2006 Supreme(SC) 646

2006(6) Supreme 93
SUPREME COURT OF INDIA
(From Karnataka High Court)
Ashok Bhan and Markandey Katju, JJ.
M/s Falcon Tyres Ltd. — Appellant
versus
State of Karnataka & Ors. — Respondents
Civil Appeal No. 4408 of 2001
Decided on 20-7-2006
Counsel for the Parties :
For the Appellant : Dhruv Mehta, Harshvardhan Jha and Yashraj Singh Deora (for M/s. K.L. Mehta & Co.), Advocates.
For the Respondents : Sanjay Hegde, Advocate.

IMPORTANT POINTS
1. From the reading of the definition of ‘agricultural produce’ under Section 2(A)(1) of the Karnataka Tax on Entry of Goods Act, 1979, it unequivocally emerges that rubber and few other items enumerated therein are excluded from being agricultural produce, therefore, while reading Entry 2 in the Second Schedule to the Act there is no scope to include rubber from being exempt from payment of entry tax.
2. The Legislature has deliberately excluded certain items from being agricultural produce and therefore while interpreting the provisions of the Karnataka Tax on Entry of Goods Act, the legislative intention will have to be given effect to in consonance with the definition as contained in the statute.

Headnote:Karnataka Tax on Entry of Goods Act, 1979 — Sections 2(A)(1), (5), 3(1), (6) — Agricultural produce — Scope of definition — Claim of exemption from entry tax on value of rubber brought into the local area — Maintainability — Exemption Schedule i.e. Second Schedule in Sl. No. 2 specifies agricultural produce including tea, coffee and cotton as exempt from Entry Tax — Rubber is not one of the agricultural produce included in Sl. No. 2 — Appellant, a public limited company and a dealer was engaged in the manufacture of tyres of two wheeler motor vehicles — Appellant located in Mysore procures rubber from the neighbouring State of Kerala — Appellant claimed exemption from entry tax on value of rubber brought into the local area for assessment year 1996-97 in terms of definition of agricultural produce — High Court conceded that raw rubber is an agricultural produce but definition of agricultural produce in Section 2(A) (1) of the Act, rubber is excluded — Whether appellant was entitled to claim exemption from entry tax on value of rubber — (No) — Legislature having deliberately excluded rubber from being agricultural produce, legislative intention will have to be given effect to.

       Held : We would have readily accepted the submissions advanced by the learned counsel for the appellant without any difficulty under normal circumstances but for the fact that in the present Act as indicated by us earlier, term agricultural produce as defined by the legislature specifically excludes rubber from agricultural produce. Under the law governing the principles of interpretation of a statute, this Court is necessarily restricted while construing the expression agricultural produce in relation to the present Act by the definition that is incorporated in the Act itself. Under these circumstances it is not possible to accept the submission of the learned counsel for the appellant. The expression agricultural produce as it appears in the Second Schedule has to given its normal and ordinary interpretation. Sl. No. 2 of the Second Schedule which reads "Agricultural produce including tea, coffee and cotton is an inclusive definition and not an exhaustive definition. What is excluded from the definition of the agricultural produce in the Act cannot be held to be an agricultural produce unless the same find mentions in the Second Schedule. Since the legislature provided tea, coffee and cotton in Sl. No. 2 of the Second Schedule and not the rubber, rubber cannot be taken to be agricultural produce within the meaning of agricultural produce as defined under the Act.(Para 10)

       Section 2(A)(1) is in two parts, it excludes two types of food from agricultural produce. According to us, the definition of the agriculture and horticulture produce does not say as to what would be included in the agriculture or horticulture produce, in substance it includes all agriculture or horticulture produce but excludes, (1) tea, coffee, rubber, cashew, cardamom, pepper and cotton from the definition of the agriculture or horticulture produce though all these products as per dictionary meaning or in common parlance would be understood as agricultural produce and (2) "such produce as has been subject to any physical, chemical or other process for being made fit for consumption", meaning thereby that the agricultural produce other than what has been excluded, which has been subjected to any physical, chemical or other process for making it fit for consumption would also be excluded from the definition of the agriculture or horticulture produce except where such agricultural produce is merely cleaned, graded, sorted or dried.(Para 11)

       From the reading of the definition under Section 2 (A) (1), it unequivocally emerges that rubber and few other items enumerated therein are excluded from being agricultural produce or horticulture produce. For all intent and purposes as far as the present Act is concerned, it is the definition given in the Act which will govern the expression agricultural produce. While reading Entry 2 in the Second Schedule to the Act there is no scope to include rubber from being exempt from payment of entry tax. Entry 2 of Second Schedule creates exceptions regarding few of the excluded items from payment of Entry Tax but not all excluded items. The items for which an exception has been created in Entry 2 of the Second Schedule would only be exempt from payment of entry tax and not all the items, which have been excluded from being agricultural produce in the definition clause. While interpreting the provisions of present Act the legislative intention will have to be given effect to inconsonance with the definition as contained in the statute.(Para 13)

       In the definition clause of Section 2 (A) (1) rubber is excluded form the agricultural produce, sub-section (6) of Section 3 provides for exemption in respect of goods specified in the Second Schedule. At Sl. No. 2 of the Second Schedule, only tea, coffee and cotton (whether ginned or un-ginned) have been given exemption from payment of Entry Tax and not other items such as rubber, cashew, cardamom and pepper and such other agricultural produce which has been subjected to any process for making it fit for human consumption. Intention of the legislature is that though tea, coffee and cotton have been excluded in the definition clause from the agricultural produce but for the purposes of the Entry Tax Act tea, coffee and cotton are exempted from payment of Entry Tax. This is an exception created by the legislature. If the legislature intended to create exception for rubber also it could have done it but it chose not to do it. Simply because the legislature has included tea, coffee and cotton in the Second Schedule exempting it from payment of Entry Tax does not mean that all other agricultural produce items which have been excluded from the definition of the agricultural produce would stand included in the Second Schedule to the Act exempting them from payment of Entry Tax. This would be doing violation to the Act as well as acting contrary to the intent of the legislature. (Para 14)

       The Legislature has deliberately excluded certain items from being agricultural produce and therefore while interpreting the provisions of the present Act, the legislative intention will have to be given effect to in consonance with the definition as contained in the statute.(Para 16)