Patna High Court
Anil Hard Coke Industries And Ors. vs The State Of Bihar And Ors. on 8 April, 1988
Equivalent citations: [1988]71STC322(PAT)
JUDGMENT S.K. Jha, Ag. C.J. and L.P.N. Shahdeo, J.
1. C.W.J.C. Nos. 1460, 1462, 1463, 1465 and 1473 of 1986 (R) as well as C. W. J. C. Nos. 83, 86, 88 and 340 of 1987 (R) constitute one batch of cases, which shall hereinafter be referred to as "the first batch of cases". The second batch of cases comprises of C. W. J. C. Nos. 308 to 319 of 1988 (R). Mr. B. P. Rajgarhia, learned Counsel, has appeared and argued for the writ petitioners in the first batch of cases; whereas out of the second batch of cases, Dr. Pal has appeared for the petitioner in C. W. J. C. No. 308 of 1988 (R) and his argument has been adopted by Mr. L. K. Bajla, learned Counsel, appearing for the petitioners in rest of the second batch of cases, namely, C. W. J. C. Nos. 309 to 319 of 1988 (R).
2. The primary question of law that arises for determination in all these cases is the same as to whether the term "coke", be it hard coke or any other form of coke, can be said to fall within the ambit of the term "coal" as defined in Section 14(ia) of the Central Sales Tax Act, 1956 (hereinafter to be referred to as "the Central Act") as amended by Act No. 16 of 1972, and as to what would be the cumulative effect of the provisions of Section 14(ia) and Section 15 read with Section 12(2) of the Bihar Finance Act, 1981. The other ancillary question that will then fall for consideration is as to the effect of Section 11 of the Bihar Finance Act, 1981 and Rule 45 of the Bihar Sales Tax Rules, 1983.
3. The first batch of cases has been filed by different registered dealers, both under the State Act and under the Central Act and in all these applications, the legality and validity of the notice, as contained in annexure-2, is under challenge. The notice as incorporated in annexure-2 in each of the cases has been issued by the Deputy Commissioner, Commercial Taxes, Hazaribagh Circle', drawing the attention of and intimating to all the dealers in hard coke within the Hazaribagh Circle that according to the decision of the State Government, coal and coke were two different and distinct goods for the purpose of taxation under the Sales Tax Act. All the sales of hard coke within the State of Bihar shall be subjected to sales tax at the rate of 4 per cent apart from the sale of coal and on the inter-State trade the tax will be 4 per cent if form C is given or else the tax will be at 8 per cent and if the dealers do not pay the sales tax on the sale of hard coke, there will be great difficulty in issuing any road permit in form 28B to them and that, therefore, they must clear off the tax calculated under the rules mentioned therein before any road permit is issued to them.
4. In all these applications, this notice to the petitioners has been challenged on the ground that it is in contravention of the provisions of Section 14(ia) of the Central Sales Tax Act and Section 15 read along with Section 12(2) of the Bihar Finance Act, 1981 and the notification issued by the State Government under Section 11 of the State Act, specially item No. 17 thereof. We shall, therefore, have to construe the provision with regard to "coal" and "coke" as mentioned in the aforesaid statute.
Section 11 of the Bihar Finance Act runs as follows :
11. Point or points in the series of sales at which the sales tax shall be levied.--(1) The sales tax on goods shall be levied only at that point or points in the series of sales as may be specified by the State Government by a notification published in the Official Gazette.
(2) Where by a notification published under Sub-section (1) the State Government specifies in respect of any goods, class or description of goods that the sales tax shall be levied at the first point of sale in Bihar either by an importer, or a manufacturer or a wholesaler, subsequent sale of the same goods shall not be levied to tax, if
(i) the dealer making the second sale of such goods produces before the authority prescribed under Section 17 a cash memo, or invoice or bill in the prescribed manner from the dealer making the first sale in Bihar to show that he (the dealer making the second sale) has purchased such goods after making full payment of sales tax thereon ;
(ii) the dealer making the third sale of such goods produces before the authority prescribed under Section 17 a cash memo, or invoice or bill together with a declaration from dealer making the second sale in such form and manner as may be prescribed.
(3) ...
(4)...
The notification published under Section 11 being Notification No. Bikrikar/San/1026/77-14537, dated the 26th December, 1977, as amended from time to time, lays down the stage of levy in these terms :
The point of levy of tax under this Act, in the case of following goods will be the point of
(a) ...
(b) ...
(c) First sale in the State in all other cases.
And in the notification, the goods, which are subjected to tax, are mentioned in different items. Item No. 17 thereof speaks of "coal including coke in all its forms....
5. This had to be so, presumably on account of the statutory provisions of Section 14(ia) of the Central Act, which also speaks of "coal including coke in all its forms...." Learned Counsel for the parties were at loggerheads and Mr. Gadodia, learned Counsel appearing for the Revenue and the State in all the cases, has vehemently argued that "coal" and "coke" were two distinct subject-matters, which should be subjected to tax under different heads within the meaning of Section 14 as well as the items enumerated in the State notification aforementioned. His whole argument was that "coke" in all its forms supposed to be included within the term "coal" is merely illustrative. On the contrary, learned Counsel for the petitioners argued that in view of the express language of the statute, there could be no manner of doubt that the sale of "coke" in any form will include the sale of "coal".
6. This question is not a matter of first impression to be decided by us. It has already undergone judicial scrutiny in this Court as well as in the apex court of the land. The question of law, loosely speaking, is, therefore, not res Integra, which we are called upon to decide for the first time.
7. When the Supreme Court was seized with this question, while interpreting this very statutory provision in India Carbon Lid. v. Superintendent of Taxes, Gauhati AIR 1972 SC 154 it was held that Section 14 of the Central Act declares, inter alia, that coal including coke in all its forms constitutes goods, which are of special importance in inter-State trade or commerce. In the case of India Carbon Ltd. [1971] 28 STC 603 (SC); AIR 1972 SC 154 it was laid down that if petroleum coke is covered by Clause (i) of Section 14, which reads "coal including coke in all its forms" the State was not competent to levy tax at a rate exceeding the one given in Section 15(a) of the Central Act. The High Court had taken a view that the word "coal" includes "coke" in all its forms in Clause (i) of Section 14 of the Central Act and must be taken to mean "coke" derived from coal. In other words, it must be "coke", which had been derived or acquired from coal by following the usual process of heating or burning. The contention of the appellant-dealer was, therefore, negatived by the High Court. While reversing the judgment of the Assam and Nagaland High Court, Grover, J., speaking for the Supreme Court in the case of India Carbon Ltd. AIR 1972 SC 154 held We are wholly unable to agree with the reasoning or the conclusion of the High Court with regard to the ambit and scope of Clause (i) of Section 14 of the Central Act. The language is clearly wide and coal has been stated to include coke in all its forms. It is not denied that petroleum coke is one of the forms of coke. Therefore, on a plain reading of the aforesaid clause, it is incomprehensible how petroleum coke can be excluded from its ambit. It may be that the clause mentions coal only and then declares that that word shall include coke in all its forms. That shows that the object of the words, which follows coal, is to extend its meaning.
That is exactly what the petitioners in these cases contend. A Bench of this Court in Bajrangbali Coke Briquetting Industries v. State of Bihar 1987 PLJR 926 also had to consider the provisions of Section 14(ia) of the Central Act and held that the term "coal" in Section 14 of the Central Act also included within its sweep "coke" and "briquettes" and once the briquettes prepared by the petitioners are held to be a form of coke, then they are entitled to the protection of Section 15 of the Act. For this purpose, some case laws were referred to and relied upon. The decision of the Supreme Court in India Carbon Ltd. AIR 1972 SC 154 and that of a Bench of this Court in Bajrangbali Coke Briquetting Industries 1987 PLJR 926 support the contention of the learned Counsel for the petitioners.
8. Mr. Gadodia, learned Counsel for the State and other respondents contended that the word "including" in Section 14(ia) meant the same thing as the term "that is to say". He further contended that the goods known as "coal" was altogether distinct entity from "coke" under the statutory provision and for that purpose, he invited our attention to a number of decisions, to wit [1976] 37 STC 319 (SC) (State of Tamil Nadu v. Pyare Lal Malhotra), [1964] 15 STC 719 (SC) (A. Hajee Abdul Shukoor and Co. v. State of Madras) and [1981] 48 STC 411 (SC) (Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh); all the three being the decisions of the Supreme Court. Learned Counsel vehemently relied upon these decisions to bring home the point that 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 purposes of single point taxation in a series of sales unless the contrary is shown. We are afraid that while this legal proposition cannot be taken exception to, they do not support the contention of Mr. Gadodia on the question of construction of the provisions of Section 14(ia) of the Central Act. Before referring to any judicial precedent, we may, at once, embark upon an examination of different provisions of Section 14 itself and apply the well-settled canons of construction of statutes to find out as to what does the word "include" or "including" in Section 14(ia) connotes. On a plain reading of the different provisions of Section 14, one will find in clauses (i), (ii), (iic), (iv), (v), (vi), (via) that each of these clauses, the genus having been specified the species are enumerated after the statute has used the words "that is to say". For instance, in Section 14(i), after the word "cereals" in all other such provisions, namely, in Clause (iic), the genus mentioned is crude oil, in (iv) iron and steel, in (v) jute, in (vi) oil-seeds and in (via) pulses. Subsequent species have been enumerated under the heading "that is to say". For instance, cereals contain ten such species of the general genus of cereals. In crude oil, species are crude petroleum oils and crude oils obtained from bituminous minerals (such as shale, calcareous rocks, sand) whatever their composition, etc., etc., in "iron and steel" the species being (i) pig iron and cast iron including (ingot moulds, bottom plates), iron scrap, cast iron scrap, runner scrap, etc., in species (ii) steel semis...(iii) skelp bars, tin bars...(iv) steel bars...(v) steel structurals...(vi) sheets, hoops...(vii) plates, both plain and chequered in qualities; (viii) discs, rings...(ix) tool, alloy...and so on and so forth. So also, under the genus "oilseeds", the species mentioned are twenty, like groundnut or peanut; sesame or til, cotton seed, soyabean, etc., etc.; "pulses" covering seven species like gram or gulab gram, tur or arhar, moong or green gram, masur or lentil, etc., etc. In all these statutory provisions, the term that has been used by the legislature deliberately is "that is to say". One has to look into the intention of the legislature, while deliberately using two different phrases for the purpose of identifying different categories of genus as laid down in Section 14 of the Central Act. It would be manifest that the term "that is to say" has been used in a sense quite distinct from the term "including" as mentioned in Section 14(ia). In the context of these statutory provisions, we have no manner of doubt that while coal is said to include coke in all its forms, it cannot be understood in the same manner in which the other goods as mentioned in the other clauses of Section 14 that the expression "that is to say" has to mean. As a matter of fact this distinction has been noticed by the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra AIR 1976 SC 800, a decision on which Mr. Gadodia has himself relied, and it was held by the Supreme Court that in the context, of single point sales tax, subject to special conditions when imposed on separate categories of specified goods, the expression "that is to say" was apparently meant to exhaustively enumerate the kind of goods on a given list. The purpose of an enumeration in a statute dealing with sales tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute a separate class for a series of sales. While so holding, Beg, J., as he then was, speaking for the Supreme Court, pointed out the distinction between the term "that is to say" and the term "includes" by saying that ordinarily the expression "that is to say" is employed to make clear and fix the meaning of what is to be explained or defined. Such words are not used, as a rule, to amplify a meaning by removing a possible doubt for which purpose the word "includes" is generally employed. In unusual cases, depending upon the context of the words "that is to say", the expression may be followed by illustrative instances. By no stretch of imagination can it be said that the legislature has used the language in Section 14(ia) to the effect that the word "coal" includes coke in all its forms, "coke" is merely an illustrative instance of the species "coal". That is certainly not so. On the other hand, there are numerous decisions incorporating the word "includes" or "including". In such circumstances, a Bench of this Court of which one of us (S.K. Jha, J.) was a member, in Minerva Printing Works v. State of Bihar 1973 BBCJ 589, was seized with the question as to whether the word "books" in item 18 of Schedule III in notification, dated 1st July, 1959 with regard to the claim of exemption both from general and special sales tax to the articles mentioned therein, the term "books" would be covered in item 18 along with the word "periodicals" exercise book or blank register as being embraced within the meaning of the word "paper". It was held that item No. 2 of the Schedule reading as "paper" included all kinds of pasteboard, mill-board, straw-board, card-board, blotting paper, etc., etc. It was obvious that the various articles in the second column had not been enumerated separately as one distinct from the other, which Mr. Gadodia wants us exactly to do in this case. It was further held that the use of the word "including" connotes that the other articles mentioned thereafter may not be "paper" in the dictionary sense or in the common parlance, or some of them may be so. But the use of the word "including" means that whether they are so or not, all articles enumerated after that word must be deemed to be "paper" for the purpose of notification, dated 27th August, 1959. That being so, it was further held that although the articles sold were not "paper" in the strict sense of the term, the assessee was not liable to pay any special sales tax on its own sales in regard to the various articles included in the word "paper" in column 2 of the Schedule appended to the notification. To say the least, it may even be deemed to be a legal fiction.
9. Mr. Gadodia further invited our attention to a decision of the Supreme Court in A. Hajee Abdul Shukoor and Co. v. State of Madras [1964] 15 STC 719. That was a case where the subject-matter was "raw hides and skins". Certainly raw hides were distinct from skins, because one was not inclusive of the other. The ratio of that case is absolutely irrelevant for the purpose of the instant case.
10. In Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh [1981] 48 STC 411, the Supreme Court was again dealing with a matter not quite akin to those with which we are presently concerned. On the language of the particular statutory provision in the case of Hindustan Aluminium Corporation Ltd. [1981] 48 STC 411 (SC), it was held that the expression "including" in the notification, dated 30th May, 1975, as amended retrospectively by the Amendment Act of 1975 did not enlarge the meaning of the word "metal" and must be understood in a conjunctive sense as a substitute for "an". The other term "including" had to be so incorporated as it was in juxtaposition, which would otherwise have been rendered otiose.
11. Having considered the matter in all its ramifications, we have no option but to hold that "coke" in any form, is not a distinct subject-matter for taxation under the Central Act and is embraced by "coal" within the meaning of Clause (ia) of Section 14. It is as if by legal fiction, it was so, because in common parlance, coke may not be understood as coal. Such was the interpretation by the Supreme Court in the case of India Carbon Ltd. [1971] 28 STC 603, and by this Court in Bajrangbali's case [1987] 66 STC 128; 1987 PLJR 926. That clinches the answer in favour of the petitioners in so far as the true meaning and purport of Clause (ia) of Section 14 of the Central Act is concerned. The necessary consequences flowing therefrom will have to be in consonance with the provisions of Section 15 of the Central Act and Section 11 of the Bihar Finance Act, 1981 read with Section 12(2) thereof. In the notification issued under Section 11 and as enumerated in the various items, item No. 17 thereof with an identical note, namely, "coal" including "coke" in all its forms, the issuance of the registered permit cannot be withheld unless the relevant provisions of Rule 45 of the Bihar Sales Tax Rules, 1983 are attracted against the writ petitioners. That occasion evidently has not arisen because it is no one's case that the petitioners by contravening any provisions of the Act have not cleared off the dues of the sales tax, which ought to have been paid by them, as in the series of sales they are said to have been taxed at the first point of sale. The series of sales evidently means that in the process, there has been a number of sales, but in order to avoid multi-point of taxation, the provision has been inserted in the statute for reimbursement (original refund) of the payment made previous to the subsequent stage of sales.
12. Before, however, we conclude, we must, in all fairness to the learned counsel for the respondents, take a serious notice to the preliminary objection as to the maintainability of the writ application purported to have been taken by him. The submission was that the impugned notice as contained in annexure-2 was not actually a notice nor was it an order nor any interdepartmental correspondence (although he started with the argument that it was a piece of interdepartmental correspondence), but was merely a thought of the Deputy Superintendent, expressed loudly, having no legal sanctity to which the assessing authority may not pay any heed. In such circumstances, it was contended that no writ can issue. This argument has been taken notice of merely for rejecting the same.
13. The decisions in the case of Filterco v. Commissioner of Sales Tax, M.P. AIR 1986 SC 626, Bajrangbali Coke Briquetting Industries v. State of Bihar 1987 PLJR 926 and Ashok Industries v. State of Bihar 1979 BBCJ 465 clearly go to demolish the proposition of Mr. Gadodia. Mr. Gadodia, however, invited our attention to the decisions in State of Assam v. Apt Kumar Sarma AIR 1965 SC 1196, G. f. Fernandez v. State of Mysore AIR 1967 SC 1753 and Sant Ram Sharma v. State of Rajasthan AIR 1967 SC 1910. We are afraid none of these cases decides any principle helpful to Mr. Gadodia. The decision in State of Assam AIR 1965 SC 1196 is altogether on a different point, where the court was dealing with the case under the provisions of Rule 7 of the Conduct and Discipline of the Employees of Assam Educational Rules, 1961 and was interpreting the administrative instructions without any statutory force. In that action, it was held by the Supreme Court that employees could not ask for the enforcement or non -enforcement of any of the provisions of the Rules, because such instructions did not confer any right on them. We think this decision is an authority for the proposition that non-statutory administrative instructions do not confer any justiciable right. In other words, an instruction for gratuitous and benevolent aid to some people cannot be legally enforced. But of course, even in dealing with such cases, one must have a word of caution to be more prudent. It must be borne in mind that even in acting under the cover of any policy or administrative instructions, no public authority is entitled to be either arbitrary or can be permitted to make unreasonable discrimination among the members of the same class. This we say for the obvious reason that mala fide exercise of powers and arbitrariness are the two different lethal radiations emanating from the same vice; both are inhibited by articles 14 and 16 of the Constitution and further that any executive action like law or statutory rules must be predictable and the discretion means not arbitrary but sound discretion according to certain norms. These are the principles well-settled by the Supreme Court long way back in S. G. Jaisinghani v. Union of India AIR 1967 SC 1427, E. P. Royappa v. State of Tamil Nadu AIR 1974 SC 555 and Smt. Maneka Gandhi v. Union of India AIR 1978 SC 597 that no writ court can now permit any colourable exercise of power by public authority under the legislative enactments, statutory rules and administrative instructions. In the case of Fernandez AIR 1967 SC 1753, it was laid down by the Supreme Court that even if there has been breach of any executive instructions, that does not confer any right on a member of public to ask for a writ. But that was a case of a breach of executive instructions; whereas we are dealing with the case for contravention of the statutory provisions made in the Act by a competent legislature. Herein lies the difference. Where there is a breach of administrative instructions, it is certainly always open to challenge by inducing the writ court to exercise its jurisdiction. We have deliberately used the word "always", because even in the case of Pratap Singh v. State of Punjab AIR 1964 SC 72, the Supreme Court itself granted relief on the basis of an administrative instruction in favour of a retired officer who has since been absorbed by the Government under its employment.
14. These applications (the first batch of cases), therefore, must be allowed, the impugned notices (whatever be the nomenclature, which the respondents ascribe to it) issued to the petitioners are, accordingly, quashed. Let a writ of mandamus issue restraining the respondents from giving effect to any part of that notice (annexure-2).
15. Now coming to the second batch of cases, the only point involved in these applications is as to whether the impugned order as contained in annexure-2, which has been passed under orders of the Commissioner on the basis of the opinion of the Law Department and the Advocate-General is a well-considered order. It would indeed be a failure on the part of any officer in the hierarchy of the Commercial Taxes Department to pass any order contrary to that as contained in annexure-2 to these applications, which is based upon the opinion of the Law Department and the Advocate-General. As a result of the decision of the State Government, any act to the contrary by any Revenue authority would be inviting a great risk to such an officer and no one would like to pass such an order at his own peril. The point remains the same with regard to the legality and validity of annexure-2, be it based upon the advice of the Law Department and the Advocate-General or on the instructions of the State Government. All these applications must, therefore, also be allowed and annexure-2 thereto must be quashed. Order accordingly.
16. Let a writ of mandamus issue restraining the respondents from acting on the basis of annexure-2. We, however, may not be misunderstood in saying that the competent taxing authority under the Act will not now proceed for assessment in accordance with law. But, for the present that is neither here nor there. Suffice it to say that in all these applications, none of the respondents shall give effect to the notice as contained in annexure-2. On the facts and in the circumstances of both the first and the second batch of cases, there shall be no order as to costs.