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PETITIONER: ADVANCE BRICKS COMPANY

       Vs.

RESPONDENT: ASSESSING AUTHORITY, ROHTAK & ANR.

DATE OF JUDGMENT22/09/1987

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH DUTT, M.M. (J)

CITATION:  1988 SCR  (1) 272        1987 SCC  Supl.  650  JT 1987 (3)   655        1987 SCALE  (2)658

ACT:      Haryana General  Sales Tax Act, 1973: ss. 15 & I8-State Government Notification  of 1973-’Sun  dried bricks’-Whether ’bricks’-Whether exigible to sales tax.

HEADNOTE:      The Notification  dated 5th  May, 1973,  issued by  the State Government  under s.  18 of  the Haryana General Sales Tax Act authorised levy of tax under s. 15 of the Act at the first point  in respect  of the  named goods, of which brick was  one.   The  appellant,   a  registered  dealer  claimed deduction of  a certain sum out of the gross 1:) turnover in respect of assessment of sales-tax for the accounting period 1981-82, on  the ground  that  he  had  purchased  sun-dried bricks on payment of sales tax under the Act and that amount represented the  sales price  of such  tax paid  bricks, and that a  second set of tax in the hands of the dealer was not exigible. The claim was rejected by the authorities.      The appellant  filed  writ  petition  before  the  High Court, which  rejected his  claim on  the  ground  that  raw bricks did not come within the purview of the notification.      Allowing the appeal in part, ^      HELD: The  notification dated May 5, 1973 issued by the State Government  under s.  18 of  the Haryana General Sales Tax Act, 1973 applied to the sun-dried bricks. [274E]      ’Brick’ is  a generic  term in which both the sun-dried and ovenbaked  varities of  brick  are  included.  Sun-dried bricks  are,   however,  required   to  undergo   a  further treatment, namely,  the burning  process  to  become  bricks proper. They  are thus  an intermediate  stage of  bricks as understood in  common parlance and are goods in the ordinary sense of the term being a commercial commodity. [276G-H; C] 273      Lilavati Bai  v. The  State of  Bombay, [1957] SCR 721; Gulraj  Singh   v.  Mota   Singh,  [1964]  7  SCR  205;  Dy. Commissioner, Sales  Tax, v.  Plo Food  Packed, [1980] 3 SCR 1271 and  Indian Carbon  Ltd. v.  Superintendent  of  Taxes, Gauhati, 11972] 1 SCR 316, referred to.      When sun-dried  brick is purchased on payment of sales- tax and  purchasing dealer burns the same and sells the same for a higher price, sales tax should be leviable on the sale

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price of such bricks. The amount of sales-tax paid when sun- dried bricks  were purchased,  on production  of appropriate declaration can  be deducted  from the  total amount of tax. This would  not prejudice the revenue of the State nor would it bring  about any  additional liability unwarranted by law so far as the dealer is concerned. [277C-E]      In the instant case the bricks which had been purchased as sun-dried bricks were burnt by the appellant. He had thus further treated  the sun-dried  bricks and produced goods of added value. It would not be proper to extend the benefit of total exemption for the turnover of sale of bricks from tax, but it would be appropriate to allow set off of the tax paid at the  time of the purchase of the sun dried bricks, out of the tax  exigible on  the taxable  turnover of burnt bricks. [277F-G]      If it is found that the appellant had paid sales tax on the sun-dried  bricks, the amount of tax then paid should be given credit  and the  balance should be recovered from him. The  Taxing   officer  to  hear  parties  and  come  to  his conclusion afresh. [277H; 274G]      The interest  of the  State would be properly protected if the  impugned notification is changed and so far as brick is concerned  necessary modification  is made. Until that is done, the  State should adopt the modality indicated. [277G- H]

JUDGMENT:      CIVIL APPELLATE JURISDlCTION: Civil Appeal No. 2375(NT) of 1987.      From the  Judgment and  order  dated  4.9.1984  of  the Punjab and  Haryana High  Court in  Civil Writ  Petition No. 2479 of 1984. 274      Anil B. Diwan and M.R. Ramachandran for the Appellant.      S.C. Mahanta,  V.K. Mehta, C.V.S. Rao and Mahabir Singh for the Respondents.      The following order of the Court was delivered:                          O R D E R      Special leave granted.      The appellant  is a registered dealer under the Haryana General Sales  Tax Act, 1973 (’Act’ for short) and is also a licencee under  the Haryana  Control of  Brick Supply order, 1972 (’order’ for short). In respect of assessment of sales- tax for  the accounting period 1981-82, it claimed deduction of a  sum of Rs.1,49,600.92 out of the gross turnover on the ground that  it had  purchased  sun-dried  bricks  from  one Sardool Singh,  a registered  dealer on payment of sales-tax under the  Act and that amount represented the sale price of such  tax-paid   bricks.  The  claim  was  rejected  by  the authorities under  the Act.  In the writ petition before the High Court  the claim  was rejected  on the  ground that raw bricks (i.e. unburnt bricks) did not come within the purview of the  notification of  5th May,  1973, issued by the State Government in  exercise of  power vested under Section 18 of the Act  prescribing levy  of tax  at  the  first  point  in respect of the named goods of which brick was one.      Two questions  have been  placed for our consideration: (i) P  whether as a fact the appellant has paid sales-tax on the purchase  of sun-baked bricks from the seller as claimed and the  appropriate declaration  has been  produced in  the assessment proceedings;  and (ii) whether bricks used in the notification of 1973 covered sun-dried bricks.      So far  as the first question is concerned it is one of

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fact and  both parties  have agreed  that we  may direct the Taxing officer  to hear  parties and  come to his conclusion afresh.  That   situation  would  arise  if  we  accept  the contention of  the assessee  on the  other score.  We shall, therefore, proceed  to examine  the correctness of the other contention. 275      The term  ’Brick’ has  not been defined in the Act. The High Court  has adopted  the definition  given in the order, where it  has been  defined as  ’piece of  burnt clay having geometrical shape  fixed in a kiln’. It is not disputed that the order  has nothing to do with the Act. In the absence of a statutory  definition of  the  term  ’Brick’,  the  common parlance meaning of the word as found in dictionaries has to be accepted.  (See Lilawati  Bai’s case  1957  SCR  721  and Gajraj Singh’s  case [1964]  7  SCR  205.  Counsel  for  the appellant also  relied upon  the decisions  of this Court in the cases  of Dy.  Commissioner,  Sales  Tax.  v.  PIO  Food Packed,  [1980]  3  SCR  1271  and  Indian  Carbon  Ltd.  v. Superintendent of  Taxes, Gauhati,  [1972] 1  SCR  3  16  in support of  his submissions.  According to  Collins  English Dictionary ’brick’  means ’a rectangular block of clay mixed with sand  and fired  in a kiln or baked by the sun, used in building construction’. New Webster’s Dictionary carries the meaning  of   the  word   as:  ’a   block  of  clay  usually rectangular, hardened by the sun or by burning in a kiln and used for  building, paving  etc.’ According  to  the  oxford English Dictionary  ’brick’ means  ’a  substance  formed  of clay, kneaded, moulded, and hardened by baking with fire, or in warm  countries and  ancient times by drying in the sun’. Encyclopaedia Britannica  indicates that  ’after the  bricks are formed,  they must be dried to remove as much free water as possible. Drying, apart from sun-drying, is done in drier kiln with controlled, draft and humidity’.      We have  on record the Schedule of Rates of the Haryana Public Works  Department of  the contemporaneous  time which shows that  while the  rate per thousand of sun-dried bricks was Rs.15,  oven-burnt bricks  of that quantity of the first class cost  Rs.75 five  times more.  The  sun-dried  bricks, though a  form of  brick are  not indeed  the same  as burnt bricks. As  seen above  though they  have many things common with baked  bricks,  they  are  not  a  complete  substitute thereof. A  customer in  the market  would not ordinarily be prepared  to   accept  the  sub-dried  bricks  to  meet  his requirement of bricks for house construction. As was rightly pointed out  by appellant’s counsel sun-dried brick is goods of an intermediate stage.      We are  satisfied that  the High  Court went  in  wrong placing full  reliance on the definition of the term ’Brick’ in the order and. H 276 therefore,  the   proper  perspective   of  the   issue  for determination has  been lost  sight of.  For  brick  making, cleaned clay  and sand  mixed in  desired proportion are put into sized  frames and after the extra substance is removed, the raw  brick is  taken out of the frame and is laid on the field to dry up and become hard. If it intended to make hard bricks, the  same are  stacked into  a kiln  and  adequately heated up  by fire. There are various methods of burning the bricks. If  not burnt,  the sun-dried  bricks are  not  hard enough to  take good  load. Sun-dried  bricks  are  thus  an intermediate  stage   of  bricks  as  understood  in  common parlance and  are goods  in the  ordinary sense  of the term being a commercial commodity.      Section 18  of the  Act authorises the State Government

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by notification  to direct  that in  respect of named goods, tax under  Section 15  of the Act may be levied at the first stage  of   sale  thereof   and  on  the  issue  of  such  a notification, tax on such goods shall be levied accordingly. ’Brick’ under  the notification  is taxed at the first point of sale.  The dealer  claimed deduction  on the basis of the notification by maintaining that he had purchased the bricks from the  manufacturer and  at that  point had paid the tax. Thus a  second set of tax in the hands of the dealer was not exigible. The  reasoning given  by the taxing authorities as also the  High Court cannot be sustained. As the counsel for the appellant pointed that ’brick’ is a generic term; as per the meaning  of the term in common parlance and dictionaries sun-dried bricks are bricks of a class and both varieties of bricks can  to a  considerable extent  be used  for the same purpose as  substitute of  one another.  As the term ’Brick’ covers both sun-dried and oven-baked bricks, and there is no definition in  the Act, the contention of the appellant that sun-dried bricks  are  a  class  of  ’brick’  to  which  the notification under  Section 18  applies cannot be thrown out as wrong.      We have  already  pointed  out  that  though  both  the varieties of brick are included in the generic term ’brick’, the use to which these are put is not the same. We have also pointed out  that there  is a considerable difference in the price. Sun-dried  bricks are  required to  undergo a further treatment, namely,  the burning  process  to  become  bricks proper, when  burnt, bricks  are  sold  at  a  substantially higher price  to meet  different demands  in the market. The appellant after  purchasing sun-dried  bricks has burnt them and sold the same 277 for higher consideration. A      Learned counsel for the State rightly contended that if sun-dried brick is accepted as ’brick’ within the meaning of the notification,  on the  basis of the provision for taxing at the  first point  in regard  to sale of bricks, by paying tax on the low consideration of sun-dried bricks, the dealer would escape  liability of  sales-tax on  the  turn-over  of baked bricks.  Undoubtedly this  would be  the position.  We accordingly suggested  to counsel  for the  State that  this situation should  be appropriately  met and  the interest of the State would be properly protected if the notification in questions  changed   and  so  far  as  brick  is  concerned, necessary modification  is made.  Where sun-burnt  brick  is purchased on  payment of sales-tax and the purchasing dealer (whose assessment  is in issue) burns the same and sells the same for a higher price, sales-tax should be leviable on the sale price of such bricks. The amount of sales-tax paid when sun-dried bricks were purchased on production of appropriate declaration can  be deducted  from the  total amount of tax. This would  not prejudice the revenue of the State nor would it bring  about any  additional liability unwarranted by law so far as the dealer is concerned. The impugned notification would not  serve the  purpose   indicated and  would require amendment. It  is up  to the  State to  take  the  requisite steps.      Now what  remains for  consideration  is:  whether  the appellant would  succeed in  the claim for deductions. It is not disputed  by appellant’s  counsel that the sale price of bricks which had been purchased as sun-dried bricks and sold for the price of Rs.1,49,600.92 were burnt by the appellant. On the  finding that  the appellant  had further treated the sun-dried bricks  and produced  goods of  added value, we do not think  it would be proper to extend the benefit of total

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exemption for  the turn-over of sale of bricks from tax. The notification of the State Government is somewhat misleading; it would  thus be  appropriate to  allow st-off  of the tax paid at the time of the purchase of the sun-dried bricks out of the  tax exigible  on  the  taxable  turn-over  of  burnt bricks. While  setting aside  the judgment of the High Court we would  direct that  until appropriate  amendment  to  the notification is  made, the  State should  adopt the modality indicated above.  In the  instant case  if it  is found that appellant had paid sales-tax to Sardool Singh, the 278 amount of  tax then  paid should  be given  credit  and  the balance should be recovered.      The appeal  is allowed  to the  extent indicated above. Parties shall bear their respective costs. P.S.S.                                       Appeal allowed. 279