http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE

       Vs.

RESPONDENT: G.S. PAI & CO.

DATE OF JUDGMENT15/10/1979

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. TULZAPURKAR, V.D. PATHAK, R.S.

CITATION:  1980 AIR  611            1980 SCR  (1) 938  1980 SCC  (1) 142  CITATOR INFO :  APL        1981 SC1362  (1)  R          1981 SC1574  (1)  F          1983 SC 493  (3)  E          1990 SC1779  (6)

ACT:      Kerala General  Sales  Tax  Act  1963,  First  Schedule Entries 56  and 26A-Scope  of-Ornaments and articles of gold whether  ’bullion  and  specie’-G.I.  pipes  whether  ’water supply and sanitary fittings’.      Words and  phrases-’Bullion’,  ’specie’  and  ’sanitary fittings’ meaning  of-Kerala General  Sales  Tax  Act  1963, First Schedule Entries 56 and 26A.      Interpretation  of   Statutes-Entries  in   Sales   Tax Legislation-Interpretation of-Words  used by  legislature to be given their popular sense meaning.

HEADNOTE:      On the  questions (1)  Whether the  ornaments and other articles of  gold purchased  by the assessee fell within the description of "Bullion and specie" given in Entry 56 in the First Schedule  of the Kerala General Sales Tax Act 1956 and (2) the  taxability of  the turn-over of sales of G.I. Pipes made by the assessee. ^      HELD: 1.  One cardinal  rule  of  interpretation  while interpreting entries  in Sales  Tax legislation  is that the words used  in the  entries must  be construed  not  in  any technical sense nor from the scientific point of view but as under stood  in common  parlance.  The  words  used  by  the legislature must be given their popular sense meaning, "that sense which  people conversant  with the subject-matter with which the statute is dealing would attribute to it."      [940 H, 941A]      2.  "Bullion"  in  its  popular  sense  cannot  include ornaments or  other articles of gold. "Bullion" according to its plain ordinary meaning means gold or silver in the mass. It connotes  gold or  silver regarded as raw material and it may be either in the form of raw gold or silver or ingots or bars of gold or silver. [941 B]      3. Ornaments  and other  articles  of  gold  cannot  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

regarded as  "bullion" because,  even if old and antiquated, they are  not raw or unwrought gold or gold in the mass, but they represent  manufactured or  finished products  of gold. Nor do  they come  within  the  meaning  of  the  expression "specie". The  word "specie"  means coin,  as  distinguished from paper money". [941 D]      4. The  ornaments and  other articles of gold purchased by the  assessee do  not fall  within Entry 56 and they are, liable to  be taxed  not at  the lesser  rate of  1 per cent applicable to  "bullion and  specie" but at the general rate of 3 per cent under S. 5A read with S. 5(i) (ii) of the Act.                                               [941 G, 943 E]      5. In  State of Uttar Pradesh v. Indian Hume Pipe Ltd., 39 STC  355 it  has been  held by  this Court that ’sanitary fittings’ according  to the  popular sense of the term means such pipes or materials as are used in lavatories urinals or bath-rooms of private houses or public buildings. [942 C] 939      6. The  G.I. Pipes  sold by  the  assessee  would  fall within the description of ’sanitary fittings’ only if it can be shown and the burden of so doing would be on the Revenue, that they were meant for use in lavatories, urinals or bath- rooms. The attention of the assessee and the tax authorities was not drawn to this aspect of the question and no material was brought  on  record  which  would  throw  light  on  the question as  to what  was the  use for  which the G.I. Pipes were meant.  If the G.I. Pipes were heavy and intended to be laid underground for carrying supply of water from one place to another  they would obviously not be ’sanitary fittings’. [942 C-E]      7. The  category of goods in Entry 26A is not described as ’water  supply pipes’  but as  ’water supply and sanitary fittings’. The words ’water supply... fittings’ do not occur in isolation  but they  are in  juxtaposition of  the  words ’sanitary fittings’. The entire expression ’water supply and sanitary fittings’  is one  single expression  and the words ’water supply...  fittings’ must  receive  colour  from  the immediately  following   words  ’sanitary   fittings’.   The expression ’water  supply.....fittings’ in  the  context  in which it  occurs means  such pipes or materials as are meant for use  for supply of water to or in lavatories, urinals or bath-rooms of private houses of public buildings and they do not include  heavy pipes which are laid underground as mains for carrying water supply from one area or place to another. [942 G, 943 A-B]      8. As  far as  G.I. Pipes  sold  by  the  assessee  are concerned the  case  remanded  to  the  Appellate  Assistant Commissioner for the purpose of deciding on the basis of the existing material  as also  such further  material as may be adduced, whether G.I. Pipes sold by the assessee fall within the description  "water supply  and sanitary fittings" so as to be exigible to sales tax at the higher rate of 7 per cent under Entry 26A. [943 F]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2422 of 1978.      Appeal by  Special Leave  from the  Judgment and  Order dated 13-2-1978 of the Kerala High Court in TRC No. 63/76.      M.M. Abdul  Khader, V.J. Francis and M.A. Firoz for the Appellant.      The Judgment of the Court was delivered by      BHAGWATI, J.  The questions  of  law  which  arise  for

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

determination in  this appeal  lie in  a very narrow compass and do  not present  any difficulty  in answering them. They are the  usual type  of questions that arise under the Sales Tax legislation, namely, whether a particular commodity sold or purchased  by the  assessee falls  within  one  entry  or another. The  assessee always  contends that it falls within an entry which attracts lesser rate of tax while the Revenue invariably seeks  to bring  it within the entry attracting a larger rate of tax.      Two  questions   arise  here   for  consideration.  One question is  whether certain ornaments and other articles of gold purchased  by the  assessee with a view to melting them and making new ornaments 940 or other  articles out  of the melted gold fall within Entry 56 in  the First  Schedule of  the Kerala  General Sales Tax Act, 1963 (hereinafter referred to as "the Act") which reads "Bullion and Specie". If the ornaments and other articles of gold purchased  by the  assessee fall within this Entry, the turn-over of  purchases of these goods would be liable to be taxed at  the rate  of 1  per cent,  while it  would have to suffer tax  at the  rate of 3 per cent if these goods do not fall within  the Entry and are taxable under section 5A read with sec.  5(1) (ii)  of the Act. The other question relates to taxation  of the turnover of sales of G.I. Pipes effected by the  assessee and  it raises the point whether G.I. Pipes sold by  the assessee  fall within  Entry 26A  in the  First Schedule to  the Act  which reads "Water Supply and Sanitary Fittings". If  they do not fall within this Entry, the turn- over of  their sales would be liable to be taxed at the rate of 3  per cent  under section  5(1) (ii)  of the Act, but if they do, then the rate of tax would be 7 per cent. The Sales Tax  Officer,   and  in   appeal  the   Appellate  Assistant Commissioner decided both the questions against the assessee and taxed  the turn-over of purchases of ornaments and other articles of gold at the rate of 3 per cent and the turn-over of sales  of G.I.  Pipes at  the rate  of 7  per  cent.  The Tribunal, on  further appeal by the assessee, disagreed with the view  taken by  the tax authorities and holding that the ornaments and  other  articles  of  gold  purchased  by  the assessee were  "Bullion and  specie" within  the meaning  of Entry 56  and G.I.  Pipes sold  by  the  assessee  were  not covered  by   the  expression  "water  supply  and  sanitary fittings" in  Entry 26A,  taxed the  assessee at  the lesser rates as  claimed by  him. The  Revenue thereupon  took  the matter by  way of  revision to  the High Court, but the High Court also  took the  same view and affirmed the judgment of the Tribunal. This decision of the High Court is assailed in the present  appeal preferred by the Revenue after obtaining special leave from this Court.      We  will   first  consider  the  question  whether  the ornaments and  other  articles  of  gold  purchased  by  the assessee fall within the description of "Bullion and specie" given in  Entry 56.  There are two expressions in this Entry which require  consideration; one is "bullion" and the other is  "specie".   Now  there   is   one   cardinal   rule   of interpretation which  has always  to be  borne in mind while interpreting entries in Sales Tax legislation and it is that the words  used in  the entries must be construed not in any technical sense nor from the scientific point of view but as understood in  common parlance.  We must give the words used by the  legislature their  popular-sense meaning "that sense which people conversant with the subject-matter with 941 which the  statute is  dealing would  attribute to  it". The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

word "bullion"  must, therefore, be interpreted according to ordinary parlance  and must  be given a meaning which people conversant with  this commodity  would ascribe to it. Now it is obvious  that  "bullion"  in  its  popular  sense  cannot include ornaments  or  other  articles  of  gold.  "Bullion" according to its plain ordinary meaning means gold or silver in the  mass. It  connotes gold  or silver  regarded as  raw material and  it may  be either  in the  form of raw gold or silver or  ingots or  bars of  gold or  silver. The  Shorter Oxford Dictionary gives the meaning of "bullion" as "gold or silver in  the lump;  also applied to coined or manufactured gold or  silver considered  as raw  material."  So  also  in Jowitt’s Dictionary of English Law and Wharton’s Law Lexicon we find  that the  following meaning  is given  for the word "bullion", "uncoined  gold and  silver in  the  mass.  These metals are called so, either when melted from the native ore and not  perfectly refined,  or  where  they  are  perfectly refined, but  melted down  into bars  or ingots, or into any unwrought body,  of  any  degree  of  fineness".  It  would, therefore, be seen that ornaments and other articles of gold cannot be  regarded as  "bullion" because,  even if  old and antiquated, they  are not  raw or  unwrought gold or gold in the  mass,  but  they  represent  manufactured  or  finished products of gold. Nor do they come within the meaning of the expression "specie".  The word  "specie"  has  a  recognised meaning and  according to Webster’s New World Dictionary, it means "coin,  as distinguished  from paper  money". The  Law Dictionaries also  give  the  same  meaning.  Wharton’s  Law Lexicon and  Jowitt’s Dictionary  of English  Law state  the meaning of  "specie" as  "metallic money" and in Black’s Law Dictionary, it is described as "coin of the precious metals, of a  certain weight  and fineness, and bearing the stamp of the Government, denoting its value as currency" while "Words and Phrases-Permanent  Edition-Vol. 39A" also gives the same meaning. Therefore,  according to  common parlance, the word "specie" means  any metallic  coin which is used as currency and if  that  be  the  true  meaning,  it  is  obvious  that ornaments and  other articles of gold cannot be described as "specie". It  would thus  seem clear  that the ornaments and other articles of gold purchased by the assessee do not fall within Entry  56 and  they are,  accordingly, liable  to  be taxed not  at the  lesser rate  of 1  per cent applicable to "bullion and  specie" but  at the general rate of 3 per cent under section 5A read with Section 5(1) (ii) of the Act.      That takes  us to  the second  question  in  regard  to taxability of  the turnover  of sales  of G.I. Pipes made by the assessee. The Revenue 942 contended that G.I. Pipes fall within the description "water supply and  sanitary fittings"  in Entry  26A so  as  to  be exigible to  tax at  the higher rate of 7 per cent while the assessee  contended  that  they  are  not  covered  by  this expression and  are, therefore,  taxable only  at the lesser rate  of   3%  under   sec.  5(1)   (ii)  of  the  Act.  The determination  of   this  question   turns   on   the   true interpretation of  the  words  "water  supply  and  sanitary fittings". So  far as  the expression "sanitary fittings" is concerned, it  has received  judicial interpretation by this Court in  State of  Uttar Pradesh  v. Indian  Hume Pipe Ltd. where  it  has  been  laid  down  that  "sanitary  fittings" according to  the popular  sense of the term mean such pipes or materials  as are  used in  lavatories, urinals  or bath- rooms of  private houses of public buildings. The G.I. Pipes sold by  the assessee  would,  therefore,  fall  within  the description of  "sanitary fittings"  only if it can be shown

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

and the  burden of  so doing  would be  on the Revenue, that they were  meant for  use in  lavatories, urinals  or  bath- rooms. It does not appear that the attention of the assessee and the  tax authorities  was drawn  to this  aspect of  the question and  hence no  material was brought on record which would throw light on the question as to what was the use for which the  G.I. Pipes  were meant.  If the  G.I. Pipes  were heavy and  intended to  be  laid  underground  for  carrying supply of  water from  one  place  to  another,  they  would obviously not  be "sanitary  fittings". This  is, however, a question which  has  not  been  considered  by  the  Revenue authorities and  the  case  would,  therefore,  have  to  be remanded to  the Appellate  Assistant Commissioner  for  the purpose of  determining whether having regard to the meaning which this  Court has  placed on  the  expression  "sanitary fittings", the  G.I. Pipes  sold by the assessee fall within that description.      But the  Revenue contended  that even if the G.I. Pipes are not  "sanitary fittings"  within  the  meaning  of  that expression, they  would still  fall within  the  description "water supply.....fittings". Now, it must be remembered that the category  of goods  in Entry  26A is  not  described  as "water supply  pipes" but  as  "water  supply  and  sanitary fittings". The  use of the word "fittings" suggests that the expression is  intended to refer to articles or things which are fitted  or fixed to the floor or walls of a building and they may  in a given case include even articles or materials fitted or  fixed outside, provided they can be considered as attached or  auxiliary to  the building  or part of it, such as, for  example, a  pipe carrying  faecal matter  from  the commode to  the sceptic  tank, but they cannot include pipes laid underground 943 for  carrying  water  supply.  Moreover,  the  words  "water supply..... fittings"  do not  occur in  isolation, but they are used  in juxtaposition of the words "sanitary fittings". The entire  expression "water  supply and sanitary fittings" is   one    single   expression   and   the   words   "water supply......fittings"   must   receive   colour   from   the immediately following  words "sanitary  fittings".  We  are, therefore,  of   the  view   that  the   expression   "water supply....fittings" in  the context in which it occurs means such pipes  or materials  as are meant for use for supply of water to  or in lavatories, urinals or bath-rooms of private houses or  public buildings  and they  do not  include heavy pipes which are laid underground as mains for carrying water supply from  one area  or place  to another. Therefore, even for the  purpose of  determining whether  G.I. Pipes sold by the assessee are "water supply.......... fittings", it would have to  be found  as to  what is the purpose for which they were meant  to be  used and  since the question has not been approached from  this point  of view,  we think it desirable that the  case be  sent  back  to  the  Appellate  Assistant Commissioner for  the purpose of determining whether, in the light of  this meaning  placed by  us on  the  words  "water supply.. fittings",  the G.I.  Pipes sold  by  the  assessee could be said to be "water suply........... fittings."      We, therefore,  allow the  appeal, set aside the orders made by  the High  Court, the  Tribunal  and  the  Appellate Assistant Commissioner and hold that so far as the ornaments and other  articles of  gold purchased  by the  assessee are concerned, they  were liable to be taxed at the general rate of 3  per cent  under section 5A read with section 5(1) (ii) of the Act and so far as G.I. Pipes sold by the assessee are concerned, we  remand the  case to  the Appellate  Assistant

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

Commissioner for the purpose of deciding on the basis of the existing material  as also  such further  material as may be adduced, whether G.I. Pipes sold by the assessee fell within the description  "water supply  and sanitary fittings" so as to be exigible to sales tax at the higher rate of 7 per cent under Entry 26A.      There will be no order as to costs of the appeal. N.V.K.    Appeal allowed. 944