Motipur Zamindary Company Private LTD. : Motipur Zamindary Company Private LTD. vs State Of Bihar: Super Intendent Of Taxes, Muzaffarpur

Headnote:(A) Sales Tax Act - Section 6 - Notification - Exemption of "green vegetables" - Interpretation of "vegetables" - In taxing statutes, the word "vegetables" is to be understood in common parlance, denoting a class of vegetables which are grown in a kitchen garden or in a farm and are used for the table - Sugar-cane, being a grass cultivated for sugar, does not fall within the meaning of "green vegetables" and is therefore not exempt from sales tax. (Para 4)

(B) Sales Tax Act - Section 2(c) - Definition of "dealer" - A person who sells or supplies any goods falls within the wide definition of a "dealer" - The preamble to an amending Finance Act cannot limit or change the plain meaning of the statutory definition of "dealer" unless the amendment is explicitly temporary. (Para 5)

(C) Constitution - State List, Entry 54 - Tax on sale of goods - Amendment to the definition of "dealer" in a state sales tax act is a matter within the state's legislative competence and does not require the assent of the President. (Para 6)

Facts of the case:
A private limited company producing sugar-cane challenged the assessment of sales tax for three financial years. The company contended that sugar-cane is a "green vegetable" and thus exempt from tax under a government notification. Additionally, it argued that as a producer, it was not a "dealer" under the Act and that a specific amendment to the definition of "dealer" was either temporary or lacked the necessary presidential assent.

Findings of Court:
Sugar-cane is not a "green vegetable" as it is not used for the table in common parlance. The company qualifies as a "dealer" under the wide definition provided in the Act. The amendment to the definition of "dealer" was valid and did not require presidential assent.

Issues: Whether sugar-cane falls within the term "green vegetables" for tax exemption; whether a producer of sugar-cane is a "dealer" under the Act; and whether the amendment to the definition of "dealer" required the President's assent.

Ratio Decidendi: Terms in taxing statutes must be interpreted according to common parlance. Since sugar-cane is a grass grown for sugar rather than a vegetable grown for the table, it cannot be classified as a "green vegetable." Furthermore, the statutory definition of "dealer" is broad enough to include producers who sell goods, and the preamble of a Finance Act cannot override the clear language of a section.

Result: Appeals and petitions dismissed.

Legal Category Hierarchy

1. Sales tax exemption dispute — whether sugar-cane constitutes green vegetables under Section 6 of the Bihar Sales Tax Act and whether a producer qualifies as a dealer. (Para 1 , 2 , 3 )

2. Sugar-cane is a green vegetable exempt from tax; a producer is not a dealer under the Act; and the amendment to the dealer definition was temporary. (Para 3 , 4 , 5 )

3. Taxing statutes interpret vegetables based on common parlance as those grown for the table; sugar-cane is botanically a grass; and preambles cannot limit plain statutory definitions. (Para 4 , 5 , 6 )

4. In taxing statutes, vegetables are understood in common parlance as those grown in kitchen gardens or farms for the table, excluding industrial crops like sugar-cane. (Para 4 )

5. Appeals and petitions dismissed with costs. (Para 7 )

6. How is the term vegetables interpreted in taxing statutes?

The term vegetables in taxing statutes is understood in common parlance, denoting the class of vegetables which are grown in a kitchen garden or in a farm and are used for the table. (Para 4 )

7. Does sugar-cane qualify as a green vegetable for tax exemption purposes?

No, sugar-cane is defined as a grass cultivated for sugar and does not fall within the common parlance meaning of vegetables used for the table. (Para 4 )

8. Can a preamble limit the meaning of plain words in a statutory definition?

No, a preamble cannot limit or change the meaning of the plain words of a section in an Act. (Para 5 )

9. Is the assent of the President required for amendments to a State Sales Tax Act?

No, because tax on the sale of goods is a matter entirely within Entry 54 of the State List, such amendments do not require the assent of the President. (Para 6 )

Judgment

KAPUR, J. : The principal question raised in these appeals and petitions under Art. 32 of the Constitution is whether sugar-cane falls within the term "green vegetables" and is therefore exempt from Sales tax under the exemption given by the notification dated August 28, 1947, issued under S. 6 of the BIHAR SALES TAX ACT (Act 19 of 47), hereinafter called the Act. After hearing the arguments in these appeals and petitions we announced our decision dismissing them with costs and we now proceed to give our reasons for the same.

2. The three appeals by special leave are brought by the assessment and relate to assessment of Sales tax for three years, 1950 51, 1951-52 and 1952-53 for which the amount of Sales tax levied was Rs. 28,866, 23,383 and 23,298 respectively. Besides the three appeals the assessee company has filed three petitions under Art. 32 challenging the constitutionality of the assessments. In this judgment the appellant and the petitioner is a private limited company and it will be termed "appellant" and the State of Bihar which is respondent will be termed the "respondent".

3. The appellant took an objection to the assessment and filed appeals to the Deputy Commissioner of Commercial Taxes and then a revision to the Board of Revenue and then at its instance the following question was referred by the Board of Revenue to the High Court for opinion:-

"Whether sugar-cane is a green vegetable within the meaning of item 6 of notification -No. 9884. FT dated 28-8-47 and as such exempt from taxation."

The High Court answered the question against the appellant and held that "sugarcane" was not included in the term "green vegetables" and it is the correctness of that answer which has been canvassed before us. In the petitions under Art. 32 of the Constitution it was contended that the appellant being a producer of sugar-cane was not a "dealer" within the meaning of the Act and therefore no tax was payable on sale of sugar-cane by it.

4. The exemption under the Act is provided under S. 6 of the Act which, at the relevant time, was as follows :-

S. 6 "No tax shall be payable under this Act on the sale of any foods or class of goods specified in this behalf by the (State) Government by notification in the Official Gazette, subject to such conditions as may be mentioned in the notification :

Provided no notification shall be issued under this section without giving in the Official Gazette such previous notice as: the State Government may consider reasonable; of its intention to issue "such notification."

Under S. 6 of the Act the notification relied upon was issued on August 28, 1947. This was notification No. 9884-FT which was in the following terms :

"In exercise of the powers conferred by Section 6 of the BIHAR SALES TAX ACT , 1947 (Bihar Act XIX of 1947), and in supersession of all the previous notifications on the subject, the Governor of Bihar is pleased to direct that no tax shall be payable under the said Act on the sale of goods specified in the second column of the schedule hereto annexed subject to the exceptions, if any, set out in the corresponding entry in the third column thereof.

THE SCHEDULE

Serial description No. of goods Exception subject to which the exemption has been allowed.

1. .....................................

2. .....................................

3. .....................................

4. .....................................

5. .....................................

6. Green vegetables other than potatoes Except when sold in sealed containers.

......................................

The question raised is that sugar-cane falls within the term "green vegetables" in entry 6 of the Schedule and is therefore exempt from assessment to Sales tax. In support of this contention counsel for the appellant relied upon a judgment of the Bombay High Court, State of Bombay v. R. S. Phadtare 1956-7 STC 495 where it was held that sugar-cane is "fresh vegetable" and is therefore exempt from Sales tax under a si