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1977 Supreme(P&H) 85
PUNJAB & HARYANA HIGH COURT
O.Chinnappa Reddy, S.C.Mital and A.S.Bains JJ.
Porritts And Spencer (Asia) Ltd.
Versus
State Of Haryana
General Sales Tax Reference No. 16 of 1974,
Decided On : MAY 11, 1977
The word "textiles" in item 30 of Schedule B of the Punjab General Sales Tax Act, 1948 should be construed according to popular usage, that is, in the sense in which the members of the general public in their ordinary day-to-day commerce understand it.
Headnote:
SALES TAX - EXEMPTION - TEXTILES - COTTON/WOOLLEN DRYER FELTS - WHETHER EXEMPT FROM SALES TAX UNDER ITEM 30 OF SCHEDULE B OF THE PUNJAB GENERAL SALES TAX ACT, 1948 - HELD, NO.
Fact of the Case:
The assessee-firm, Messrs. Porritts and Spencer (Asia) Limited, engaged in the manufacture and sale of cotton/woollen dryer felts at Faridabad, claimed exemption from sales tax under item 30 of Schedule B of the Punjab General Sales Tax Act, 1948 (hereinafter called as "the Act") on the ground that the products (i. e., dryer felts) manufactured by it fell into the category of tax-free goods being covered by item 30 of Schedule B of the Act. This contention of the assessee-firm was not accepted by the Assessing Authority. Accordingly, its liability was fixed under both the Acts with effect from 26th April, 1971.
Finding of the Court:
The court held that cotton/woollen dryer felts used in the manufacture of paper are not included in the expression "textiles" occurring in item 30 of Schedule B of the Punjab General Sales Tax Act. The court observed that the word "textiles" is a word of ordinary and everyday use, used to denote certain common articles of merchandise. We are concerned with the use of the word in a statute affecting a wide range of the merchant and consumer-public. The word, therefore, should be construed according to popular usage, that is, in the sense in which the members of the general public in their ordinary day-to-day commerce understand it. While in its broadest dictionary sense it means every woven fabric, in the everyday parlance of the ordinary merchant and consumer-public, it means clothing, furnishing and the like. By clothing I mean cloth used to cover or clean the body such as shirting, suiting, towelling, etc. By "furnishing" I mean cloth used in connection with covering and decorating walls and furniture such as curtains, carpets, bed-spreads, etc. It is in that sense, that is, in the sense of clothing, furnishings, etc., that the word "textiles" must be understood when used in the Sales Tax Act. It cannot be interpreted to include material specially manufactured for industrial purposes. The ordinary merchant and consumer will never so understand it.
Issues: Whether, on the facts and circumstances of the case, the products manufactured by the petitioner are not covered by item 30 of Schedule B of the Punjab General Sales Tax Act, 1948 and, therefore, not exempt from sales tax both under the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956.
Ratio Decidendi: The court held that the word "textiles" in item 30 of Schedule B of the Punjab General Sales Tax Act, 1948 should be construed according to popular usage, that is, in the sense in which the members of the general public in their ordinary day-to-day commerce understand it. While in its broadest dictionary sense it means every woven fabric, in the everyday parlance of the ordinary merchant and consumer-public, it means clothing, furnishing and the like. By clothing I mean cloth used to cover or clean the body such as shirting, suiting, towelling, etc. By "furnishing" I mean cloth used in connection with covering and decorating walls and furniture such as curtains, carpets, bed-spreads, etc. It is in that sense, that is, in the sense of clothing, furnishings, etc., that the word "textiles" must be understood when used in the Sales Tax Act. It cannot be interpreted to include material specially manufactured for industrial purposes. The ordinary merchant and consumer will never so understand it.
Final Decision: Reference answered against the assessee and in favour of the revenue.
A.S.Bains, J.
1. In this reference there is no controversy on facts which are briefly stated as under :
The assessee-firm Messrs. Porritts and Spencer (Asia) Limited are engaged in the manufacture and sale of cotton/woollen dryer felts at Faridabad. The assessee-firm is registered both under the Punjab General Sales Tax Act, 1948 (hereinafter called as "the Act") and also under the Central Sales Tax Act, 1956. It also deals in inter-State sales and the first such sale was effected on 26th April, 1971. A notice under the Act was given to the firm by the Assessing Authority for its liability to pay sales tax but the assessee-firm contested its liability on the ground that the products (i. e., dryer felts) manufactured by it fell into the category of tax-free goods being covered by item 30 of Schedule B of the Act and claimed that it was not liable to get itself registered either under the Act or under the Central Sales Tax Act. This contention of the assessee-firm was not accepted by the Assessing Authority. Accordingly, its liability was fixed under both the Acts with effect from 26th April, 1971. The order of the Assessing Authority is annexure A.
2. Dissatisfied by the order of the Assessing Authority, the assessee-firm filed two revision petitions before the Deputy Excise and Taxation Commissioner on the ground that they were not liable to pay tax as their manufactured goods fell in the category of tax-free goods covered by item 30 of Schedule B of the Act. These revision petitions were dismissed and the copies of the orders are annexures B and C. The assessee-firm then unsuccessfully appealed before the Tribunal. The Tribunal also held that the products manufactured by the assessee-firm were taxable as they were not covered by item 30 of Schedule B of the Act. The Tribunals order is annexure D. The assessee then moved an application to the Tribunal for making a reference to the High Court which was allowed and reference in the following terms was made to this court:
Whether, on the facts and circumstances of the case, the products manufactured by the petitioner are not covered by item 30 of Schedule B of the Punjab General Sales Tax Act, 1948 and, therefore, not exempt from sales tax both under the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956.
3. This is how we are seized of the matter.
4. Mr. A. R. Lall, the learned counsel for the assessee-firm, contends that the taxing authorities have erred in law in fixing the liability of the assessee-firm to pay sales tax on the goods manufactured by it in view of item 30 of Schedule B of the Act. In order to appreciate the argument of the learned counsel, it is necessary to reproduce Section 6(1) and item 30 of Schedule B of the Act:
6. Tax-free goods.-(1) No tax shall be payable on the sale of goods specified in the first column of Schedule B subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which are declared tax-free from time to time under this section....
Item 30 of Schedule B.-All varieties of cotton, woollen or silken textiles, including rayon, artificial silk or nylon, whether manufactured by handloom or powerloom or otherwise but not including pure silk fabrics, carpets, druggets, woollen durees and cotton floor durees.
5. A reading of item 30 shows that all varieties of cotton, woollen or silken textiles including rayon, artificial silk or nylon, whether manufactured by handloom or powerloom or otherwise, are exempt from the mischief of the Act, but pure silken fabrics, carpets, druggets, woollen durees and cotton floor durees are not included in the exempted articles. The argument of the learned counsel for the assessee-firm is that dryer felt is a textile and hence the assessee-firm is not liable to pay tax on their products. He contends that the basic material used in the manufacture of cotton dryer felts is a blend
