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PETITIONER: STATE OF UTTAR PRADESH

       Vs.

RESPONDENT: M/S. KORES (INDIA) LTD.

DATE OF JUDGMENT18/10/1976

BENCH: SINGH, JASWANT BENCH: SINGH, JASWANT KHANNA, HANS RAJ

CITATION:  1977 AIR  132            1977 SCR  (1) 837  1976 SCC  (4) 477  CITATOR INFO :  D          1985 SC1201  (12)  RF         1986 SC 386  (6)  RF         1986 SC1730  (7)  R          1988 SC2223  (13)

ACT:         U.P.  Sales Tax Act, 1948, s. 3-A, Notification issued  und-         er----Rule  for constructing words--Whether carbon paper  is         taxable  as ’Paper’--Whether ribbon is accessory or part  of         typewriter.

HEADNOTE:          The  Governor of U.P. issued a Notification  under  Section         3-A  of  the  U.P. Sales Tax Act, 1948, and  the  Sales  Tax         Officer (Section IV) Kanpur, ordered the respondent  company         to pay tax on the turnover of’ carbon paper at 6%, and  that         of  ribbon at 10%, as per entry 2 of the Notification.   The         respondent  challenged the order in a writ  petition  before         the High Court. contending that carbon paper was not ’paper’         with  the meaning of entry 2 and its turnover was  therefore         to be assessed at the rate of 2% prescribed for unclassified         goods,  and that ’ribbon’ being an accessory and not a  part         of the typewriter, could only be taxed at the rate of 6% and         not  10%.  The High Court allowed the writ and  quashed  the         levy.             The appellant contended that carbon paper does not  lose         its character as paper in spite of being subjected to chemi-         cal  processes, and that ribbon is not an accessory  but  an         essential part of the typewriter.         Dismissing the appeal the Court,             HELD  :(1) A word which is not defined in  an  enactment         has  to  be understood in its popular and  commercial  sense         with reference to the context in which it occurs.  It has to         be  understood  according to the well established  canon  of         construction  in the sense in which persons dealing  in  and         using the article understand it. [839 A-B]             Attorney  General  v. Winstanley (1831) 2  Dow  &  Clark         302:(1901)  6  E.R.  740, and Grenfell  v.  Commissioner  of         Inland Revenue (1876)1 Ex. D. 242 at p. 248 applied.             (2)  The  word ’paper’ is understood as meaning  a  sub-         stance which is used for bearing writing or printing, or for         packing.  or for drawing on. or for decorating, or  covering

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       the  wails. Carbon paper cannot be used for  these  purposes         but is used for making replicas or carbon copies, and cannot         properly be described as paper. [839 G, 840 A-B]             K. Kilburn & Co. Ltd. v. Commissioner of Sales Tax, U.P.         Lucknow  (31 S.T.C. 625), Sree Rama Trading Company v. State         of Kerala (28 S.T.C.  469).     state of Orissa v. Gestetner         Duplicators (P) Ltd. (33 S.T.C. 333 ) Commissioner of  Sales         Tax, U.P.v.S.N. Brothers (31 S.T.C. 302) applied.         (3) The above mentioned rule of construction equally applies         to  ribbon. an accessory and not a part of  the  typewriter,         though  it may not be possible type out any  matter  without         it. [841 D-E]         State  of  Mysore v. Kores (India) Ltd. (26 S.T.C.  87)  ap-         proved.

JUDGMENT:              CIVIL  APPELLATE JURISDICTION: Civil Appeal   No.   1773         of 1971.             (From  the  Judgment and order dated  20-2-1970  of  the         Allahabad  High  Court  in Civil  Misc.  Writ  Petition  No.         2943/69)         S.C. Manchanda and O.P. Rana, for the Appellants.             V.S.  Desai,  P.B. Agarwala and B.R. Agarwala,  for  the         Respondents.         838         The Judgment of the Court was delivered by             JASWANT SINGH, J.---This appeal by certificate which  is         directed  against the judgment and order dated February  20,         1970, passed by the High Court of Judicature at Allahabad in         writ petition No. 2943 of 1969 raises two interesting  ques-         tions  viz.  (  1 ) whether carbon paper  is  paper  falling         within the purview of the word ’paper’ as used in serial No.         2  of Notification Ng. ST-3124/X-1012(4)-1964 dated July  1,         1966, issued by the Governor of Uttar Pradesh in exercise of         the power vested in him under section 3-A of the U.P.  Sales         ’Fax Act, 1948 (U.P. Act No. XV of 1948) so as to be  liable         to  sales tax at the point and at the rate specified in  the         Schedule  to the Notification and (2) whether ribbon  is  an         accessory or a part of the typewriter.             It appears that the respondent which is a company incor-         porated  under  the Indian Companies Act dealing  in  carbon         paper,   typewriter,  ribbon, stepler machines  and  stepler         pins,  despatches   the said goods from its head  office  at         Bombay to its branch office at Kanpur wherefrom sales there-         of  are effected in the State of Uttar Pradesh.  During  the         course of the assessment proceedings for the assessment year         1956-57, the respondent claimed that carbon paper not  being         paper  falling  within  the ambit of Entry No.  2   of   the         Schedule  to  the aforesaid Notification but  a  specialised         article   used for copying purposes, its turnover had to  be         assessed at the rate of 2 per cent prescribed for  unclassi-         fied  goods and not at  the rate  of 6 paise per rupee  i.e.         6% prescribed in the aforesaid Notification. The  respondent         further  claimed that ribbon being an accessory anti  not  a         part of the typewriter, its turnover could not be  subjected         to  sales tax at the rate of 10% prescribed inter  alia  for         typewriters   and   parts  thereof   by   Notification   No.         ST-1738/X-I012-1963  dated  June  1, 1963.   The  Sales  Tax         Officer, (Section IV), Kanpur, did not accede to the conten-         tions  of the respondent and holding that carbon  paper  re-         mained  paper even after  going  through   certain  chemical         processes  and  that ribbon was a part  of  the  typewriter,         taxed the turnover of carbon paper for the period commencing

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       from July 1, 1966, to the end of March, 1967 at 6% and  that         of ribbon at 10%.  He, however, taxed the turnover of carbon         paper  for the period April 1, 1966 to June 30, 1966 at  2%.         The  validity and correctness of this order in so far as  it         related to the levy of tax on carbon paper at 6% and  ribbon         at  10%  was challenged by the respondent by  means  of  the         aforesaid  writ petition before the High Court at  Allahabad         which  by its  aforesaid  judgment  and  order  allowed  the         same and quashed the levy.  Hence this appeal.             Appearing  in support of the appeal, Mr.  Manchanda  has         assailed  the reasoning and approach of the High  Court  and         has  vehemently  urged that carbon paper does not  lose  its         character  as paper even after being subjected  to  chemical         processes and that ribbon is not an accessory but an  essen-         tial part of the  typewriter.  We  have carefully considered         the  submission  made by Mr. Manchanda  but  find  ourselves         unable to accept the same.         839             It  is well settled that a word which is not defined  in         an enactment has to be understood in its popular and commer-         cial sense with reference to the context in which it occurs.             In  Attorney-General v. Winstanley (1),  Lord  Tenterden         started as follows:                             "Now,  when we look at the words  of  an                       Act  of Parliament, which are not  applied  to                       any  particular  science  or art,  we  are  to                       construe them as they are understood in common                       language."                           In  Grenfell  v. Commissioners  of  Inland                       Revenue (2) Pollock, J, pointed out:                             "As  to tile construction of  the  Stamp                       Act,  I think it was very properly urged  that                       the  statute is not to be construed  according                       to  the  strict or technical  meaning  of  the                       language contained in it, but that it is to be                       construed  in its popular sense,  meaning,  of                       course,  by  the words  ’popular  sense’  that                       sense  which people conversant with  the  sub-                       ject-matter with which the statute is  dealing                       would attribute to it."             The  word  ’paper’ admittedly not  having  been  defined         either  in  the U.P. Sales Tax Act, 1948 or the  Rules  made         thereunder, it has tO be understood according to the  afore-         said well  established canon of construction in the sense in         which  persons dealing in and using the  article  understand         it.   It is, therefore, necessary to know what is  paper  as         commonly or generally  understood.  The  said word which  is         derived  from  the  name of reedy plant  papyrus  and  grows         abundantly  along  the Nile river in Egypt is  explained  in         ’The  Shorter  Oxford English Dictionary (Volume  2)  (Third         Edition) as "a substance composed of fibres interlaced  into         a compact web, made from linen and cotton rags, straw, wood,         certain grasses, etc., which are macrated into a pulp, dried         and  pressed; it is used for writing. printing,  or  drawing         on,  for  wrapping things in, for covering the  interior  of         wails, etc."             In  ’Encyclopaedia  Britannica’,   (Volume  13),   (15th         Edition),  ’paper’  has been defined as the  basic  material         used  for  written communication and  the  dissemination  of         information."             In the Unabridged Edition of "The Randon House Dicition-         ary  of  the English Language", the word  ’paper’  has  been         defined as "a substance made from rags, straw wood’ or other         fibrous  material,  usually  in thin sheets,  used  to  bear         writing or printing or for wrapping things, decorating walls

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       etc."             From the above definitions, it is clear that in  popular         parlance,  the word ’paper’ is understood as meaning a  sub-         stance  which is used for bearing, writing, or printing,  or         for packing, or for drawing on, or for decorating, or cover-         ing the walls.   Now carbon paper which is manu         (1) [1831] 2 Dow & Clark 302=(1901) 6 E.R. 740.         (2) [1876] 1 Ex.D. 242 at 248.         840         factured  by coating the tissue paper with a  thermo-setting         ink (made to a liquid consistency) based mainly on wax,  non         drying oils, pigments and dyes by means of a suitable  coat-         ing  roller and equalising rod and then passing  it  through         chilled rolls cannot be used for  the aforesaid purposes but         is  used. according to ’The Randon House Dictionary  of  the         English Language’ between two sheets of plain paper in order         to  reproduce  on the lower sheet that which is  written  or         typed  on  the upper sheet i.e. making  replicas  or  carbon         copies cannot properly be described as paper.             It  will be well at this stage to refer to a  few  deci-         sions which confirm our view.             In   Kilburn & Co. Ltd.  v.  Commissioner of  Sales  Tax         U.P.,  Lucknow(I)  a  Bench of Allahabad  High  Court  while         examining the very same entry in the Notification with which         we  are  concerned  in the instant  case  and  holding  that         "Ammonia paper and ferro paper used for obtaining prints and         sketches of site plans are not paper us understood generally         and,  therefore, will not come within the expression  ’paper         other  than hand-made paper’ as used in Notification No.  ST         3124/X-1012(4)  dated 1st July, 1966, issued  under  section         3-A of the U.P. Sales Tax Act, 1948" observed :--                             "The  word ’paper’ has not been  defined                       in the Act or the Rules, and, as such, it  has                       to  be  given  the meaning  which  it  has  in                       ’ordinary  parlance.  Paper, as understood  in                       common  parlance, is the paper which  is  used                       for printing. writing and packing purposes."                           In  Sree Rama Trading Company v. State  of                       Kerala(2)  the  High Court of Kerala  after  a                       good deal of research held that cellophane  is                       not paper coming within entry 42 in the  First                       Schedule to  the Kerala General Sales Tax Act,                       1963, as it stood at the time relevant to  the                       year 1966-67.             In State of Orissa v. Gestetner Duplicators (P)  Ltd.(3)         the  HIgh Court of Orissa held that stencil paper  was   not         paper within  the meaning of serial No. 7-A of the  Schedule         to the Notification issued by the State Government under the         first  proviso to section 5(1)’of the Orissa Sales Tax  Act,         1947  and  that sale of stencil paper  was,  therefore,  not         taxable at the rate of 7 per cent but is exigible to tax  at         the rate of 5 per cent.             In  Commissioner of Sates Tax, U.P,  v.S.N.  Brothers(1)         this  Court  while upholding the decision of  the  Allahabad         High  Court  which held that ’food colours’ and  ’syrup  es-         sences’ arc .edible goods while ’dyes and colours and compo-         sitions thereof and ’scents and perfume’ did not seem  prima         facie to connote that they are edible goods observed:         (1) 31 S.T.C. 625.      (2) 28 S.T.C. 469.         (3) 33 S.T.C. 333.      (4) 31 S.T.C. 302.         841                             "The  words ’dyes and. colours’ used  in                       entry  No.   10  and  the  words:  scents  and                       perfumes’  used  in  entry No. 37 have  to  be                       construed  in  their own context  and  in  the

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                     sense, as ordinarily understood  and attribut-                       ed  to  these words by people usually  conver-                       sant with  and dealing in such goods.    Simi-                       larly,  the  words "food  colours" and  "syrup                       essences", which are descriptive of the  class                       of  goods the sales of which are to  be  taxed                       under  the  Act, have to be construed  in  the                       sense  in which they are popularly  understood                       by  those who deal in them and  who   purchase                       and use them."                           Bearing  in  mind the ratio of  the  above                       mentioned  decisions, it is quite  clear  that                       the mere fact that the word ’paper’ forms part                       of  the denomination of a specialised  article                       is  not decisive of the question whether   the                       article  is  paper  as  generally  understood.                       ’the   word ’paper’ in the common parlance  or                       in  the comercial sense  means paper which  is                       used  for  printing, writing or  packing  pur-                       poses.    We are, therefore, clear of  opinion                       that Carbon paper is not paper as envisaged by                       entry 2 of the aforesaid Notification.                       Regarding  ribbon  also  to  which  the  above                       mentioned  rule construction equally  applies,                       we have no manner of doubt that it                       an accessory and not a part of the  typewriter                       (unlike  spool) though it may not be  possible                       to  use the latter without the former.    Just                       as aviation petrol is not a part of the  aero-                       plane nor diesel is a part    of a bus in  the                       same way, ribbon is not a  part of the   type-                       writer  though it may not be possible to  type                       out any matter without it.                           The  very same question with which we  are                       here  confronted came up for  decision  before                       the High Court of Mysore in State of Mysore v.                       Kores (India)Ltd. (1) where it was held:                       "Whether  a typewriter ribbon is a part  of  a                       typewriter is to be considered in the light of                       what  is meant by a typewriter in the  commer-                       cial  sense.   Typewriters are being  sold  in                       the market without the typewriter ribbons  and                       therefore  typewriter ribbon is not an  essen-                       tial part of a typewriter so as to attract tax                       as per entry 18 of the Second Schedule to  the                       Mysore Sales Tax Act, 1957."                           For the foregoing reasons, we do not  find                       any  force in this appeal which  is  dismissed                       but  in the circumstances of the case  without                       any order as to costs.         M.R.                                                  Appeal         dismissed         (1) 26 S.T.C. 87.         842