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PETITIONER: COMMISSIONER OF SALES TAX, MADHYA PRADESH

       Vs.

RESPONDENT: JASWANT SINGH CHARAN SINGH

DATE OF JUDGMENT: 23/02/1967

BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. MITTER, G.K.

CITATION:  1967 AIR 1454            1967 SCR  (2) 720  CITATOR INFO :  E          1973 SC  78  (5)  F          1973 SC2440  (3)  R          1974 SC1362  (3)  R          1977 SC 153  (7)  R          1977 SC 597  (34)  R          1981 SC1079  (4)  D          1985 SC1201  (12)  R          1985 SC1387  (11)  F          1985 SC1644  (8)  RF         1989 SC 516  (27)  R          1990 SC1579  (39)  RF         1991 SC 583  (29)

ACT: Madhya  Pradesh  General  Sales  Tax  Act,  1958--  Charcoal whether  ’coal’ within meaning of Entry I Part III  of  Sch. II to the Act-rate of tax applicable.

HEADNOTE: The  respondent  was a dealer in firewood and  charcoal.  in ings  for assessment of sales tax under the Madhya  Pradesh, General  sales  Tax Act. 1958, the respondent  claimed  that charcoal  was ’coal’ within the meaning of Entry I  of  Part Ell  of the Schedule II to the Act and fore was  taxable  at the rate of 2%.  The sales tax authorities however held that charcoal was not ’coal’ and was taxable at 4% as it fell the rwsiduary  Entry I of Part VI of Schedule II.  The Board  of India  the   High  Court held in favour  of  the  respondent relying  on the dictionaty meaning of the word ’coal’.   The Commissioner of Salex tax appealed. It  was  urged on behalf of the appellant that  coal  wag  a mineral  while charcoal was manufactured from products  like wood  and  other things by human agency  and  therefore  the dictionary  meaning  ought  not to have  been  relied  upon. Reliance  was also placed on legislative practice which  had treated coal and charcoal as different items. In interpreting items in statutes like the Sales Tax  resort should be had not to the scientific or technical meaning  of the  terms used but to their popular meaning or the  meaning attached ter them by those dealing in them, that is to  say, in  their  commercial sense.  Viewed from this angl  both  a merchant dealing in coal and a consumer wanting to  purchase

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it would reaard coal not in its geological sense but in  the sense  as ordinarily understood and would include  ’charcoar in  the term ’coal’.  Under the Entries.’ ’coal’ as well  as ’firewood’  were  taxed  at  2%.  It  could  not  have  been intended  to tax charcoal alone at 4%.  Entry I of Part  III of  Sch.   II  must therefore be read broadly  and  held  to include  charcoal.   It  was  not  possible  to  adopt   its connotation from other statues passed for different purposes or in the context of different objects.[713 B; 725 A-E;  726 c] Ramavtar  Budhaiprasad etc. v. Assistant Sales Tax  Officer, Akola,  [1962]  1  S.C.R. 279 and His Majesty  the  King  v. Planters  Nut and Chocolate Company Limited,  [1951]  C.L.R. (Ex.) 122, relied on. Attorney-General  v.  Winstanley,  (1831) 2  D  &  Cl.  302, Grenfell  v. Inland Revenue Commissioner, (1876) 1 Ex-.   D. 242  Holt & Co. v. Collyer, (1881) 16 Ch.  D. 718,  referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2011  of 1966. Appeal  by special leave from the judgment and  order  dated February 23, 1966 of the Madhya Pradesh High Court in M.C.C. No. 169 of 1965. 721 B. Sen and L N. Shroff  for the appellant. Rameshwar Nath and Mohinder Narain, for the respondent. The Judgment of the Court was delivered by Shelat, J. The appellant has been  carrying on business  and s  a dealer in firewood and charcoal.  For the  period  from March  29, 1962 to April 29, 1962, he was assessed to  sales tax  under s. 18(6) of the Madhya Pradesh General Sales  Tax Act, 1958 as he did not have any registration certificate in respect  of this period.  The Additional Sales Tax  Officer, Ujjain, and the Additional Appellate Assistant Commissioner, Indore,  both held that charcoal in which the appellant  was dealing  was not covered by Entry I of Part III of Sch.   II to the Act, but that it fell under the residuary Entry I  of part VI of that Schedule; and consequently was liable to  be assessed at the rate of 4 % of the price of charcoal.  In  a further  appeal  before  the Board of  Revenue,  the  Board, relying  on  the dictionary meaning of the  word  ’coal’  as given  in Blackies’ concise Dictionary, held  that  charcoal would be included in the term ’coal’, and, therefore,  Entry I  in  Part  III  of Schedule II would  Apply  and  the  tax chargeable  would  be at 2 % only.  At the instance  of  the Commissioner of Sales Tax, the Board referred the  following question to the High Court               "Whether charcoal is covered under Entry I  of               Part  III  of  Sch. 11 to  the  M.P.  General.               Sales  Tax  Act, 1958, and is taxable  at  the               rate of 2 % or will be taxable at the rate  of               4  % under Entry I of Part VI of Sch.   II  to               the M.P. General Sales Tax Act, 1958 ?" The High Court held that while construing entries in a  sta- tute  like the Sales Tax Acts, the court should  prefer  the popular  meaning of the terms used in such entries  and  not their  dictionary  meanings and that so  construed  charcoal would  be  included in the word  ’coal’.   Consequently,  it answered   the  question,  in  favour  of  the   respondent. According  to the High Court, charcoal would be  covered  by Entry I of Part III of Sch. 11 and was taxable at 2 %. Hence

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this appeal by special leave. Entry I of- Part III of Sch. 11 reads as follows "1. Coal, including coke in ill its forms..2 per cent" Entry I of Part VI of the said Schedule reads as follows "I  All other goods not included in Schedule 1 or any  other part of this Schedule. 4 per cent" We  may also reproduce Entry 8 of Part III of  Schedule  II2 percent" which is "8. Firewood 722 The  meaning given to the word ’Coal’ in  Blackies’  Concise Dictionary,  New  Edition, page 134 relied on by  the  Board reads as follows :-               "Coal  :  Kol  :  A piece  of  wood  or  other               combustible  substance  burning  or   charred;               charcoal; a cinder; now, usually a solid black               substance found in the earth, largely employed               as fuel, and formed from vast masses of  vege-               table  matter deposited through the  luxurious               growth  of  plants  in former  epochs  of  the               earth’s history." The  Shorter Oxford English Dictionary at pages 330 and  331 gives the meaning of coal as follows :-               "1. A piece of carbon glowing without a flame.               2.  A piece of burnt wood, etc. that is  still               capable  of combustion without flame,  cinder,               ashes, 3. Charcoal. 4. A mineral, solid, hard,               opaque  black or blackish, found in  seams  in               the  earth,  and  largely  used  as  fuel;  it               consists of carbonized vegetable matter".               At  page  293, the said Dictionary  gives  the               meaning of charcoal as follows               "The  suggestion that Char=chare v. or sb.  as               if  turn  coal, i.e. wood  turned  into  coal,               lacks  support. 1. The black  porous  residue,               consisting  (when  pure)  wholly  of   carbon,               obtained  from partly burnt wood, bones,  etc.               Hence  specified  as wood,  vegetable,  animal               etc.". The   Webster’s  New  International  Dictionary  gives   the following meaning of charcoal at page 452 :-               "(Char to burn, reduce to coal; Coal);               1.A dark coloured or black porous form  of               carbon  prepared  from  vegetable  or   animal               substance, as that made by charging wood in  a               kiln,   retort,  etc.,  from  which   air   is               excluded." According  to these Dictionaries ’coal’ would appear to  in- clude ’charcoal’.  The contention of the respondent was that charcoal  is  one of the species of  coal,  and,  therefore, would be covered by Entry I of Part 111, and, therefore, the answer given by the High Court is correct.  Counsel for  the State, however, raised three contentions; (1) that coal  and charcoal are different products, one being a mineral product and the other prepared from wood and other articles by human agency,  and,  therefore, the term ’coal’  would  not  cover charcoal;  (2)  that  while  construing  such  entries,  the dictionary  meaning should not be preferred to  the  popular meaning or the meaning in the commercial sense; and (3) that the Legislative policy in reference to the term ’coal’                             723 shows that it is not used by the Legislature in India so  as to include charcoal. Now, there can be no dispute that while coal is  technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things.   But

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it  is  now well-settled that while  interpreting  items  in statutes  like the Sales Tax Acts, resort should be had  not to  the scientific or the technical meaning of  such  terms’ but to their popular meaning or the meaning attached to them by  those  dealing  in  them,  that  is  to  say,  to  their commercial   sense.  In  Ramavatar  Budhaiprasad   etc.   v. Assistant  Sales Tax Officer, Akola,(1) the petitioners  who were  dealers  in betel leaves were assessed  to  sales  tax under  the  C.P.  and  Berar  Sales  Tax  Act,  1947.   They contended that under section 6 read with the Second Schedule of  the  Act  betel  leaves were  not  taxable.   Section  6 provided  that  articles  mentioned in  that  Schedule  were exempt  from  gales  tax and  articles  not  mentioned  were taxable.   There  were two items in the,  Schedule,  namely, item  6,  "vegetables",  and item 36,  "betel  leaves",  but subsequently  item.  No. 36 was deleted by an  amendment  of the  Act.  This Court held that the use of two distinct  and different  items i.e., ’vegetables’ and ’betel  leaves’  and the  subsequent  removal of betel leaves from  the  Schedule were  indicative  of  the  Legislature’s  intention  of  not exempting  betel leaves from taxation.  The Court laid  down that  the  word  ’vegetable’ must be interpreted  not  in  a technical  sense but in its popular sense as  understood  in common  language i.e., denoting a class of vegetables  which are grown in a kitchen garden or on a farm and are used  for the  table.   The same principle was also laid down  in  His Majesty  the  King  v. Planters Nut  and  Chocolate  Company Limited.(2).  The question there was whether salted  peanuts and cashew nuts fell within the category of either fruits or vegetables.   A considerable expert opinion was led in  that case, but the court ultimately found that the Parliament  in enacting  the, Excise Tax Act, 1927, Part XIII and  Schedule III was not using words which were applied to any particular science  or  art and, therefore, the words used  are  to  be construed  as  they are understood in common  language.   It also  held  that what constitutes a ’fruit’  or  ’vegetable’ within  the  meaning of the Excise Tax.  Act is  what  would ordinarily  in  matters of commerce in  Canada  be  included therein  and not what would, be a botanist’s  conception  of the subject matter.  If a statute uses the ordinary words in every day use, such words should be construed according  to- their popular sense.  At page 128 of the Report Cameron,  J. observed,  "The  object of the Excise Tax Act  is  to  raise revenue,  and for this purpose to class substance  according to  the general usage and known denominations of trade.   In my  view, therefore, it is not the botanist’s conception  as to what constitutes a (1)  [1962] 1 S.C.R. 279. CI/67-17. (2), [1951] C.L.R. 122. 724 ’fruit’ or ’vegetable’ which must govern the  interpretation to be placed on the words, but rather what would  ordinarily in  matters  of.  commerce in Canada  be  included  therein. Botanically,  oranges and lemons are berries, but  otherwise no one would consider them as such." This rule was stated as early  as  1831  by Lord Tenterden  in  Attorney-General  v. Winstanley(1).   Similarly,  in Grenfell v.  Inland  Revenue Commissioner(2)  Pollock,  D. observed, "that if  a  statute contains  language which is capable of being construed in  a popular sense such statute is not to be construed  according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense,  meaning of  course, by the words ’popular-sense’, that  sense  which people  conversant  with the subject-matter with  which  the

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statute  is dealing would attribute to it.". But "if a  word in its popular sense and read in an ordinary way is  capable of   two  constructions,  it  is  wise  to  adopt   such   a construction  as is based on the assumption that  Parliament merely  intended to give so much power as was necessary  for carrying  out  the objects of the Act and not  to  give  any unnecessary powers.  In other words, the construction of the words  is to be adapted to the fitness of the matter of  the statute"., On the other hand, as Fry, J. said in Holt &  Co. v.  Collyer(3) "If it is a word which is of a  technical  or scientific character then it must be construed according  to that which is its primary meaning, namely, its technical  or scientific meaning." Our  attention was drawn to the decision in K. V. Varkey  V, Agricultural  Income  Tax  and  Rural  Sales  Tax   Officer, Peelmedu and others(4), where green leaves plucked from  tea bushes  were  held to fall under the word ’tea’.   But  this decision  turned on the definitions of turnover in s.  3  of the  Travancore General Sales Tax Act, XVIII of  1124  which while  including  sales of  agricultural  ,or  horticultural produce included ’tea, coffee, rubber’ etc. in the turnover. The  court held there that ’tea’ was not in the  statute  in the  sense in which it is used in commerce but in the  sense of  a  product of plant life, and, therefore,  green  leaves plucked from tea plants were covered by the term ’tea. The result emerging from these decisions is that while cons- truing  the word ’coal’ in Entry I of Part III of Sch.   II, the test that would be applied is what would be the  meaning which persons dealing with coal and consumers purchasing  it as  fuel  would give to that word.  A sales tax  statute  is being  one levying a tax on goods must in the absence  of  a technical  term or a term of science or art, be presumed  to hive used an ordinary term as coal according to the  meaning ascribed ’to it in common parlance.  Viewed (1)  11831] 2 D & Cl. 302. (3)  [1881]16 Ch.  D. 718,720. (2)  [1876] I Ex-D. 242,248. (4)  [1954] S S.T.C. 384. 725 from  that  angle  both a merchant dealing  in  coal  and  a consumer wanting to purchase it would regard coal not in its geological  sense but in the sense as ordinarily  understood and would include ’charcoal’ in the term ’coal’.  It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal and  charcoal; otherwise,  both of them would in ordinary parlance as  also in their commercial sense be spoken as coal. There is another aspect also from which Entry I of Part  III may be considered.  Section 14 of the Central Sales Tax Act, 1956  declares certain goods as goods of special  importance in  inter-State  trade or commerce.  One of these  is  ’coal including coke in all its forms’. Section  15 of  that  Act provides that the State Legislatures in theirrespective sales tax laws can impose only 2 % tax on these goods.That is  why in Entry I of Part III ’coal’ is stated  to  include ’coke in all its forms’, and coal including coke in all  its forms  is  charged  at  2 %  tax.   The  State  Legislature, however,  knew or must be presumed to know that firewood  is also  used by the people as fuel, but would not fall  within that  Entry,  and, therefore, provided 2 % tax on  it  by  a separate  entry, namely, Entry 8 in Part III.  Having  taxed coal and firewood at 2 %, it does not appear to be  possible that the Legislature deliberately left out charcoal from the connotation of the word ’coal’ and left it to be charged ,it 4%  under the residuary Entry 1 in Part VI.  The  object  of

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the  Legislature  clearly was to tax coal  and  firewood  as articles  used as fuel and did not make a separate entry  in regard  to  charcoal  as  it must  be  aware  that  coal  is understood  in ordinary and commercial sense  would  include charcoal.  Had that not been so, instead of leaving it to be dealt with under the residuary item, it would have enacted a separate entry just as it did in the case of firewood  which it  knew  would not in its ordinary meaning fall  under  the term  ’coal’.  In this view, the contention of  counsel  for the State must be rejected. Counsel then relied upon s. 5 of the Colliery Control Order, 1945, in order to show that the Legislature there had  dealt with  coal  in its strict and technical  meaning.   He  also relied  upon certain other statutory provisions with a  view to  show that the Legislature has all along been  using  the word ’coal’ as a mineral product only.  The Colliery Control Order  deals with collieries and obviously,  therefore,  the term  ’coal’  there is used as a mineral product.  It  is  a well-settled  principle that in construing a word in an  Act motion  is necessary in adopting a meaning ascribed to  that word in other statutes.  As Lord Loreburn stated in  Macbeth v.   Chislett,(1)  ’it  would  be  a  new  terror   in   the construction  of Acts of Parliament if we were  required  to limit a word to an unnatural (1)  [1910] A.C. 220.224. 726 sense  because  in  some Act which is  not  incorporated  or referred  to such an interpretation is given to it  for  the purposes of that Act alone’.  The strict sense in which such a  word  is  to  be  found  in  another  statute  may   mean the.etymological  or scientific sense and would not  in  the context of another statute be applicable.  From the Colliery Control  Order,  1945 or the other provisions to  which  our attention  was drawn, it would neither be possible nor  safe to  adopt  the  meaning of the word ’coal’  given  in  those provisions  for the purposes of the Act under  construction. Nor  can  we  infer  that  there  is  a  Legislative  policy consistently followed by the Legislature merely because  the word  ’coal’ has been used as meaning a mineral  product  in the  context of these statutes, It would not, therefore,  be possible  to discard the meaning of the word ’coal’ in  this statute as understood in its commercial or popular sense and to adopt its connotation from other statutes passed for dif- ferent purposes or in context of different objects. We  agree with the meaning of the word ’coal’ given  by  the High  Court and hold that charcoal would be taxable  at  the rate of 2 % only. The appeal is consequently dismissed with costs. Appeal dismissed. 727