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PETITIONER: MARTAND DAIRY & FARM

       Vs.

RESPONDENT: THE UNION OF INDIA & ORS

DATE OF JUDGMENT23/04/1975

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. SARKARIA, RANJIT SINGH GUPTA, A.C.

CITATION:  1975 AIR 1492            1975 SCR  265  1975 SCC  (4) 313  CITATOR INFO :  F          1989 SC 611  (7)  RF         1992 SC 224  (11)

ACT: Central Sales Tax Act 1956-"Sealed Container"-Meaning of.

HEADNOTE: A notification issued under the Central Sales Tax Act,  1956 allowed  exemption  to, among others,  cream  but  excluding "products  sold in sealed containers".  The appellant  sends cream  to  Calcutta  in  sealed  container&  The  sales  tax authorities  held  that the sales were of cream,  that  they were interstate sales but that the exemption extended by the notification  could not be enjoyed by the assessee since  he fell within the area of exclusion contained in the exemption notification. The High Court rejected the writ petition of the  appellant. On appeal to this Court it was contended that the containers were used for bulk mission, that sealing was for  preventing abuse on the way or to avoid pilferage and that the emphasis should be on the "cream" and the container had no  relevance in the context. Dismissing the appeal, HELD: It is not forthe  Court to launch on  obscure  fiscal astrology but merely to construe whathas  been  expressed in plain words. "Sealed container" merely means acontainer which  is  "so  closed  that  access  to  the  contents   is impossible  without breaking the fastening.  The  expression seal in this context does not involve affixture of the  seal of  the seller such as impressing a signet in wax  etc.,  as evidence  or guarantee of authenticity.  An article  may  be regarded  as  put  in  sealed containers  if  it  is  closed securely in any vessel or container by any kind of fastening or  covering  that  must  be broken  before  access  can  be obtained  to  what is packed inside.  This is  the  popular, perhaps the literal, meaning of the expressions used in  the notification.    Maybe   the  State  thought   that   sealed containers would be used only by big manufacturers who  were able  to  bear  the  burden  of  tax;  maybe  administrative convenience in assessing quantities sold induced this  step. [269B-D]

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Commissioner  of  Sales Tax, U.P., v. G. G.  Industries;  21 S.T.C. 63 followed. Govindram  Ramprasad  v. Assessing Authority (Sales  Tax)  8 S.T.C. 407, held inapplicable.

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 1623  and 1624 of 1971. From the Judgment add Order dated the 13th October, 1970  of the Allahabad High Court in O.M. Writ Petition No. 55 and 56 of 1970.  S.  T.  Desai,  Naunit Lal and Miss Lalita  Kohli  for  the appellant. G.  L.  Sanghi,     Girish Chandra and R.  N.  Sachthey  for respondent No. 1. S.   C. Manchanda and O. P. Rana for Respondents Nos. 2-4. 266      The Judgment of the Court was delivered by KRISHNA IYER, J.-Mr. S. T. Desai, counsel for the appellants in both the appeals, correctly assured us that the facts are not  in  dispute, although the legal  inference  bearing  on taxability is very much in controversy. The appellant, who has arrived in this Court by  certificate under  Art. 133(1) (a) of the Constitution, urges before  us that  he is not liable to sales tax under the Central  Sales Tax Act, 1956 (LXXIV of 1956) (for short, the Act) sought to be  levied from him: Admittedly the appellant is  a  leading dairy of Benaras and has been sending cream to Calcutta  for being  converted  into  butter or ghee.   The  long  journey involved   and   the  considerable   quantities   despatched necessarily   called  for  protective   receptacles   during transport.   So  the  cream used to  be  carefully  sent  in canisters  whose  lids  were  sealed  by  the  seller.   The Calcutta  buyers received the cream and paid for it  on  the basis of the ghee/butter recovered from the cream  supplied. Although  there  was  some controversy even  on  the  facts, counsel  on  both sides proceeded on  the  factual  findings recorded  by the Judge (Revisions) who held that  the  sales were  of cream, that they we’re inter-State sales  and  that the exemption extended by Government notification under  the Act  for  cream could not be enjoyed by the assessee  as  he fell within the area of exclusion contained in the exemption notification.  It is appropriate at this stage to  reproduce the  notification,  dated  May 10,  1956,  under  which  the exemption is claimed.  It reads :                "No.  ST-3506/X                    D/10-5-56          Exemption has been allowed to               Milk  and Milk products such as Chhena,  Dahi,               kha,  Butter  and  Cream  but  excluding   (i)               products sold in sealed containers (ii) sweet-               meats and (iii) ghee." This  in  general terms cream is exempted  from  payment  of Central  Sales  Tax by virtue of this  notification  but  it carves out an exception to the exemption.  If the cream were ’sold in sealed containers’ the seller could not come within the  exemption  notification.   We  need  not  go  into  the technique of sealing adopted in this case since it is common ground  now that the cream is put in containers  whose  lids are properly soldered.  The short question is whether  cream sold  in  soldered containers in the circumstances  set  out above  can be described appropriately as ’products  sold  in sealed containers’. Fascinated   we  were  by  the  imaginative  and   realistic

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picturisation  of  the expression ’products sold  in  sealed containers’  projected by Shri S. T. Desai, counsel for  the assessee-appellant  but,  on further reflection,  we  veered round  to the view presented by Sri Sanghi, for  the  State, that  after  all  law  is  not  always  logic  and  taxation considerations  may stem from administrative experience  and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian,  interpretation must prevail. 267 The  High Court has negatived the plea of the  assessee  and since  we  are  inclined to agree  with  its  reasoning,  we express  our  grounds  only briefly,  although  we  may,  in passing,  make reference to two decisions cited, before  us, viz., Govindram Ramprasad v. Assessing Authority (Sales Tax) (1)   and  Commissioner  of  Sales  Tax,  U.P.  v.   G.   G. Industries(2).   Govindram(1)-a decision of the Madhya  Pra- desh  High  Court-is  not germane to  the  question  we  are dealing  with  and therefore we need not  discuss  it.   The latter-The  Commissioner  of Sates  Tax,  U.P.(2)--We  shall discuss as it in some measure, governs the issue before us. The assessee’s main contention is that cream sold in  sealed containers  must bear a ’market’ meaning, if we may say  so, and not be, taken literally.  What Shri Desai urges is  that there  are  many  articles which the consumers  buy  on  the strength of the image projected before them in their  packed state.  For instance, a well-secured box of chocolates, car- ton  of dried fruits or a tin of coffee put out  with  well- known makings, a sealed bottle of whisky gold in such manner that  its  quality,  quantity  and  genuineness  are  easily acceptable--these, going by the consumers’ habit of  looking for  articles  properly  packed or tinned  and  acquiring  a special   value  as  a  unit  of  consumer  commodity,   may legitimately   be  described  as  items  ’sold   in   sealed containers’.   If we consult our housewives or  our  village vendors,  there is no doubt that these illustrations may  be borne  out as apt and may even be supplement  by  other like instances.   A thing is bought loose for a price by a  buyer on  certain assumptions.  But a securely packed or  properly sealed  commodity  sold  by  a  well-known  manufacturer  is purchased  by  the  consumer based on a  sort  of  flavoured considerations.   The assessee’s case is that here no  cream in  sealed  containers as a unit with  an  individuality  is sold.   On the other hand cream qua cream is  bargained  for and despatched.  The canister is used because, ex necessitae large  quantities  of  cream  cannot  be  transported   over distances  without  being  put in  some  container  and  its leakage  and spoilage can be prevented only by soldering  or scaling.   Items sold in containers are usually so sold  for two  reasons  :  (i)  for easy  consumption  by  the  retail consumer  who,  by mere sight, is able  to  distinguish  the particular  ’patented brand, and picks it off the counter  ; (ii) to prevent adulteration or mixing with spurious  stuff. In  the  instant  case  the containers  used  are  for  bulk transmission--like tea chests-and scaling is for  preventing abuse  on  the way or pilferage.  And soldering  is  a  sure method  of sealing.  Further, if the item were not a  liquid like  cream,  but a solid, it could be transported  even  in gunny bags-merely stitched and d without any seal.  If  this view be sound, certainly the Benaras cream dealer is out  of the  liability  zone.   We  do not  examine  the  impact  on taxability  had the receptacles been returned by  the  buyer since it does not arise on the evidence. Shri  Desai further drew our attention to the fact that  the containers  had no particular design nor did they  bear  any

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special  marks  or  have a uniform size.   Thus  the  sealed container bad no connection with (1) 8 S.T.C. 407. (2)  21 S.T.C. 63.                             268 the  bargain  or the stuff sold.  The emphasis  was  on  the cream  and the container had no pertinence in  the  context. In  this  connection, he also referred to s. 8  of  the  Act which  refers to containers and packing material.  There  is force  in  the  argument,  certainly.   But,  as  indicated, judicial  adventure  in interpretation-particularly  in  tax matters,-is  severely  circumscribed, Mr.  Desai  posed  the question  whether  sale  in loose  quantities  and  unsealed containers (in this very case, cream also been sold in  milk cans  which  were  not  sealed  and  had  been  granted  tax exemption)  made  any difference from similar sates  in  old kerosene  tins, the soldering being  no sin  which  attached tax  guilt.  Not that we are oblivious to the force of  this argument,  but we are influenced by the words  whose  normal meaning  should ordinarily guide interpretation.   All  that the  notification  states is that products  sold  in  sealed containers  must sail out of the harbour of exemption.   The simple question is this : Was the sale, of cream ? Yes.  Was it,  when sold, packaged in containers which were  sealed  ? Yes.   On these two affirmative answers the  exclusion  from the exemption operates.  Such is the contention put  forward on  behalf of the taxing authority by Shri  Sanghi,  learned counsel. In  this connection, he drew our attention to  Commissioner of  Sales  Tax, U.P. (supra).  Sikri, J. (as he  then  was), speaking  for  the  Court,  considered  a  somewhat  similar question  of  exemption where sales,-tax dealers  in  cooked food ’other than cooked food sold in sealed containers’ were conferred  exemption, on certain conditions.  The  commodity there  was confectionery sold in sealed containers  and  the High Court upheld the assessee’s case with these words               In   commercial   world   in   such   trades,,               particularly   where   food   materials    are               concerned, it would be seen that the name  and               reputation of the manufacturer by itself is  a               sufficient   evidence  or  guarantee  of   the               quality of the contents.  The most usual  form               or method for furnishing such evidence or gua-               rantee  of  the quality and  quantity  of  the               contents is by way of putting its seal ’by the               manufacturer  in order to secure the goods  in               the  container  in such manner  that  to  have               access  to the contents of the  container  the               seal  so  put has to be destroyed  or  broken.               For  if  it were not so done neither  the  re-               tailer nor the purchaser would be sure whether               the  goods  inside the container as  to  their               quality   and   quantity  are  the   same   as               represented   and  have  not  been   otherwise               adulterated or mixed up by extraneous elements               is  hardly necessary to mention that a  dealer               carrying on the business of selling sweetmeats               and  confectionery on a comparatively  smaller               scale would find it uneconomical  commercially               to put the stuff sold or to be sold in  sealed               containers;   it   is  only  a   large   scale               manufacturer who manufactures and exports  the               confectionery, who would need selling the same               in a container, In our opinion, therefore,  it               is only that class of dealers carrying on  the

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             business  of sale of confectionery  in  sealed               containers  as  explained above who  were  not               intended to be exempted," from the  liability               to pay sales tax on their turnover.                             269 On  appeal, this Court,. after noticing the plausibility  of the  opposite  point  of  view  and  guessing  the  possible administrative  and  other reasons for  the  exclusion  from exemption, held :               "Be  that  as  it may, in the  context  it  is               difficult  to give to the  expression  ’scaled               contained   a  meaning  different   from   the               ordinary dictionary meaning.’ "Sealed  container"  merely means a container which  is  "so closed  that access ’to the contents’ is impossible  without breaking  the  fastening".  The expression  ’seal’  in  this context  does  not involve an affixture of the seal  of  the seller such as impressing a signet in wax etc., as  evidence or guarantee of authenticity.  An article may be regarded as put  in  sealed containers if it is closed securely  in  any vessel  or  container by any kind of fastening  or  covering that must be broken before access can be obtained to what is packed  inside.  This is the popular, perhaps  the  literal, meaning of the expressions used in the notification.   Maybe the State thought that sealed containers would be used  only by  big  manufacturers who were able to bear the  burden  of tax;  maybe administrative convenience in assessing  quanti- ties  sold  induced this step.  It is not for the  Court  to launch  on obscure fiscal astrology but merely  to  construe what has been expressed in plain words.  We should have been happier if the State had furnished the reasons prompting the exclusion  from the exemption.  An intelligent  appreciation of the reason of the rule is an aid to judicial construction but  the  State has not been as alert on this  score  as  we might  have wished.  Why should a sale, if generally  exempt from  tax, being a milk product, forfeit it  merely  because the  wholesome step of sealing the container and  insulating the  food  article  from  contamination,  is  taken   during transit?   But  counsel  for the  State  has  expressed  his inability  to throw light on this aspect or on  the  reasons for the policy.  Had the State’s counter-affidavit been more illuminating  on these questions, it would have performed  a service  to  this Court and to the public and  rendered  the task of judicial construction simpler. With  these observations, we dismiss the appeals  but  there will be no order as to costs in this Court. P.B.R.                                Appeal dismissed. 270