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PETITIONER: HINDUSTAN ALUMINIUM CORPORATION LTD.

       Vs.

RESPONDENT: STATE OF UTTAR PRADESH & ANR.

DATE OF JUDGMENT28/07/1981

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. PATHAK, R.S.

CITATION:  1981 AIR 1649            1982 SCR  (1) 129  1981 SCC  (3) 578        1981 SCALE  (3)1130  CITATOR INFO :  R          1989 SC 644  (18)  RF         1992 SC 422  (3)

ACT:      U.P.  Sales   Tax   Act   1948-Section   3A   (2)   and notifications issued thereunder-Scope of.      Interpretation-Words of common parlance used in a Sales Tax Act-How interpreted.

HEADNOTE:      Pursuant to  a circular  issued by  the Commissioner of Sales Tax  that aluminium ingots only should be taxed at the lower rate  and that all other items like rods, bars, rolled products, extrusion  sections etc. should be taxed at higher rates as  unclassified items,  the Sales  Tax Officer  taxed aluminium ingots  manufactured by the appellant at the lower rate; and  treating the  remaining products  manufactured by them as unclassified items taxed them at the higher rate.      The  High   Court,  dismissing   the  appellant’s  writ petition impugning  the assessment  made by  the  Sales  Tax Officer, held  that while  aluminium ingots,  wire bars  and billets would  fall in  the category of "metals and alloys", rolled products  prepared by  rolling ingots  and extrusions manufactured  from   billets   were   different   commercial commodities from  the ingots  and billets and that they fell outside the  category of  "metals and alloys". The method of assessment made  by the  Sales Tax  Officer was,  therefore, upheld.      In appeal  to this Court it was contended that the High Court  erred   in  holding  that  the  rolled  products  and extrusions were  new commercial  commodities, distinct  from the aluminium  ingots  and  billets  from  which  they  were prepared and  that  they  represented  the  marketable  form merely of ingots and billets.      Dismissing the appeal, ^      HELD:  The   expression  ’metal’   has  been  generally employed in the relevant notifications to refer to the metal in its  primary sense  i.e. in  the  form  in  which  it  is marketable as  a primary commodity. Subsequent forms evolved from the  primary form and constituting distinct commodities marketable as  such  must  be  regarded  as  new  commercial

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commodities. In  all the  relevant notifications, therefore, the framers  followed the  scheme that one clause dealt with metal in  its original  saleable form  and another  separate clause dealt  with fabricated forms in which it was saleable as  a  new  commodity.  Aluminium  ingots  and  billets  are saleable commodities  as such  in the  market. When  such  a notification refers to a metal it refers to the metal in the primary or  original form in which it is saleable and not to any subsequently fabricated form. [133 H; 134 F] 130      The word  "all" occuring  in "all  kinds  of  minerals, ores,  metals   and  alloys   including  sheets..."  in  the notification  cannot   be  interpreted   to   include   even subsequently fabricated  forms of  the metal,  for  such  an interpretation would  be inconsistent with the scheme of the notifications. While broadly a metal in its primary form and a metal  in its  subsequently fabricated form may be said to belong to  the same  genus, the distinction made between the two constitutes  a dichotomy  of direct  significance to the controversy in the instant case. [135 B-C]      Having regard  to the scheme followed in the framing of the  notifications,  the  expression  "including"  does  not enlarge the  meaning of  the  word  "metal".    It  must  be understood in  a conjunctive  sense,  as  a  substitute  for "and". [134 H]      Devi Dass  Gopal Krishnan  and Others  v. The  State of Punjab and Others [1967] 20 S.T.C. 430 followed.      Tungabhadra Industries  Ltd., Kurnool v. Commercial Tax Officer, Kurnool  [1960] 11  S.T.C. 827  and State of Madhya Bharat (now  State of Madhya Pradesh) and Others. v. Hiralal [1966] 17 S.T.C. 313 distinguished.      State of  Tamil Nadu  v Pyare  Lal Malhotra  [1976]  37 S.T.C. 319  and 325,  & Maharaja  Book  Depot  v.  State  of Gujarat [1979] 2 S.C.R. 138 referred to.      State of Gujarat v. Shah Velijibhai Motichand, Lunawada [1969] 23 S.T.C. 288 not approved.      A word  describing a  commodity in  a sales tax statute should be  interpreted according  to its  popular sense, the sense in  which people  conversant with  the subject  matter with which  the statue  is dealing  would attribute  to  it. Words of  everyday  use  must  be  construed  not  in  their scientific or  technical sense  but as  understood in common parlance. But  what is  relevant in the circumstances of the present case  is the  manner  in  which  these  and  similar expressions have  been employed  by  those  who  framed  the relevant notifications  and with  the inference  that can be drawn from  the particular arrangement of the entries in the notifications. The  intent must be derived from a contextual scheme. [133 D-F]      Porritts &  Spencer (Asia)  Ltd. v.  State  of  Haryana [1978] 42 S.T.C. 433 followed.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos. 2014 to 2016 of 1977      Appeals by  special leave  from the  judgment and order dated the 17th November, 1976 of the Allahabad High Court in Civil Misc. Writ Nos. 107, 108, & 357 of 1976.      S.S.  Ray,  Depankar  Gupta,  Raja  Ram  Agarwal,  O.P. Khaitan, N.R. Khaitan, Bharat Ji Agarwal, Mrs. Neelam Thakur and Umesh Khaitan for the Appellants. 131      S.C. Manchanda,  R. Ramchandran  and O.P.  Rana for the

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Respondent.      The Judgment of the Court was delivered by      PATHAK, J:  These appeals  by special  leave raise  the question whether  aluminium rolled  products and  extrusions can  be  described  as  "metal"  for  the  purposes  of  the notifications dated December 1, 1973 and May 30, 1975 issued under the U.P. Sales Tax Act, 1948.      The  appellant,  the  Hindustan  Aluminium  Corporation Limited,  carries  on  the  business  of  manufacturing  and dealing in aluminium metal and various aluminium products.      On December 1, 1973 the State of Uttar Pradesh notified under section  3-A (2)  of the U.P. Sales Tax Act, 1948 that the turnover  in respect of the following goods set forth in item No.  6 of  the attached schedule would be liable to tax at all points of sale at 3 1/2%-      "6.  All kinds  of minerals  and ores and alloys except           copper, tin, zinc, nickel or alloy of these metals           only." On May  30, 1975  the State  of Uttar  Pradesh  published  a notification, under  section 3A  (2-A) of  the Act, in which item No. 1 of the schedule read as follows:      "1.  All kinds  of minerals,  ores, metals  and  alloys           except those  included in  any other  notification           issued under the Act." and a  rate of  2% was  prescribed. The  notification  dated December 1, 1973 was amended and item No. 6 was deleted.      On August  14, 1975  the U.P.  Legislature enacted  the U.P. Sales  Tax (Amendment and Validation) Act, 1975 section 31 (7)  of which  amended the  aforesaid notification of May 30, 1975  retrospectively, so that it would be deemed always to have read as follows:-      "1.  All kinds  of minerals,  ores, metals,  and alloys           including  sheets   and  circles   used   in   the           manufacture of brass 132           wares  and  scraps  containing  only  any  of  the           metals, copper,  tin, zinc, or nickel except those           included in  any other  notification issued  under           the Act."      On July  11, 1975  the appellant wrote to the Sales Tax Officer  contending  that  the  aluminium  ingots,  billets, rolled products,  extrusions and  other  aluminium  products manufactured and  sold by  it upto  May 31, 1975 fell within item No.  6 of  the notification  dated December 1, 1973 and thereafter their  sale was  covered by  item No.  1  of  the notification dated  May 30,  1975. However, the Commissioner of Sales  Tax, U.P. issued a circular on October 15, 1975 to all Sales  Tax Officers  advising that aluminium ingots only should be  taxed as  "metal", and  in regard  to other items such as  rods, bars, rolled products, extrusion sections tax at the rate of 7% would be payable as on unclassified items.      On December  30,  1975,  the  Sales  Tax  Officer  made provisional assessments  under rule  41(3), U.P.  Sales  Tax Rules, 1948  for the  quarters  ending  June  30,  1975  and September 30,  1975. The Sales Tax Officer applied a rate of 3-1/2%  under  the  Notification  of  December  1,  1973  to aluminium ingots  only and treated the remaining products as unclassified items  attracting sales  tax at  7%.  Similarly under the  Notification of  May 30,  1975 a  rate of  2% was applied to  the  turnover  of  aluminium  ingots  while  the remaining products were charged to tax at 7% as unclassified items.      The appellant  filed a  writ petition  in the Allahabad High Court  against the  provisional assessments. During the pendency of  the writ  petition the Sales Tax Officer made a

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final assessment  order for  the assessment  year 1975-76 on August 3,  1976. The  writ petition  was amended in the High Court and relief was now sought against the final assessment order. On  November 17,  1976 the High Court passed judgment on the  writ petition  holding that  while aluminium ingots, wire bars and billets would fall in the category "metals and alloys", rolled  products prepared  by  rolling  ingots  and extrusions manufactured  from billets  must be  regarded  as different commercial commodities from the ingots and billets and therefore  outside the  category of "metals and alloys". The rolled  products included plates, coils, sheets, circles and strips. The extrusions were manufactured in the shape of bars,  rods,   structurals,  tubes,   angles,  channels  and different types  of sections.  In regard  to properzi redraw rods, the High Court considered that a further 133 enquiry was  necessary and  therefore directed the Sales Tax Officer to re-examine the matter.      The present  appeals are  directed against  the part of the High  Court judgment refusing relief in regard to rolled products and extrusions. It is vehemently contended that the High Court has erred in holding that the rolled products and extrusions are  new commercial commodities distinct from the aluminium ingots  and billets  from which they are prepared. It is  urged that  they represent the marketable form merely of ingots  and billets. We have been referred to a number of documents  and   publications  as   well  as  the  Aluminium (Control) Order,  1970, and  the  submission  is  that  when reference is made to aluminium as a metal it includes rolled products and extrusion products.      We are not satisfied that the appellant is right. There is no  doubt that,  as laid down by this Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana, a word describing a commodity in  a sales  tax  statute  should  be  interpreted according to  its popular  sense, the  sense being  that  in which people  conversant with  the subject matter with which the statute  is dealing  would attribute  to  it.  Words  of everyday use  must be  construed not  in their scientific or technical sense  but as  understood in common parlance. That principle has been repeatedly reaffirmed in the decisions of this Court. It holds good where a contest exists between the scientific and  technological connotation of the word on the one hand  and its  understanding in  common parlance  on the other. We are here concerned, however, with a very different situation. We  are concerned, with the manner in which these and similar  expressions have  been employed  by  those  who framed the  relevant notifications,  and with  the inference that can  be drawn  from the  particular arrangement  of the entries in the notifications. We must derive the intent from a contextual scheme.      Section 3A of the U.P. Sales Tax Act empowers the State Government to  prescribe, by notification, the rate, and the point at  which the  tax may  be imposed  on the  sale of  a commodity. A  consideration of the notifications issued from time to  time will show that the expression "metal" has been generally employed  to refer  to the  metal in  its  primary sense. The reference is to the metal in the form in which it is marketable as a primary commodity. Subsequent 134 forms  evolved   from  the  primary  form  and  constituting distinct commodities  marketable as such must be regarded as new commercial  commodities. The notification No. ST-2631/X- 902 (64)-50  of November  21, 1952,  for example, sets forth two clauses:      (a)  Copper,  tin,   nickel,  or  zinc  or  any  alloy,

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         containing any of these metals only, and      (b)  Scrap, meant  for melting,  and  sheets  including           circles   meant   for   making   brass-ware,   and           containing only  any or  all of  the said  metals,           viz., copper, tin, nickel and zinc. It is  clear that  while clause (a) makes specific reference to certain  metals, clause  (b) separately  sets  forth  the products which emerge as a result of processing the original metal. Clause  (b) speaks of sheets, including circles meant for making brass-ware, and containing only any or all of the metals specified  in clause  (a). A  sheet of copper only or tin only  or  nickel  only  or  zinc  only  is  regarded  as belonging to  a distinct  entry  in  the  notification  from copper, tin,  nickel or  zinc in its unfabricated from. This schematic arrangement  has been followed in notification No. ST-3500/X dated  May 10,  1956, notification No. 1366/X-990- 1956, dated April 1, 1960 and notification No. St-9377/X-906 (AB-4)-1971  dated   October   6,   1971.   In   all   those notifications the  framers of the notifications followed the scheme that  one clause dealt with the metal in its original saleable  form   and  another  separate  clause  dealt  with fabricated  forms   in  which  it  was  saleable  as  a  new commodity. It  is  admitted  before  us  on  behalf  of  the appellant that  aluminium ingots  and billets  are  saleable commodities as  such in the market. In the circumstances the inference is  irresistible that  when  such  a  notification refers to  a metal, it refers to the metal in the primary or original form  in which  it  is  saleable  and  not  to  any subsequently  fabricated  form.  It  is  true  that  in  the notification dated  May 30, 1975, as amended retrospectively on August 14, 1975, the entry reads:           "All kinds  of minerals,  ores, metals  and alloys      including sheets and circles used in the manufacture of      brass wares  and scraps  containing  only  any  of  the      metals, copper,  tin,  zinc,  or  nickel  except  those      included in  any other  notification issued  under  the      Act." But here,  the expression  "including" does  not enlarge the meaning of  the word  "metal" and  must be  understood in  a conjunctive sense, 135 as a substitute for "and". This is the reasonable and proper construction having  regard to  the scheme  followed in  the framing of notifications.      It is urged that item No. 6 in the notification of 1973 and Item  No. 1  in the  notification of  1975 speak of "all kinds of minerals, ores, metals and alloys" and, it is said, the word  "all" should  be given its fullest amplitude so as to include  even subsequently fabricated forms of the metal. It  seems   to  us   that  the   construction  suggested  is inconsistent with  the scheme  to which  we  have  referred. While broadly a metal in its primary form and a metal in its subsequently fabricated  form may  be said  to belong to the same genus, the distinction made between the two constitutes a dichotomy of direct significance to the controversy before us.      The  question  whether  rolled  steel  sections  are  a different commodity from scrap iron ingots was considered by this Court  in Devi  Das Gopal  Krishnan and  Others v.  The State of Punjab and Others, and this Court had no hesitation in holding  that when  scrap iron  ingots are converted into rolled  steel   sections  they   go  through  a  process  of manufacture which  brings into  existence a  new  marketable commodity. We  are of  the opinion  that the same conclusion must follow  when aluminium ingots and billets are converted

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into aluminium rolled products and extrusion products.      Learned counsel  for the  appellant places  reliance on Tungabhadra  Industries  Ltd.,  Kurnool  v.  Commercial  Tax Officer,  Kurnool  where  this  Court  took  the  view  that hydrogenated "groundnut  oil" commonly  called Vanaspati was "ground nut  oil" within  the meaning  of rule  18(2) of the Madras General  Sales Tax  (Turnover and  Assessment) Rules, 1939. In  that case,  the Court  was  of  opinion  that  the process  of   hydrogenation  did  not  alter  the  essential identity of  the oil,  and reference  was made  to the broad compass of  the  expression  "groundnut  oil",  besides  the circumstance that  the use  to which  the original groundnut oil could  be put  would  also  be  the  use  to  which  the hydrogenated oil  could be  applied. It seems to us that the case is  distinguishable. We  then turn  to State  of Madhya Bharat (now  the State  of Madhya  Pradesh)  and  Others  v. Hiralal, the  next case  placed before  us. This  Court held that scrap iron, when put through a process of re-rolling to produce attractive and acceptable forms of iron and steel in the shape of 136 bars, flats and plates, must be regarded as continuing to be "iron and  steel" for the purpose of the notification issued under the  Madhya Bharat  Sales Tax  Act. The case, however, has been  distinguished by this Court in State of Tamil Nadu v. Pyare  Lal Malhotra  on the ground that the nature of the raw material from which the goods were made was the decisive criterion for deciding the earlier case. It observed -           "The language  of the  notification involved there      made it  clear that  the exemption  was for  the  metal      used. In  the cases before us now, the object of single      point taxation  is the  commercial commodities  and not      the substance  out of which it is made. Each commercial      commodity here becomes a separate object of taxation in      a series  of sales of that commercial commodity so long      as it retains its identity as that commodity." And the Court then referred with approval to Devi Dass Gopal Krishnan (supra).      Our attention  has been  invited to State of Gujarat v. Shah Veljibhai  Motichand, Lunawada  where the  Gujarat High Court held that corrugated iron sheets were merely "iron" in another shape and form and could not be regarded as articles or products  manufactured or fabricated out of iron. We have perused the  three judgments  delivered in  that case but it seems to  us  that  the  majority  opinion  is  of  doubtful validity, specially  having regard  to the  observations  of this Court made in Pyare Lal Malthora (supra).      We are also referred to Maharaja Book Depot v. State of Gujarat. This Court held that an exercise book is "paper" as defined in  s. 2(a)  (vii) of the Essential Commodities Act, 1955 and  Item 13  in Schedule  I to  the Gujarat  Essential Articles Dealers (Regulation) Order 1971. The Court accepted that  construction  on  the  ground  that  it  would  be  in consonance with  and would  carry out effectively the object or purpose  of the  Act and  the  Regulation  Order.  It  is desirable to  recall that  the Essential Commodities Act was enacted to  control the  distribution and price of essential commodities. A sufficiently comprehensive interpretation was called for 137 in order  that all products essential to the community which would reasonably  fall within  the scope  of the  definition could be covered.      Learned counsel  for the  appellant relies  on the wide definition  of   the  word   "aluminium"  in  the  Aluminium

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(Control) Order,  1970, but  we must  remember that the word has been  given the  broad definition set out there only for the purposes  of that  Control Order.  It cannot  be pressed into service for resolving the controversy before us.      Learned counsel  for the  appellant also  relies on the Glossary  of   Terms  for  Aluminium  and  Aluminium  Alloys prepared  by   the  Indian   Standards  Institution(1),  the Glossary  of   Terms  prepared   by  the  British  Standards Institution(2),   Engineering   Metallurgy(3),   Non-Ferrous Metals and  their Alloys(4),  Metal Industry:  Hand Book and Directory, 1962  and allied  literature. In  considering the material, it  is necessary  to caution  ourselves  that  the literature is  concerned with  conceptions particular to the aluminium industry,  while we  are here  concerned with  the application of a sales tax statute.      Finally, it  is  urged  that  two  interpretations  are possible of  the relevant  entries in  the notifications  of 1973 and 1975 and therefore the interpretation favourable to the dealer should be adopted. We are of the definite opinion that the  only interpretation  possible  is  that  aluminium rolled products  and extrusions  are  regarded  as  distinct commercial items  from aluminium  ingots and  billets in the notifications issued under the U.P. Sales Tax Act.      In the  result, the appeals fail and are dismissed with costs. P.B.R.                                     Appeals dismissed 138