Karnataka High Court
Maharashtra Hybrid Seeds Company ... vs State Of Karnataka on 20 February, 1999
Equivalent citations: [2000]119STC112(KAR)
Author: Ashok Bhan
Bench: Ashok Bhan, K.R. Prasad Rao
ORDER Ashok Bhan, J.
1. This judgment shall dispose of Entry Tax Revision Petition Nos. 838-839 of 1996 as they arise from the common order passed by the Karnataka Appellate Tribunal, Bangalore, involving common questions of law and fact.
2. The petitioner is a registered dealer under the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter called "the Act") carrying the business of selling sowing seeds. Assessments for the years 1988-89 and 1989-90 were concluded by assessment orders dated November 15,1991 and January 28,1992 respectively. Assessing authority subjected "cloth bags" which were brought in the city limits by the petitioner for packing the seeds to entry tax under the Act, even though petitioner claimed exemption thereon, being not specified under entry 16-A(v) of the Schedule to the Act. Details of the turnover subjected to tax besides the imposition of penalty are as under :
Year Turnover Tax Penalty 1988-89 13,27,948 26,759 20,701 1989-90 21,10,200 42,204 32,553
3. Aggrieved against the orders of assessment, petitioner filed appeals before the first appellate authority which confirmed the orders of the assessing authority in respect of both the years and held that "cloth bags" as packing materials are conceived by entry 16-A(v) of the Schedule to the Act on the ground that "cloth bags are also considered in common parlance as packing material". Confirming the levy of penalty, the appeals of the petitioner were dismissed.
4. Appellant carried further appeals, two against the order of assessment and other two against the orders levying penalty to the Karnataka Appellate Tribunal, Bangalore (for short, "the Tribunal"). Tribunal allowed the appeals relating to imposition of penalty as according to it case for levy of penalty was not made out. The appeals relating to levy of tax on the cloth bags were dismissed. The submission of the petitioner that entry 16-A(v) of the Schedule referring to packing materials, is exhausted by itself without permitting inclusion of any other, other than the items mentioned in that entry was not accepted by the Tribunal on the ground that entry as such could not be considered as exhaustive but only illustrative and the addition of the words "and the like" at the end of each sub-group would provide for inclusion of other items in the group. The Tribunal in this connection has observed in para 10 of the order :
"Therefore, the items of goods specified in each of the six clauses after the word 'namely' in the said entry cannot be construed as exhaustive. From the addition of the words 'and the like' at the end of each sub-group of the specified items in the said entry it is made clear that the legislative intention is not to restrict or confine the meaning of the words packing materials only to the items of goods specified in the said entry, The addition of the words 'and the like' has the effect of making the specified items unenumerated in the said entry only, illustrative and not exhaustive. Therefore, in the context the word 'namely' used in the said entry will have to be understood as 'such as'."
5. The Tribunal in conclusion has observed as under :
"Therefore, having regard to the full text of entry 16-A of the Schedule to the Karnataka Tax on Entry of Goods Act which is reproduced above, the general words 'and the like' used at the end of each of the six sub-groups of the specified items, which follow the word 'namely' must be given a plain and ordinary meaning and should be understood as 'other items of goods used as packing material'. Thus, viewed 'cotton cloth bags' which are admittedly used for packing the hybrid seeds by the appellant, would certainly be covered by the words 'and the like' used in the said entry, and hence constitute 'packing material', within the meaning of entry 16-A of the Schedule to the Karnataka Tax on Entry of Goods Act as it stood during the relevant period. Therefore, our answer to the issue No. 1 is in the positive and against the appellant."
6. Not satisfied with the orders passed by the authorities under the Act the petitioner has filed these two appeals contending that the Tribunal was not justified in law in conceiving "cloth bags" in entry 16-A(v) of the Schedule to the Act.
7. In order to appreciate the controversy, brief reference to the statutory provision is as under :
8. Karnataka Tax on Entry of Goods Act, 1979 was enacted to provide for levy of tax on the entry of goods into a local area for consumption, use or sale therein. Section 3 provides for levy and collection of tax on entry of any goods specified in the Schedule into a local area for consumption, use or sale therein at such rates not exceeding 5 per cent of the value of the goods as may be specified either retrospectively or prospectively by the State Government by issuing a notification.
9. Entry 16-A was introduced by the State Government by issuing Notification No. FD 235 CET 83(II) dated 28th October, 1986 in exercise of powers conferred by Sub-section (1) of Section 3 of the Act specifying that with effect from April 1, 1983, the tax shall be levied and collected under the Act on the entry of Scheduled goods specified in column (3) of the table into every local area for consumption, use or sale therein at the rates specified in the corresponding entries in column (4) thereof.
10. Entry 16-A reads as under :
"Packing materials, namely,--
(i) wrapping paper, fibre board cases, paper boxes, folding cartons, paper bags, carrier bags, card board boxes, corrugated board boxes and the like ;
(ii) tin plate containers (cans and boxes), aluminium foil, collapsible tubes, steel and aluminium drums and crates, and the like ;
(iii) plastic films, bottles, pots (excluding country made earthen pots), jars, bags and cushioning material, and the like ;
(iv) wooden boxes, crates, casks and containers and the like ;
(v) gunny bags, bardan (including batars), hessian cloth and the like ;
(vi) glass bottles, jars and carboys, and the like."
11. Normally speaking, the courts while giving a meaning to an item contained in the Schedule give it the meaning which the makers of the Schedule intended by grouping various articles in a particular group considering them in a generic sense. On a reading of entry 16-A and its analysis, it is evident that the Legislature did not intend to tax all packing materials. Intention is to tax certain items made out of specified materials enumerated in Clauses (i) to (vi). By putting the word "namely" after the words "packing material" in the heading of entry 16-A, the Legislature intends to specify the packing materials made out of a particular commodity to be taxed under the Act. Clause (i) deals with packing materials made out of paper, (ii) with tin and other metals, (iii) from plastic, (iv) with wood, (v) from jute fibre and (vi) with glass.
12. In this case, we are concerned with the packing materials made out of jute and not any other material. Under Clause (v) the packing materials made out of jute have been brought to tax. There are three items in entry (v) : (a) gunny bags, (b) bardan (including batars) and (c) hessian cloth. Counsel for the parties are agreed that gunny bags and bardans (including batars) is made out of jute. "Hessian" as per Shorter Oxford Dictionary means "strong coarse cloth of hemp or jute ; sack-cloth". In the same dictionary "hemp" means "plant from which coarse fibres are obtained for the manufacture of rope and cloth". Thus all the three entries in Clause (v) relate to fibre made out of jute. After these entries, the Legislature has added the words "and the like". Similarly, in all other clauses as well, the words "and the like" have been added at the end of entries. The words "and the like" will have to go with the description of the items in the clause and would not include an item which is not conceived in the entry. In Clause (v), the intention is to subject to tax the packing materials made out of jute only and not out of any other material like cloth, polythene, etc. Jute is the basic fibre and the packing materials made out of jute only are subjected to tax. The expression "and the like" would require to be considered "ejusdem generis". The genesis or the class of items envisaged by the preceding words not being exhaustive of the genesis or the class, the Legislature has conceived the words "and the like" so as to bring in any other item of the same class or genesis. In entry 16-A, broadly speaking, the packing materials of different metals and materials have been mentioned and the reference to the words "and the like" will have to go separately with the description in each item and would not go beyond that to any other item not conceived in such each sub-item. The reference in entry 16-A(v) is with reference to gunny bags, bardan (including batars), hessian cloth and the words "and the like" extending the principle of ejusdem generis would not conceive cotton cloth bags within that group to subject the petitioner to entry tax.
13. The Tribunal was not justified in law to hold that the reference of words in entry 16-A "namely" and "and the like" will have the meaning "such as" to conceive the entry to be illustrative. In our view, entry in itself is exhaustive which does not permit the inclusion of any other material which is not enumerated. Bags made out of plastic have been subjected to tax Under Clause (iii) and not Clause (v). There is a fallacy in the argument of Mr. Mallya, Government Advocate, that the intention of the Legislature is to tax the packing materials made out of fibre obtained by cultivation like jute, cotton or hemp. Cotton is not a fibre obtained from a plant, Cotton is a flower on a plant. Cloth can be made out of cotton, synthetic or silk and the like. If we accept the argument that the bags made out of cloth are taxable, then, the respondents have to put to tax the bags made out of cloth and not out of cotton as cloth can be made out of cotton, silk, synthetic and the like which does not seem to be the intention of the Legislature.
14. Tribunal was not right in holding that words "namely" and "and the like" are only illustrative and not exhaustive to subject cotton cloth bags to tax under the Act. Tribunal was further not right in holding that the expression "namely" and "and the like" will have the meaning "such as".
15. For the reason stated above, the petitions are accepted. Order of the authorities below is set aside and it is held that bags made out of cotton cloth were not exigible to entry tax under entry 16-A(v) of the Schedule to the Act. No costs.