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CASE NO.: Appeal (civil)  852 of 2007

PETITIONER: Commnr. Sales Tax, U.P

RESPONDENT: M/s. Bharat Bone Mill

DATE OF JUDGMENT: 20/02/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T  (Arising out of SLP(C) No. 25232/2004)

S.B. Sinha, J.

       Leave granted.

       Whether a ’crushed bone’ can be treated to be ’fertilizer’ is the  question involved in this appeal arising out of a judgment and order dated  20.10.2003 passed by a learned Single Judge of the Allahabad High Court in  Sales Tax Revision No. 1570 of 1990 whereby and whereunder the revision  petition filed by the appellant herein was dismissed.   

       Respondent herein is engaged in manufacture of crushed bone.  It runs  a bone mill for the above-mentioned purpose.   

       The question as to whether crushed bone-meal would come within the  definition of the term "fertilizer" must be considered having regard to some  notifications issued by the State of Uttar Pradesh from time to time.   By a  notification dated 16.07.1956, ’Fertilizers’ other than ’Chemical Fertilizers’  were exempted from payment of sales tax by the State in exercise of its  powers conferred upon it under the U.P. Sales Tax Act, 1948.  However, by  reason of a notification dated 10.3.1970, ’Chemical Fertilizers’ were also  brought within the purview of exemption from payment of sales tax. By a  notification dated 31.03.1976  a taxing entry was introduced in the Schedule  appended to the notification dated 15.11.1971 in terms whereof sale of ’bone  to consumer’ was exigible to sales tax of 6 per cent. Yet, in terms of  7.09.1981, the Schedule appended to the said Act was amended; the relevant  entries being 8 and 10 read as under:- "Sl. No.    Description of goods            Point of tax        Rate of Tax 8.                Bones                   Sale to consumer            6% 10.             Chemical fertilizers      M or I                      5% "                  It is in the aforementioned context, the question as to whether   ’crushed bone’ would answer the description of ’fertilizer’ or not is required  to be considered.  We may notice that the High Court in view of some  decisions rendered by  the Tribunal as also a decision of the learned Single  Judge of the M.P. High Court in Commissioner of Sales Tax, Madhya  Pradesh v. Sagar Bone Mills, Sagar : No. 1 [18 STC 338] opined that  ’crushed bone’ would come within the purview of ’fertilizer’.   Reference  was also made to a decision of a learned Single Judge of the said Court in  CST v. Crusher and Fertilizer Company [1985 UPTC 905].

        Mr. Kavin Gulati, learned counsel appearing on behalf of the  appellant, would submit that the High Court committed a serious error in  arriving at the said conclusion relying on or on the basis of the decisions of  the M.P. High Court in Sagar Bone Mills (supra) and the Allahabad High  Court in Crusher and Fertilizer Company (supra).

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       In Sagar Bone Mills (supra), the Madhya Pradesh High Court stated  the law, thus: "\005It cannot be denied that bone-meal or crushed bones  are "bones of animals" which include powdered bones.  The three entries referred to earlier must be read  harmoniously, and, so read, their effect is clearly to  impose sales tax on bones of animals which include  crushed bones and bone-meal.         4. In coming to the conclusion that the question  whether crushed bone or bone-meal manufactured by the  assessee was "fertilizer" for the purpose of the Sales Tax  Acts should be determined with reference to the  definition of "fertilizer" given in the Fertilizer (Control)  Order, 1957, the Sales Tax Tribunal altogether  overlooked the settled rules of construction about the  meaning of words used in different statutes. It is firmly  settled that the interpretation or definition clause  occurring in a statute can be used only for the purpose of  interpreting words appearing in that statute and not for  the purpose of interpreting words appearing in other  statutes. To take a word bearing a peculiar meaning in a  particular Act and to clothe that word with the same  meaning when found in different context in a different  Act is a fallacious process of interpretation. The Tribunal  was, therefore, not justified in pressing into service the  definition of "fertilizer" given in the Fertilizer (Control)  Order, 1957-a statutory provision, the scope and object of  which is altogether different from the Sales Tax Act. The  Tribunal was, therefore, in error in remanding the matter  to the Sales Tax Officer for a fresh decision after  determining whether the produce manufactured by the  assessee was or was not a "fertilizer" according to the  definition of that term given in the Fertilizer (Control)  Order, 1957."

       The said view was approved by a Full Bench of the said Court in The  Ratlam Bone & Fertilizer Co. v. The State of Madhya Pradesh and Another  [35 STC 132].

       In  Yasin Bone Mills v. State of U.P. and Another [46 STC 112 : 1980  UPTC 450], the Allahabad High Court considered a report of the Directorate  of Marketing and Inspection, Ministry of Food and Agriculture, Government  of India, in terms whereof four products were obtained from bones known  as: (1) Bones sinews, (2) Crushed bones, (3) Bone grits, and (4) Bone meal.   The characteristics of the said four products from bones are said to be  different.  The learned Judges also referred to the Standard Cyclopedia of  Modern Agriculture, wherein a distinction had been drawn between ’bone  meal’ and ’crushed bone’, on the basis whereof it was opined :

         " 6.  As noted above in the instant case the assessee  is dealing in crushed bones and not bone-meal.   The  distinction between the two-commodities is quite clear on  the basis of the information contained in the report of the  Directorate of Marketing and Inspection, Ministry of  Food and Agriculture, Government of India and the  Standard Cyclopaedia of Modern Agriculture referred to  above.  It is not possible, therefore, to hold that crushed  bones are fertilisers.  Apart from this the assessee himself  does not appear to have been making sales of crushed  bones as fertilisers.   This commodity is not sold by the  assessee in the country and the turnover of the years  under consideration goes to show that almost the whole  of it was in the form of exports to foreign countries.  As  noted above crushed bones are meant for use as raw  material in the manufacture of glue and gelatine, the

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industries which have not developed to any appreciable  extent in India and, hence, this commodity has to be  exported to countries outside India."  

       Therein reliance was placed on the opinions of some experts to  establish ’crushed bone’ and ’fertilizers’.   The Court, however, found the  report of the Directorate of Marketing and Inspection more creditworthy,  opining that bone-meal and not crushed bones can be treated as fertilizers.    

       Moreover, it is well-known that the question as to whether a  commodity would be exigible to sales tax or not must be considered having  regard to its identity in common law parlance.  If, applying the said test, it is  to be borne in mind that if one commodity is not ordinarily known as  another commodity; normally, the provisions of taxing statute in respect of  former commodity which comes within the purview of the taxing statute  would be allowed to operate.  In any event, such a question must be  determined having regard to the expert opinion in the field.  We have  noticed hereinabove the difference between ’bone meal’ and ’crushed bone’.   Different utilities of the said items has also been noticed by the Allahabad  High Court itself.  The High Court or for that matter, the Tribunal did not  have the advantage of opinion of the expert to the effect as to whether  crushed bones  can be used only for the purpose of fertilizer or whether  crushed bones are sold to the farmers for use thereof only as fertilizer.

       For the reasons aforementioned, we set aside the orders of the  Assessing Authorities including that of the High Court.  However, we intend  to leave the question open for subsequent cases, if any.            There is another aspect of the matter, notice whereof must be taken by  us, viz., the Assessing Authority proceeded to determine the taxability in  view of the decisions, as were prevailing.  It sought to rectify its order  keeping in view the subsequent decisions.  The question which arose for  consideration before the Tribunal was as to whether the Assessing Authority  could pass such an order having regard to the power of rectification in terms  of Section 22 of the Act.    

       This aspect of the matter has been considered in The Income \026 Tax  Officer, Alwaye v. The Asok Textiles Ltd., Alwaye [(1961) 3 SCR 236]  wherein it was held that the provisions for rectification of "mistakes  apparent on the record" cannot be equated with a power of a civil court to  review its own order as envisaged under Order XLVII Rule 1 of the Code of  Civil Procedure stating:

"The learned Judges of the High Court seem to have  fallen into an error in equating the language and scope of  s. 35 of the Act with that of O.47, r.1, Civil Procedure  Code.  The language of the two is different because  according to s. 35 of the Act which provides for  rectification of mistakes the power is given to the various  income-tax authorities within four years from the date of  any assessment passed by them to rectify any mistake  "apparent from the record" and in the Civil Procedure  Code the words are "an error apparent on the face of the  record" and the two provisions do not mean the same  thing."

       The appeal is allowed with the aforementioned observations.  No  costs.