Bombay High Court
Commissioner Of Sales Tax, Maharashtra ... vs C. Abhaykumar & Co. on 11 January, 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 Commissioner of Sales Tax, the Maharashtra Sales Tax Tribunal, Bombay, has referred the following question of law to this Court for opinion :
"Whether, on the facts and circumstances of this case and on a true and proper interpretation of entry 24(2) of Schedule C, was the Tribunal correct in law in holding that 'filter paper' is covered by that entry but is not covered by the residuary entry 22 of Schedule E ?"
2. The assessee is a dealer under the Bombay Sales Tax Act, 1959 ("the Act"). It deals in scientific equipment and filter paper. By an application dated March 23, 1977, the assessee applied to the Commissioner of Sales Tax under section 52(1)(e) of the Act for determination of the rate of tax payable under the Act on sales of filter paper. According to the assessee, filter paper sold by it was paper falling under entry 24(2) of Schedule "C" to the Act which covered paper of all kinds, including sand paper, straw boards, card board and duplex and triplex boards. The Commissioner did not agree with the assessee and, by his order dated September 5, 1979, held that filter paper did not fall under entry 24(2) of Schedule C to the Act. While arriving at the above conclusion, the Commissioner referred to the decision of the Supreme Court in State of Uttar Pradesh v. Kores (India) Ltd. [1977] 39 STC 8, which, according to him, applied to the present case. The assessee filed appeal against the above order of the Commissioner to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Tribunal, on consideration of entry 24(2) of Schedule C to the Act and the relevant literature and other material on record, came to a finding that filter paper was "paper" falling under entry 24(2) of Schedule C to the Act. While arriving at the above conclusion, the Tribunal relied on the decision of the Supreme Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433. Aggrieved by the above order of the Tribunal, the Commissioner has come to this Court by way of this reference under section 61(1) of the Act.
3. Mr. N. T. Saraf, learned counsel for the Commissioner, submits that filter paper is not paper as understood in common parlance and hence it does not fall under item (2) of entry 24 of Schedule C to the Act. In support of this contention, reliance is placed on the decision of the Supreme Court in Kores (India) Ltd. [1977] 39 STC 8.
4. Mr. R. V. Patel, learned counsel for the assessee, on the other hand, submits that the decision of the Supreme Court in Kores (India) Ltd. [1977] 39 STC 8, is not relevant for interpreting entry 24 of Schedule C to the Act in view of the fact that the language of the relevant item in the notification which came up for interpretation before the Supreme Court in that case was totally different from the language of the entry 24 of Schedule C. According to him, the language of entry 24(2) is clear enough to cover all types of paper irrespective of the use to which they can be put. The submission of the counsel is that paper referred to in item (2) of entry 24 is not restricted to paper used for writing or printing which is evident from the fact that even sand paper, straw board, card board, duplex and triplex boards have specifically been included in item (2) of entry 24. Counsel further submits that the expression used in item (2) of entry 24, viz., "paper of all other kinds" is wide enough to include all kinds of paper except those specifically referred to in item (1) of the said entry. In support of this contention, reliance is placed on the decisions of the Supreme Court in India Carbon Ltd. v. Superintendent of Taxes , State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24 (SC), Viny Pap Sales Depot v. State of Tamil Nadu [1977] 40 STC 317 (Mad.) and Porritts & Spencer (Asia) Ltd. v. State of Haryana .
5. We have carefully considered the rival submissions. Schedule C to the Act specifies the goods, the sale or purchase of which is subject to sales tax or purchase tax and the rate of tax. The entry 24 thereof, at the material time, read as under :
------------------------------------------------------------------------
Serial Description of goods Rate of sales Rate of purchase
No. tax in paise tax in paise
in the rupee in the rupee
------------------------------------------------------------------------ 24 (1) Art paper, lustra Ten Ten coat art paper, sun coat, art card, art board, ivory card, chromo coated paper, cheque paper, imitation art paper, bible paper and silver coat art paper.
(2) Paper of all other Five Five kinds including sand paper, straw board, card board and duplex and triplex boards.
------------------------------------------------------------------------
It is obvious from the above entry that item (1) deals with certain types of paper described therein, the sales and purchases of which are taxable at the rate of 10 paise in the rupee. Item (2) covers paper of all kinds other than those specified in item (1), including sand paper, straw board, card board and duplex and triplex boards. The rate of tax on the sales of such paper is five paise in the rupee. Papers specified in item (1) are papers of special grade which are generally costly. Except the type of paper specifically set out in item (1), paper of all other kinds falls under item (2). The expression relevant for our purpose therefore is "paper of all kinds". The expression "paper of all kinds" is wide enough to include within its ambit paper of every kind, whether used for printing, writing or any other purpose. The user of paper is not material or relevant for determining whether it falls within item (2) of entry 24 or not. This view of ours is strengthened by the specific inclusion of sand paper, straw board, card board and duplex and triplex boards therein, because evidently these are not used for writing or printing.
6. It may also be expedient in this connection to observe that entry 24, as it stood originally from January 1, 1960 to March 31, 1963, was not as wide as it stood at the material time. During the period from January 1, 1960 to March 31, 1963, entry 24 read as below :
-----------------------------------------------------------------------
Serial Description of goods Rate of sales Rate of purchase
No. tax in paise tax in paise
in the rupee in the rupee
-----------------------------------------------------------------------
(1) (2) (3) (4)
----------------------------------------------------------------------- 24 Paper, including Five Five newsprint but excluding paper specified in entry 6 in this Schedule.
------------------------------------------------------------------------
It is manifest from the above entry that it was confined to paper used for writing or printing. The only inclusion therein was newsprint and exclusion was of paper specified in entry 6 of the same Schedule. This entry thereafter was substituted with effect from April 1, 1963 with following entry :
---------------------------------------------------------------------
(1) (2) (3) (4)
--------------------------------------------------------------------- 24 Paper of all kinds Five Five including straw boards, card board and duplex and triplex boards (but excluding sand paper).
----------------------------------------------------------------------
Some modifications were made in the said entry between September 1, 1969 to September 30, 1969, but the same being not material for the purpose of the present controversy, it is not necessary to set out the same.
From October 1, 1972, the above entry 24 was substituted by a new entry 24 which is set out in paragraph 5 above. In the new entry, two items were specified with different rates of tax. The contention of the assessee is that the language of item (2) of entry 24 is wide enough to include filter paper, which undoubtedly is a paper, though not used for writing or printing.
7. Our attention was drawn by the learned counsel for the assessee to a book entitled "Paper Industry in India" by V. Podder wherein a glossary of paper trade terms has been given. It is stated therein that till recently Indian Standard Institution had a glossary of terms used in paper trade and industry. Later, Development Council on Paper and Allied Industries in India and the Nomenclature Committee of the Government finally decided the nomenclature set out thereunder. Paper has been classified therein as printing paper, writing paper, packing and wrapping paper and other varieties of paper, which has been sub-classified as (a) cigarette paper, (b) blotting paper, (c) filter paper, (d) base paper, (e) crepe paper, (f) electrical grade papers, (g) permanent record paper. "Filter paper" has been defined therein as paper suitable for selective retention of particles from a fluid suspension of emulsion and having low resistance to fluid flow.
8. From the above description given by the Nomenclature Committee of India, it appears that "filter paper" is also a variety of paper and is known in trade parlance as "paper". When the Legislature uses the expression paper of all kinds, it includes not only printing or writing paper but also packing and wrapping paper and all other varieties of paper including filter paper. There is no justification to give a restrictive meaning to the expression paper so as to exclude filter paper when the Legislature itself has included sand paper, straw board, card board and duplex and triplex boards within the same.
9. We have perused the decision of the Supreme Court in State of Uttar Pradesh v. Kores (India) Ltd. [1977] 39 STC 8 on which much reliance has been placed by the counsel for the Revenue, where it has been held that carbon paper is not paper as understood in popular parlance. From a careful reading of the above judgment, it appears that it was rendered on interpretation of an item appearing in a notification which read "paper other than hand-made paper". It was on interpretation of the above item that the Supreme Court held that the word paper should be 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 language of entry 24 is quite different. Item (2) of the said entry, as stated earlier, is couched in widest possible terms to include not only writing paper or certain other varieties of paper but "paper of all kinds" other than those mentioned in item (1), which refers to some of the varieties of paper. In our opinion, for interpreting entry 24(2) of Schedule C to the Act, the decision of the Supreme Court in Porritts & Spencer (Asia) Ltd. [1978] 42 STC 433 is most apposite. In that case, the Supreme Court had occasion to consider whether dryer felts made out of cotton or woollen yarn 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" in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948. The Supreme court, after considering a number of authorities on the point, observed that the use to which it may be put is 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 bed sheets 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. The Supreme Court, therefore, held that it is 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".
10. In the instant case also, there can be no dispute about the fact that "filter paper" is also a kind of paper. The only argument that has been advanced against the assessee is that filter paper is used only for the purpose of retention of particles from a fluid suspension of emulsion and in view of its low resistance to fluid flow, is not used for writing, printing, etc. Following the ratio of the decision of the Supreme Court in Porritts & Spencer (Asia) Ltd. [1978] 42 STC 433, we are of the clear opinion that the user of filter paper cannot militate against "filter paper" falling within the category of "paper of all kinds".
11. We are also supported in our above conclusion by the decision of the Supreme Court in State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24, where "patasa", "harda" and "alchidana" were held to fall within the definition of "sugar" in entry 47 of Schedule A to the Bombay Sales Tax Act, 1959. In the above case, the Supreme Court rejected the contention of the Revenue that patasa, harda, alchidana, etc., were not forms of sugar. The Supreme Court held that it was manifest that patasa, harda and alchidana were only different forms of refined sugar. The Supreme Court also repelled the contention made on behalf of the Revenue that "any form of sugar" referred to "any variety of sugar" and that it cannot be taken to mean sugar in any form. It was held that the word "sugar" was intended to include within its ambit "all forms of sugar", that is to say, sugar of any shape or texture, colour or density and by whatever name it is called.
12. Reference may also be made to the decision of the Supreme Court in India Carbon Ltd. v. Superintendent of Taxes [1971] 28 STC 603, where on interpretation of the expression "coal including coke in all its forms" appearing in item (i) of section 14 of the Central Sales Tax Act, 1956, it was held that the language employed was so wide, viz., "coke in all its forms", that petroleum coke which is a form of coke cannot possibly be excluded merely by reference to the word "coal". The ratio of the above decision, in our opinion, squarely applies to the construction of entry 24(2) of Schedule C to the Act and following the same, we are of the opinion that the meaning of expression "paper of all kinds" appearing therein cannot be narrowed down by reference to the types of paper or varieties of papers mentioned in item (1) therein.
13. Reference may also be made to the decision of the Madras High Court in Viny Pap Sales Depot v. State of Tamil Nadu [1977] 40 STC 317, where on interpretation of item 117(iv) of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, which read "all other kinds of paper and paper board not otherwise specified", it was held that the said entry was couched in the most comprehensive language with a view to take in every type, kind or sort of paper, not merely those that have been enumerated in the entry. It was observed that the Legislature, not having been satisfied with the enumeration of a number of items, had stated in clause (iv) thereof "all other kinds of paper and paper board not otherwise specified". It was observed that there can be no doubt whatever that the Legislature intended item 117 to be of the widest possible amplitude. It was, therefore, held that PVC coated paper, which is used in book-binding, manufacture of suitcase, jewel box, album, etc., falls under the above entry.
14. We have also seen the sample of filter paper which was forwarded to the Commissioner and is on record before us. From a very look at the same, it is clear that it is nothing but "paper". We have also perused the specifications of filter paper contained in the buyers-guide published by the assessee. We have perused the certificate given by Plazma Laboratories on November 27, 1979, wherein it is stated that the process employed in manufacturing filter paper and writing paper is the same with the utilization of quite parallel raw material. We have also taken note of the fact that filter paper appears under the head "other varieties" of paper in the glossary of paper trade terms. On consideration of the same, we are of the clear opinion that "filter paper" is "paper" falling under entry 24(2) of Schedule C to the Act.
15. In view of the above, we answer the question referred to us in the affirmative and in favour of the assessee.
16. In the facts and circumstances of the case, we make no order as to costs.
17. Reference answered in the affirmative.