective of its kind or quality.
5. Paper has not been defined in the Act. In Shorter Oxford English Dictionary, it has been described as "a substance composed of fibers interlaced into a compact web, made from linen and cotton rages, straw, wood, certain grasses, etc. which are macerated into a pulp, dried and passed; it is used for writing, printing, or drawing on, for wrapping things in, for covering the interior walls, etc." The Random House Dictionary of the English Language (College edition) describes "paper" as "a substance made from rags, straw, wood, or other fibrous material, usually in thin sheets, used to bear writing or printing or for wrapping things, decorating walls, etc." The Supreme Court in State of Uttar Pradesh v. Kores (India) Ltd. [1977] 39 STC 8 (at page 11), on perusal of these definitions of "paper" arrived at the following common parlance meaning of "paper" :
"In common parlance, the word 'paper' is understood as meaning a substance which is used for bearing writing, or printing, or for packing, or for drawing on, or for decorating, or covering the walls".
The above common parlance meaning was reiterated by the Supreme Court in Commissioner of Sales Tax v. Macneill & Barry Ltd. [1986] 61 STC 76 when it said that paper is used for printing or writing or for packing and held that ammonia paper and ferro paper being not employed for any of the above purposes cannot be regarded as paper in the popular sense of the term.
From the above discussion, it is abundantly clear that in popular parlance the word "paper" means a substance which is used for writing or printing or for packing, or for drawing on, or for decorating, or covering the walls. In the light of the above common parlance meaning of "paper", we may now examine whether surfane packing paper sold by the assessee can be regarded as paper. There is no dispute that it is known as packing paper. In other words, in common parlance, it is regarded as paper which is used for packing. There does not appear to be any dispute in this case also about the fact that surface packing paper is used for packing. In fact, there is a clear finding of the Tribunal that the use of this paper is for packing. A sample of the same is also attached to the paper book which shows that it is a transparent paper. It thus meets the description of paper.
7. The only ground on which according to the Revenue it should not be regarded as paper is that it is not made of materials such as rags, straw, wood, pulp, bamboo, etc., which are normally used in manufacture of paper. We do not find any merit in this contention of the Revenue because, in our opinion, it is not relevant for deciding whether the packing paper under consideration is a kind of paper or not. Moreover, there is tremendous advance of science and technology in the field of paper manufacturing. Paper is now manufactured from materials which were never used in the past for that purpose. Paper, therefore, need not be manufactured out of any particular material. Whatever be the material used in its manufacture, if the product is known in common parlance as paper and is intended to be used for the purposes for which "paper" is ordinarily used, it would be regarded as paper. In the instant case, surfane packing paper is not only known as packing paper but is actually used only for packing. That being so, we do not find any reason to hold that it is not "paper".
8. We are supported in our conclusion by the decision of the Supreme Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433, where dealing with the question whether dryer felts made out of cotton or woollen yarn by the process of weaving according to the warp and woof pattern and commonly used as absorbents of moisture in the process of manufacture in paper manufacturing units fall within the ordinary and common parlance meaning of the word "textiles", the court observed :
"...... The word 'textiles' is derived from the Latin 'texere', which means 'to weave' and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other materials is woven into a fabric, what comes into being is a 'textile' and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other kind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique, There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be 'textiles'. What is necessary is no more than weaving of yarn and weaving 'would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls : it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear in its character as a textile. It may be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that 'dryer felts' are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against 'dryer felts' falling within the category of 'textiles', if otherwise they satisfy the description of 'textiles'."
It observed further :
"Now, what are 'dryer felts' ? They are of two kinds, cotton dryer felts and woollen dryer felts. Both are made of yarn, cotton in one case and woollen in the other. Some synthetic yarn is also used. The process employed is that of weaving according to warp and woof pattern ....... We do not think that the word 'textiles' has any narrower meaning in common parlance other than the ordinary meaning given in the dictionary, namely, a woven fabric. There may be wide ranging varieties of woven fabric and they may go on multiplying and proliferating with new developments in science and technology and inventions of new methods, materials and techniques, but none the less they would all be textiles."
Emphasising the necessity of giving due regard to newly developing methods, materials, techniques and process for understanding the true meaning of a "textile", the Supreme Court observed :
"......... It is true that our minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard 'dryer felts' as 'textiles'. But it must be remembered that the concept of 'textiles' is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as 'textiles'. Take for example rayon and nylon fabrics which have now become very popular for making wearing apparel. When they first came to be made, they must have been intruders in the field of 'textiles' because only cotton, silk and woollen fabrics were till then recognised as 'textiles'. But today no one can dispute that rayon and nylon fabrics are textiles and can properly be described as such."
9. Moreover, the well-settled rule of construction is that in taxing statues, words of every day use must be construed not in their scientific or technical sense but as understood in common parlance. There is therefore no doubt that "paper of all kinds" appearing in entry 24(2) of Schedule C must be interpreted according to its popular sense, meaning "that sense which people conversant with the subject-matter with which the statute is dealing attribute to it". There is no doubt in this case that in common parlance "surfane packing paper" is known as packing paper or paper fit for packing. Furthermore, the language employed in entry 24(2) of Schedule C being very wide, viz., "paper of all kinds", surfane packing paper, which is only a form of paper cannot be excluded merely by reference to the material from which it is manufactured.
10. For the reasons set out above, we are of the clear opinion that the Tribunal was right in holding that "surfane packing paper" is a kind of paper falling under entry 24(2) of Schedule C to the Bombay Sales Tax Act, 1959. The question referred to us is, therefore, answered in the affirmative and in favour of the assessee.
11. In the facts and circumstances of the case there shall be no order as to costs.
12. Reference answered in the affirmative.