Madras High Court
Wavin India Limited vs State Of Tamil Nadu on 18 September, 1989
Author: S. Mohan
Bench: S. Mohan
JUDGMENT
S. Mohan, Offg. C.J.
1. The short question that arises for our consideration, though short is undoubtedly interesting, is what exactly is the meaning of the words in entry 136 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 which entry reads as "P.V.C. conduit pipes and fitting" as it stood prior to January 1, 1985. We state so because we are concerned with the assessment year 1976-77 in this tax case.
2. The revision petitioners reported a total and taxable turnover of Rs. 1,69,30,043.15 and Rs. 58,40,175.82 for the assessment year 1976-77. For the said assessment year, the assessing officer determined the total and taxable turnover at Rs. 72,19,736 and Rs. 63,80,087. In appeal there was a remand of the assessment but a confirmation of the rate of tax on Rs. 51,48,084. The same was directed to be assessed under serial No. 136 of the First Schedule at 9 per cent as against multi-point tax collected under section 3(1) of the Tamil Nadu General Sales Tax Act, hereinafter referred to as "the Act". It was the contention of the petitioners that PVC water pipes conforming to IS. 4985 cannot be equated to conduit pipes confirming to IS 2509 since they were technically and commercially two different goods altogether. Before the Tribunal it was submitted that in the contracts, price lists, invoices and correspondence, PVC water pipes were never described as PVC conduit pipes. They were different goods having different properties and specifications as evidenced by Indian Standards Institution classification. The user of the goods was different. In fact, the entire trade comprised of other manufacturers as well as dealers were collecting multi-point tax under section 3(1) of the Act and it was only in the case of the petitioners single point tax was applied. Though the Tribunal on a factual finding came to the conclusion that there was difference between the two goods, relying on the dictionary meaning of the expression "conduit" and "pipes", came to the conclusion that PVC water pipes will fall under serial No. 136 since it is comprehensive in its nature as "PVC conduit pipes". It is against this order of the Tribunal the present revision has come to be preferred.
3. Mr. C. Natarajan, learned counsel for the revision petitioners, after placing before us several materials to show the differentiation between the two goods, would urge on the strength of the decision reported in Collector of Central Excise v. Krishna Carbon Paper Co. as well as Commissioner of Sales Tax v. S. N. Brothers , that the dictionary meaning is a delusive guide. Therefore, disregardful of the nature of the property in the goods as well as the specifications including as to how commercially the goods are treated, one cannot rely on purely the dictionary meaning. From this point of view the order of the Tribunal is liable to be set aside. Further, if technically the method of production and the nature of the goods differ, one cannot bring in the same under serial No. 136.
4. In opposition to this the learned Government Pleader for Commercial Taxes would adopt the reasoning of the Tribunal which has gone through carefully the various materials placed before it and commend us acceptance of those reasonings. Therefore no interference is warranted.
5. It cannot be said as an axiom that dictionary meaning should never be taken into consideration at all. Conduit pipes would be for conveyance and therefore, where it is for the purpose of electrical installation or for taking water, conduit pipes being comprehensive enough, would fall under serial No. 136.
6. In order to appreciate the respective contentions, it is necessary on our part to find out the specifications prescribed by the Indian Standards Institution. Specification for rigid non-metallic conduits for electrical installations 2.2. In the Wavin electrical conduits, it is referred to as follows :
"Conduited electrical wiring has almost completely replaced traditional baton wiring in modern architectural design. In turn, PVC conduiting is a superior alternative to metal conduits for PVC performs better at a lower cost. It prevents ageing of wires, protects wiring from damage and weathering, minimises risk of short circuit in installation and of course, permits concealed wiring. Wavin rigid PVC electrical conduits are manufactured to ISI specifications and are available in a wide range of sizes. Wavin also manufactures commercial conduits. Exacting standards of quality control are consistently maintained."
7. We will now refer to the following extract of the relevant portion from the Paper Books which was quoted by the Tribunal :
"...... PVC water supply pipes referred to in IS 4985 covers a range of pipes from 16 mm 002 to 315 mm OD in four pressure ratings, viz., 2, 5, 4, 6 and 10 kgf/cm2. In these pipes the requirements covered deal with hydraulic pressure test, impact test and heat reversion test. In addition, the pipes expecting to conform in this standard will have to pass specific requirements, such as effect on water, capacity, freedom from lead, tin, etc., which are particularly designed for its application as a conveyor for potable water supply. The raw material, namely PVC along with the necessary lubricants additives used, etc., will therefore have to be tailored specifically to meet these requirement."
".... On the other hand, the PVC conduits covered in IS 2509 range from 16 mm to 63 mm nominal OD with no pressure test at all. This product is intended for use as electrical conduits and as such requirements, such as resistance to heat, mechanical strength impact and in particular electrical characteristics such as die-electric strength and insulation resistance are relevant. This specification also calls for resistance to combustion, resistance to chemical action as well as compatibility with copper as well as to foils that one might come across in the electrical wiring practice. It may thus be seen that for manufacturing PVC electrical conduits to this specification, the formulation will have to be so designed as to cater to the requirements laid down fully ...."
8. An extract from a literature "Experience in the use of rigid PVC pipes for water supplies" reads as follows :
3.1 Plastics :
Before dealing with the properties of UPVC pipes in detail, it would be helpful if the basic properties in general and PVC material in particular are kept in view. Plastic comprises of loosely held large molecules called polymers. The word polymer is derived from the word "poly" which means "many" and "mer" which means units. Small units of molecules know as "monomers" join in loose chain to form large molecules called polymers. These monomers are derived from such common sources like coal, water, air, petroleum ...."
3.5 Advantages and limitations of UPVC plastics :
The important advantages of UPVC plastic are :
1. No corrosion
2. Light weight
3. Toughness
4. Rigidity
5. Economical in laying jointing and maintenance
6. Base of fabrication into a variety of finished products.
3.6 Properties of PVC :
We will now discuss these properties in detail with reference to PVC pipes. The prefix rigid or hard or unplasticised used with PVC pipes needs a little explanation. Polyvinyl chloride in pure form is very hard and tough and since these properties are an asset in case of pressure pipes, no plasticizers (which lower these qualities) are added in the manufacture of PVC pressure pipes. For this reason these pipes are commercially referred to as rigid, hard or unplasticised pipes. Only small quantities of (less than 5 per cent) additives are used primarily to aid processing and ensure long term retention of mechanical properties. Strictly "speaking, however, these pipes are not rigid but flexible ........"
9. The following distinction between the water pipes and electrical conduits were also brought to our notice :
------------------------------------------------------------------------
Description Water pipes Electrical conduit
------------------------------------------------------------------------
ISI Specification 4985 2509
No.
Specification Unplasticized PVC Rigid non-metallic
pipes for potable conduits for
water supplies. electrical
installation.
Scope This standard covers This standard covers
pipes made of circular rigid
unplasticized conduits
polyvinyl chloride, manufactured from
intended for unplasticized PVC or
potable water copolymer material
supplies. or other suitable
non-metallic material
and intended for the
enclosure and
protection of cables
used in the wiring
of electrical
installations.
Definition A pipe through A pipe into which a
which water is cable may be drawn
conveyed under a for the purpose of
working pressure. affording mechanical
protection.
Temperature at Cold water Cable of
which used service - 1 Degree C cables - 5 Degree C
plus 49 Degree C plus 60 Degree C.
Classification of 1. Pressure class 1. Non-pressure
pipes. pipes. class pipes.
2. Range of pipes 2. Range from 16 mm
from 16 mm OD to OD to 63 mm with
315 mm OD in no pressure test
four pressure at all.
ratings,
viz., 2, 5, 4, 6
and 10 kgf/cm2.
TESTS
a. Effect on When tested after No such test.
water. flowing water, the
quantities of lead,
dialkyltin 04 and
higher homologues
(measured as tin)
and any other toxic
substances should
not exceed.
Lead 1.05 mg/litre.
Dialkyltin 4.0.02 mg/litre.
Other toxic 0.01 mg/litre.
substances
b. Working pressure Hydraulic test. No such test
test.
1. Short term.
2. Long term
C. Longevity test Reversion test No such test
Impact test at
0.0 for 1 hour.
d. Conduit No such 1. Die electrical
tests tests strength.
2. Insulation
resistance.
3. Bending test.
4. Mechanical
strength test for
rigidity and
impact test at
5.0 for
two hours.
Comparison For 1 mtr. For 1 mtr.
of prices Rs. Rs.
16 mm/10 kg 2.25 16 mm 1.95
20 mm/10 kg 2.90 20 mm 2.70
25 mm/10 kg 3.80 25 mm 4.00
32 mm/10 kg 6.10 32 mm 5.70
40 mm/6 kg 7.40 7.90
50 mm/6 kg 9.35 11.80
63 mm/4 kg 10.50 18.40
63mm/6 kg 14.85
75mm/4 kg 14.75
75mm/6 kg 19.75
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In the price list produced before us of Chemplast Company, we find this rigid PVC pipes 4985-1968 carry the following specification :
-----------------------------------------------------------------------
Outside Nearest Working Wall thickness in Price
diameter inch pressure mm. per
in mm. equivalent kg/cm2 --------------- mtr.
Minimum Maximum
Rs. P.
------------------------------------------------------------------------ Service pipes
------------------------------------------------------------------------ 16 3/8 10 1.1 1.5 1.30 20 1/2 10 1.1 1.5 2.10 25 3/4 10 1.4 1.8 2.65 32 1 10 1.0 2.2 3.95 40 1-1/4 6 1.4 1.8 5.70 50 1-1/2 6 1.7 2.1 7.00 63 2 4 1.5 1.9 7.90 63 2-1/2 4 2.2 2.7 8.50 75 2-1/2 4 1.8 2.2 9.50 75 2-1/2 6 2.6 3.1 12.35
------------------------------------------------------------------------
Mains and distribution pipes
------------------------------------------------------------------------
90 3 4 2.1 2.6 10.75 90 3 6 3.1 3.7 16.50 110 4 4 2.5 3.0 16.80 110 4 6 3.7 4.5 24.00 140 5 4 3.2 3.8 25.50 140 5 6 4.8 5.6 40.00 160 6 4 3.7 4.3 36.80 160 6 6 5.4 6.2 49.00
------------------------------------------------------------------------
While electrical conduits IS. 2509-1963 are as follows :
------------------------------------------------------------------------
Size Nearest Outer diameter Wall thickness Rate
mm. inch in mm. in mm. per
equivalent ------------- metre
Maximum Minimum Nominal tolerence
Rs. P.
------------------------------------------------------------------------
16 3/8 15.88 15.61 1.80 = 0.1 1.55 19 3/4 19.05 18.75 2.00 = 0.1 2.05 25 1 25.40 25.11 2.00 = 0.1 2.85 32 1/4 31.75 31.46 2.24 = 0.1 4.00 38 1/2 38.10 37.80 2.50 = 0.1 5.40 51 2 50.80 50.50 3.05 = 0.2 8.85 63.5 2-1/2 63.50 63.20 3.05 = 0.2 11.50
------------------------------------------------------------------------
Utility conduits
------------------------------------------------------------------------
Size in inch Outside diameter in mm. Price per meter
Rs. P.
------------------------------------------------------------------------
3/4 19.0 0.85
1 25.4 1.30
-----------------------------------------------------------------------
Fittings (price per piece)
------------------------------------------------------------------------
16 19 25 32 38 51 63.5
mm. mm. mm. mm. mm. mm. mm.
Rs. P. Rs. P. Rs. P. Rs. P. Rs. P. Rs. P.
-----------------------------------------------------------------------
90 Bends 0.33 0.50 0.82 1.20 2.00 5.70 9.00
Couplers 0.20 0.27 0.44 0.60 1.00 1.65 2.50
Tees 1.20 1.20 1.20 1.80 2.75 ... ...
Junction 2.00 2.85 3.50 4.00 5.00 ... ...
1-way, 2-way
3-way and
6/4-way
Saddles (per
100 Nos. 9.00 9.00 10.00 15.00 18.00 ... ...
-----------------------------------------------------------------------
10. From the above it is clear that the two goods are treated differently from one another.
11. The various invoices which were produced before the Tribunal also clearly spell out the difference between the two while in the customer-placing orders a clear-cut distinction has been made. Further, we find the users of these two goods are for different purposes. PVC conduit pipes are used only for electrical installations while rigid PVC pipes are used only for carrying water or any other fluid as the case may be. Therefore it will boil down to this : (1) Chemical compositions are different. (2) Dimensions are different and the trade has also clearly understood the same. (3) Method of manufacture is different. (4) User is different and (5) the prices are different. As a matter of fact, the records produced before the Tribunal clearly point out that right from the inception the revision petitioners have been paying only 4 per cent for these water pipes at multi-point, while for the other PVC conduit electrical pipes they were paying at 9 per cent. Under these circumstances, the short question would be whether the dictionary meaning alone could be the guiding factor. As a matter of fact, the Tribunal refers to both Oxford Dictionary meaning as well as Chambers Twentieth Century Dictionary meaning. We think that may be usefully reproduced here :
According to the Oxford Dictionary the meaning of the "conduit" and "pipe" is as follows :
"'Conduit' channel or pipe for conveying liquids; tube or trough for protecting insulated electric wires, length of this system (electr. transaction) with conduitor in underground".
"'Pipe' tube or wood, metal, etc., esp. for conveying, water, gas, etc."
According to the Chambers Twentieth Century Dictionary, the meaning is as under :
"'Conduit' a channel or pipe conveying water or other fluid, or covering electric wires, etc., a fountain for supplying the public with water."
"'Pipe' a musical wind instrument or part of an instrument, consisting of or including a tube : any tube, or tubular part or thing, natural or artificial : a pipe-like volcanic vent, mass of ore, etc. : an entrance to a decoy : a tube with a bowl at one end for smoking."
12. It is clear that the word "conduit" normally means pipes. The words "conduits" and "pipes" are words of common parlance though the prefix "PVC" is somewhat technical.
13. How far the dictionary meaning would be a proper guide could be gathered from Commissioner of Sales Tax, U.P. v. S. N. Brothers . At page 306 the following passage occurs :
"In our opinion the Random House Dictionary cannot serve as a safe guide in constructing the words used in the List in the notification in question for the purpose of deciding whether or not the words used in entries Nos. 10 and 37 cover food colours and syrup essences; indeed this dictionary is apt to be a somewhat delusive guide in understanding the meanings of the words and expressions with which we are concerned, in the context in which they are used. This dictionary gives all the different shades of meanings attributable to the words referred but that is hardly helpful in solving the problem raised in the present controversy."
14. The same line of reasoning was adopted by the Supreme Court in Collector of Central Excise v. Krishna Carbon Paper Co. .
15. In paragraph 6 of the judgment it was observed as follows as to the meaning of the word "paper".
"It is well-settled that in order to ascertain the correct meaning of a fiscal entry reference to a dictionary is apt to be a somewhat delusive guide, as it gives all the different shades of meaning. In the instant case, our attention was drawn to the extract from the Oxford English Dictionary, Volume III, page 436 where the meaning of the word 'paper' has been given. It read as follows :
'Paper (pei' per), sb. Also 4 papure, 4-6 papir, 5 papire, papyre, (paupire, 5-6 pauper, 5-7 papyr, 6 papre, [a. AF. papir = OF, Papier (= Pr. Papier, Cat. Paper. Sp. papel "paper", It. papira papyrus), ad. L. papyrus the papyrus or paper-reed of the Nile, also writing-material made of it, a. Gr. nanvpos the papyrus-reed]."
16. After holdings, it was observed that carbon paper will not fall in this category. The following relevant observations would be useful :
"It is a well-settled principle of construction, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. This principle is well-settled by a long line of decisions of Canadian, American, Australian and Indian cases. Pollock, J., pointed out in Grenfell v. Inland Revenue Commissioners (1876) 1 Ex D 242 at 248 that if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words 'popular sense' that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. The ordinary words in every day use, are, therefore, to be construed according to their popular sense. The same view was reiterated by Story, J., in 200 Chests of Tea (1824) 9 Wheaton (US) 430 at 438, where he observed that the legislature does not suppose our merchants to be naturalists, or geologists, or botanists. See the observations of Bhagwati, J., as the learned Chief Justice then was, in Porritts & Spencer (Asia) Ltd. v. State of Haryana . But there is a word of caution that has to be borne in mind in this connection, the words must be understood in popular sense, that is to say, these must be confined to the words used in a particular statute and then if in respect of that particular items, an artificial definition is given in the sense that a special meaning is attached to particular words in the statute then the ordinary sense or dictionary meaning would not be applicable but the meaning of that type of goods dealt with by that type of goods in that type of market, should be searched."
17. In another decision reported in Aditya Mills Ltd. v. Union of India the principle adopted was as to the characteristics of the goods in order to decide the tariff item under which the goods are taxable. It was held that where two plies of polyester spun yarn PP and one ply of rayon filament yarn RF, which are doubled together and the resultant yarn is referred to as PPRF yarn that resultant yarn is a separate and distinct item. From the above, therefore, it would be clear that the matter has to be viewed only from the treatment accorded to the goods in trade and as to how the merchants understand the same. Therefore, one cannot give an artificial definition. On the contrary, the type of the goods in the market and how they are understood is the relevant criterion. It is from this point of view we find that though the Tribunal found difference ultimately was led to believe that to adopt the dictionary meaning would be proper. We are unable to agree with the finding of the Tribunal that where the Legislature has used the expression "conduit pipes" the only conclusion can be that this includes both "conduits" and "pipes" on the assumption that these two expressions convey different meanings. We are also fortified when looking at the amendments, which took place to this item with effect from January 1, 1985. This item has been qualified as under :
Entry from January 1, 1985.
All varieties of PVC pipes, tubes and fittings, including flexible and rigid pipes, hoses and tubes, whether transparent, semi-transparent or non-transparent.
Note :
1. Entry inserted by Act 5 of 1975 w.e.f. November 29, 1974 - transferred from multi-point levy from November 29, 1974.
2. Item 136 and the entries thereto were substituted by G.O.P. No. 1357 C.T. & R.E. dated December 19, 1984 - Notification dated December 19, 1984 (Act 19 of 1985) - Notification No. 163 dated April 15, 1985 - Effective from January 1, 1985.
For all the above reasons we hold that the order of the Tribunal cannot be supported and it is hereby set aside. The tax revision case will stand allowed. There will be no order as to costs.
18. Revision petition allowed.