A.K. Yog and Dilip Gupta, JJ.
1. The issue which is both interesting and significant that needs to be decided in these petitions is whether the goods manufactured and marketed by the petitioners as Mosquito Mats/Coils or Refills would fall under entry titled "Pesticides and Insecticides" in the notifications issued under Section 3-A of the U.P. Trade Tax Act. 1948 (for short "the Act").
2. Above three Writ Petitions have been taken up together and decided finally at the admission stage itself since all the respondents are represented by their respective Counsel as contemplated under Chapter XXII Rule 2, Second Proviso, Allahabad High Court Rules, "Rules of the Court, 1952". Parties have exchanged pleadings by filing counter affidavit and rejoinder affidavit and there is no dispute on relevant facts. Learned Counsel for the parties are agreed that the question raised for adjudication in these Writ Petitions is the same and all the writ petitions may be decided by a common judgment.
3. For convenience, we will wherever necessary, refer to the facts of the case of Writ Petition No. 1214 of 2005 Knight Queen Industries (P) Ltd. v. State of U.P. through Institutional Finance Secretary, U.P. Shasan Lucknow and Ors. for the sake of convenience.
CASE OF THE PETITIONERS:-
Contention of the petitioners is that in view of the notifications in question the goods manufactured and marketed by them, namely - 'Mosquito Mat coil or Refill, fall under the goods covered by entry 'Pesticides and Insecticides' and, therefore cannot be subjected to tax as an unclassified item under Section 3-A(I)(c) of the Act.
4. The dispute is with respect to articles sold on or before 1-9-2001 and relates to the Assessment Years 1998-1999, 1999-2000, 2000-2001, 2001-2002 (up to 31-8-2001).
5. In order to appreciate the controversy, it may be useful to first reproduce Section 3-A of the Act ? and it is as follows:-
3-A. (1) Except as provided in Section 3-D, the tea payable by a dealer under this Act shall be levied:-
(a) on the turnover in respect of declared goods', at the point of sale to the consumer at the maximum rate for the time being specified in Section 15 of the Central Sales Tax Act, 1956 or where the State Government, by notification declares any other single point or a lesser rate, at such other point or at such lesser rate.
(b) on the turnover in respect of such goods, other than the goods referred to in Clause (a), at such point and at such rate, not exceeding fifty per cent, as the State Government may, by notification, declare, and different points and different rates may be declared in respect of different goods;
(c) on the turnover in respect of goods, other than those referred to in Clause (a) or Clause (b), at the point of sale by manufacturer, or importer at the rate often per cent,
(2) Every notification made, under this section shall, as soon as may be after it is made, be laid before each House of the State Legislature, while it is in session, for a total period of not less than fourteen days, extending in Us one session or more than one successive sessions, and shall, unless some later date is appointed take effect from the date of its publication in Gazette subject to such modifications or annulments as the two Houses of the Legislature may during the said period agree to make, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done thereunder except that any imposition, assessment, levy or collection of tax or penalty shall be subject to the said notification pr annulment.
(3) Where the State Government has declared any point or rate at which the tax payable by a dealer under the Act be levied under Clause (b), Clause (c), Clause (c-1), Clause (d) or Clause (e) of Sub-section (1) as it existed immediately before the commencement of the Uttar Pradesh Trade Tax (Second Amendment) Act, 2000 and such declaration is in force on such commencement, such rate or point of tax shall continue to be in force after such commencement, until modified or rescinded.
6. The tax is thus, payable at the rate mentioned in the relevant; notifications issued by the State Government from time to time under Section 3-A of the Act which have been filed as Annexures 9, 10, 11 and 12 to the Writ Petition.
(i) 1&y[kufnukad 25 ekpZ] 1997
mRrj izns'k O;kikj dj ,sDV] 1948 mRrj izns'k ,DV la[;k 15 lu~ 1948) dh /kkjk 3&d dh mi/kkjk 1 ds [k.M M- ds izfrcU/kkRed [k.M ds v/khu vf/kdkj dk iz;ksx djds jkT;iky funsZ'k nsrs gS fd bl foKfIr ds xtV esa izdkf'kr gksus ds fnukad ls vk;krdrkZ ;k fuekZrk }kjk dhVuk'kkd vkSj thoekj dh fodzh ij pkj izfr'kr dh nj ij dj ns; gksxk
(ii) "English Translation of Government Notification 2376/Xl-9(251)/97-U.P.Act -15-48-Order-98, dated 23^rd November. 1998
In exercise of the powers under Clause (e) of Sub-section (1) of Section 3-A of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948) read with Section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No. I of 1904) "and in supersession of all previous notifications issued in this behalf, the Governor is pleased to declare that with effect from 1^st December, 1998, the turnover in respect o mentioned in column 2 of the List below shall be liable to' of sale specified in column 3 of said List at the rate specified against each in column 4 thereof.
M stands for sale by the Manufacturer in Uttar Pradesh I stands for sale by the Importer in Uttar Pradesh
63. Pesticides and insecticides More 15%,
(iii) "English translation of Kar Avam Nibandhan Anubhag-2, Government Notification No. KA.NL-2-101/Xl4(231)/94-U.P. Act-15-48-Order-2000, dated 15^th January, 2000.
In exercise of the powers under Clause (e) pf Sub-section (1) of Section 3-A of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948) read with Section 21 of the Uttar Pradesh General Clauses Act 1904 (U.P. Act No. 1 of 1904) and in supersession of all previous notifications issued in this behalf the Governor is pleased to declare that with effect from 17^th January, 2000, the turnover in respect of the goods mentioned in Column 2 of the List below shall be liable to tax at the point of sale specified in column 3 of said List at the rate specified against each in column 4 thereof.
M stands for sale by the Manufacturer in Uttar Pradesh 1 stands for sale by the Importer in Uttar Pradesh
61. Pesticides-and insecticides Mor I 5%"
(iv) "KA.NL-2-2596/XI-9(51)/99-U.P.Act -15-48-Order-(37)-2001 Dated: Lucknow; August 27, 2001
In exercise of the powers under Clause (a) of Section 4 of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act no. 15 of 1948), the Governor is pleased to direct that with effect from September 1, 2001, no tax under the said Act shall be payable on the sale of the following goods:-
5. Articles for destroying and repelling mosquitoes, whether they are used by electricity or not.
6. The expression used in Notifications mentioned at serial No. (i) (ii) & (iii) is identical namely 'Pesticides and Insecticides' and there is no specific relating to the goods sold by the petitioners namely Mosquito 'mosquito coils or refills. According to the petitioners, goods sold by are 'insecticides' for following reasons-
(i) Articles/goods sold by the petitioners, though used as household articles, is none the less house hold 'insecticides' which fact is also mentioned on their products.
(ii) The chemical composition used in manufacturing the goods in question (though widely known and popularly understood as Mosquito Repellent) is allethrin which is an 'insecticide'.
(iii) Whatever may be the trade name, the petitioners are using chemicals for manufacturing the finished goods which have been treated as 'insecticides' under the provisions of the Insecticides Act, 1968 and photostate copies of the Certificate of Registration of the license issued under Section 9(4) of the 'Insecticide' Act, 1968 have been placed before us. The said certificate has been issued by Government of India, Ministry of Agriculture- (Department of Agriculture & Cooperation) Directorate of Plant Protection, Quarantine and Storage). A perusal of it leaves no scope of doubt that allethrin which is used in the product sold by the petitioners is 'insecticide'.
(iv) Insecticides Rules, 1971 provides for the manner of labelling. Relevant Rule 19(4) of the Rules read-
"19(4) The upper portion of square, referred to in sub-rule (3) shall contain the following symbols and warning statements:-
(i) insecticides "belonging to Category I (extremely toxic) shall contain the symbol of a skull and cross-bones and the word "POISON" printed in red;
(a) "KEEP OUT OF THE REACH OF CHILDREN';
(b) 'IF SWALLOWED OR IF SYMPTOMS OF POISONING OCCUR, CALL PHYSICIAN IMMEDIATELY'"
(ii) insecticides in Category II (highly toxic) shall bear the word "POISON-' printed in red and the statement "KEEP OUT OF REACH OF CHILDREN", shall also appear on the label at suitable place outside the triangle;
(iii) insecticides in Category III shall bear the word " DANGER' "KEEP OUT OF REACH OF (Maderately toxic) and the statement CHILDREN" shall also appear on the label at suitable place outside the triangle;
(iv), insecticides in Category IV (Slightly toxic) shall bear the word " CAUTION.
7. The labelling/packing of the products in question is as per the afore-quoted Rule 19(4) of the Rules relating to insecticides.
(v) D-Trans 'allethrin' and 'pallethrin' are used in manufacturing the goods which have been described as household 'insecticides' on their products as per the statutory requirement under Insecticides Act.
(vi) Learned Single Judge in the case of Trade Tax Revision No. 334 of 1996 connected with Trade Tart Revision No. 338 of 1996, The Commissioner of Trade Tax U.P. v. Priya Distributor, Ghaziabad vide judgment and order dated 20-2-2003 following the decision of the Orissa High Court in the case of Sonic Electrochem (P) Ltd. v. State of Orissa and Ors. 1992 STC 117, (Orissa) and the decision of the Madras High Court in the case of Transelektra Domestic Products Pvt. Ltd. and Ors. v. Commercial Tax Officer 1990 STC 436 held that products in question (Mosquito Mat) is 'insecticide' and liable to tax accordingly. Special Leave Petition against the said judgment and order has been dismissed vide judgment and order dated 23-2-2004.
(vii) In the absence of any specific "entry relating to Mosquito Repellent/Mosquito Destroyer and at the same time there being an entry mentioning 'insecticides and pesticides', it cannot be said that an ordinary person will not ordinarily understand the product of the petitioners -falling under category of the 'insecticides and pesticides. According to the petitioners it could have been entirely different if the schedule provided for two entries, namely, 'insecticides and pesticides' and also Mosquito Repellent/Mosquito Destroyer' because in such a situation articles in question would fall in the category of Mosquito Repellent/Mosquito Destroyer as also held by the Apex Court in the case of Sonic Electrochem and Anr. v. Sales Tax Officer and Ors. STI 1998 Supreme Court 63.
CASE OF THE RESPONDENTS:-
The above contentions advanced on behalf of the petitioners has been repudiated by Sri S.P. Kesarwani, Advocate, representing the respondents on basis of the pleadings contained in paragraph 7 of the counter affidavit, sworn by Rajesh Kumar Jain, Dy. Commissioner (Assessment), Ghaziabad 'relevant paragraphs of which are reproduced :-
7...In the instant writ petition the petitioner has taken the stand than Mosquito Repellent Coil & Mats sold by him are insecticide and not the Mosquito Repellent '(unclassified item). The following facts and evidences available on record clearly demonstrates that the Mosquito Repellent Coil & Mats are not insecticide or pesticides but Repellent and thus are unclassified item liable to tax @ - 10%:-
(a) The petitioner applied for registration under Section 8A of the Act in "form 14" wherein in column 7 he has mentioned the commodity traded as " Mosquito Repellent, Mats/Coils etc". Similarly under Section 7 of the Sales Tax Act, 1956 (hereinafter referred to as Act') the petitioner applied for registration in " Form -A" wherein in column 16 he has mentioned the purchase and sale of " Mosquito Repellent Mats/Coils etc". The registration under the Act as well as under the Central Act were granted to the petitioner for trading the aforesaid commodities. The Registration number under the Act and the central Act are of the petitioner UPTT No. GC-0060571 dated 6.8.1998 and CST No. GC-50354W dated 6.. 8.1998. A true copy of the Registration Application certificate dated 2.4.1998 " Form-14 " under the Central Act and Registration Certificate dated 2.1.1999r "Form-B" under the Central Act are being annexed to this counter affidavit and marked as Annexure No. CA 5 & CA-6 respectively."
(b) Under Rule 41(1) of the U.P. Trade Tax Rules, 1948 (hereinafter refers to as 'Rules') the petitioner regularly filed monthly returns in Form-4' wherein he had clearly mentioned the commodities sold by him as "Mosquito Repellent Mats/Coils etc.". The petitioner always accepted the aforesaid commodities traded by him as Repellents and not as insecticides or pesticides. True copies of monthly returns in Form-4 all alongwith its Annexure-1 for the months of March-99 (relating to A.Y. - 1998-99), June 1999 (relating to A.Y. - 1999-2000), May 2000 (relating to A.Y. - 2000-01),and April 2001 (relating to A.Y. -2001-02 are being annexed as exemplars and marked Annexure. No. CA-7, CA-8, CA-9& CA-10 respectively.
(c) Under Rule 41(7) of the Rules the petitioner filed annual returns dated 6.12.2000 (A.Y. - 1998-99), dated; 16.1.2002 (A.Y - 1999-2000), dated 6.1.2003 (A. Y. - 2000-01) and dated 19.2,2004 (A.Y - 2001-02), wherein in column 6 and 23 he disclosed the class of goods dealt in as "Mosquito Repellent Mats/Coils/Liquid & Machine etc.". Here also there is no allegation or whisper, of the, commodities sold by the petitioner to be insecticide or pesticide. True copies of Form ST-47 submitted by the petitioner wider Rule 41(7) of the Rules for the A.Y. 1908" 99 dated 6.12.2000, A.Y. - 1999-2000 dated 16.1.2002, A.Y. 2000-01 dated 6.1.2003 and AY. 2001-02 dated 19.2.2004 are being annexed to this counter affidavit and are marked as Annexure No.CA-11 CA-12, CA-13 & CA-14 respectively.
(d) The aforesaid commodities "Mosquito Repellent Mats/Coils etc. " were imported by the petitioner from out side the State of U.P. through "declaration form for import" under the Act (form 31) and in all petitioner disclosed the commodities into such forms the red by him for' sale in the State of U.P. as "Repellents " and not insecticide, and pesticides. True copies of Declaration Form No. F/FF-0423785 (relating to A.Y.-1998-99), No. F/FF-0423788 (relating to A.V.-1999-2000) and Form No. F/FF-4179800 (relating to A. Y.-2000-01) are being annexed to this counter affidavit and are collectively marked as Annexure No. CA-15.
(e) The petitioner has always been selling the commodities in question as "Repellent" and not as insecticide or pesticides and the buyers has always been purchasing the aforesaid commodities as 'Repellents and; not insecticide or pesticides which fact is further evident from the own invoices of the petitioner. True copies of, Invoice No. 297 dated 14.3,2001, Invoice No. 308 dated) 16.3.2001, Invoice No. 314 dated 17.3.2001t Invoice No. 330 dated 23.3.2001 and Invoice No. 332 dated 23.3.20012 are being annexed to this counter affidavit as exemplars in which the petitioner has mentioned the commodities in question as "Repellent" and not an insecticide or pesticides and the same are collectively marked as Annexure No. CA-16.
(f) The customers of the petitioners are not cheating In insecticides or pesticides, but they are dealing farading if general merchandise goods lie soap, shampoo, paper candle and cosmetics etc. which facts are evident from the certificate obtained from assessing authorities of 2 dealers buying the petitioner's goods in question. True copies of certificates dated 15.9.2005 and 16.9.2005 issued by the Assistant Commissioner Sector-6, Trade Tax, Ghaziabad and Assistant Commissioner, Sector-4, Trade Tax, Ghaziabad in respect of dealers of their jurisdiction 'i.e., M/s. Agrawal Traders and M/s Kusum Distributors respectively and are collectively marked as Annexure No. 17.
(g) The petitioner has not disclosed in the writ petition the composition of its product. The answering respondents/assessing authority has collected the paper packing- of the repellent sold by the petitioner under the brand name of Knight Queen Red Mega Coil" in which in e.i. 0.2%w/w and same packing it is the composition is mentioned as Alleth, other ingredients 99.8% w/w. In the mentioned that "light the coil and pic ie in the center of a closed room. Open the windows after about 20 minutes, and mosquitoes will rush out, " In this packing material it is also mentioned that no symptoms of poisoning have" been observed in use of coil. A Photostat/true copy of the aforesaid I packing material of "Knight Queen Red Mega Coil" is being annexed to this counter affidavit and is marked as Annexure No. CA -18.
(h) That in paragraph No. 21 of the writ petition the petitioner himself has admitted that "right from 1997 till 27.8.2001 there was no specific entry of mosquito repellent articles ". Thus according to the admission by the petitioner the commodity in question is not relatable to any specific entry of the notifications issued under Section 3A(1)(a) or (b) of the Act and as such it is an unclassified item under Section 3A(1)(c) of the Act....
(ii) Learned Counsel for the respondents has further pointed out that in respect of Writ Petition No. 1214 of 2005 filed by M/s, Knight Queen Industries pursuant; to the notice issued under Section 21 of the Act, the assessment order was made on 30.8.205 during the pendency of the petition and apart from the fact that it has not been challenged, an appeal lies against the said order and so the petition should not be entertained.
(iii) Learned Counsellor the respondents has also referred to the statement of Pawan Kumar Agrawal recorded on 15.12.2004 wherein he admitted that the products of his company was used for repelling mosquito, and as such it is a mosquito repellent and the same was subjected to tax treating it to be a product against 'insecticides and pesticides, prior to 1.9.2001.
Learned Counsel for both the parties have placed reliance on a number decisilins of the Hon'ble Supreme Court and various High Courts including Court in support of their respective contentions. We consider it proper to first examine these decisions in order to find out whether mosquito mats, coils and refills would be' insecticides'.
In Sonic Electrochem and Anr. v. Sales Tax Officer and Ors. STI 1998 Supreme Court 63 the Hon'ble Supreme Court examined whether JET MAT would come within entry No. 129 of Schedule II Part A of the Gujarat Sales Act, 1969, The said entry gave the description of goods as "mosquito appellants". It was sought to be argued on behalf the appellant that JET MAT was an 'insecticide' and not a repellent, whereas on behalf of the Revenue it was sought to be argued that the product was nothing but a mosquito repellent a repellent does not cease to be so merely because by its action mosquitoes also killed. It is in this context that the Supreme Court observed-
In view of the specific Entry 129 dealing with mosquito repellents it is difficult to accept the contention of the learned Counsel for the appellant that the product in question will not come within the ambit of Entry 129 since one of its constituents 'd-Allethrin 4%' happens to be an insecticide. The product JET MAT which is the trade fame containing 'd-Allethrin 4%' and is commercially known as 'Mosquito Repellent Mat' in our considered opinion is a mosquito repellent notwithstanding the fact that it not only repels the mosquitoes but also is capable of killing the mosquitoes. It is difficulty to hold that it is an insecticide entitled for partial exemption under entry 98 of the Act.
The Tribunal rightly points out that in interpreting statues like the Excise Act the primary object of which is to raise revenue and for which purpose various products are differently classified, resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, that is to say the meaning attached to them by those using the product. It is for this reason that the Tribunal came to the conclusion that scientific and technical meanings would not advance the case of the appellants if the same runs counter to how the product is understood in popular parlance....
9. In Commissioner of Central Excise, Calcutta v. Sharma Chemical Works Supreme Court observed as follows-
...Mere fact that a product is sold across the counters and not under a doctor's prescription, does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumaran that merely because the percentage of medicament in a product is less, does not also ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda textbooks. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criterion for determining classification is normally the use it is put to by the customers who use it. The burden of proving that Banphol Oil is understood by the customers as a hair oil was on the Revenue. This burden is not discharged as no such proof is adduced. On the contrary, we find that the oil can be used for treatment of headache, eye problem, night blindness, reeling head, weak memory, hysteria, amnesia, blood pressure, insomnia etc. The, dosages required are also set out on the label. The product is registered with the Drug Controller and is being manufactured under a drug licence.
10. In Commissioner of Central Excise, Calcutta v. Pt. D.P. Sharma Chemical Works (2003) 5 SCC 288, the question that arose for consideration before Supreme Court was whether "Himtaj Oil" was 'Ayurvedic medicament' or not classifiable or a "perfumed hair oil". The Court negatived argument that the product could not be considered to be a drug because it not prescribed by a medical practitioner and was one which could be used for long period. It was held that the test was to find out what persons using the product understood it to be and on the basis of the evidence produced by the manufacturer that common man understood the product as a medicine, it was held that the product was a medicament.
11. The aforesaid decisions of the Supreme Court in the case of Shree 'Baiddyanath' (supra) and D.P. Sharma (supra) were considered by the Supreme Court in the subsequent decision in the case of Dabur India Ltd. v. Commissioner of Central Excise, Jamshedpur wherein the Supreme Court held -
From the above mentioned authorities, it is clear that in classifying a product the scientific and technical meaning is not to be resorted to. The product must be classifiable according to the popular meaning attached to it by those using the product. As stated above, in this case the appellants have shown that all the ingredients in the product are those which are mentioned in Ayurvedic textbooks. This by itself may not be sufficient but the appellants have shown that they have a Drug Controller's licence for the product and they have also produced evidence by way of prescriptions of Ayurvedic doctors, who have prescribed these for treatment of rickets. As against this, the Revenue has not made any effort and not produced any evidence that in common parlance the product is not understood as a medicament.
12. In Collector of Central Excise v. Fusebase Eltoto Ltd. , the Supreme Court observed as follows-
The Tribunal did not touch the question as to how the product called "broadcast television receiver set" is identified by the class or section of people dealing with or using the product. That is the test to be followed when the relevant notifications do not contain any definition of the products. The identity of an article is associated with its primary function and utility. The names of certain products have functional association in the mind of the consumers. There is a mental association in the mind of the consumer in respect of certain products keeping in view the utility of the product and also the reputation the name of the product has acquired, in the market and among the consumers. "Broadcast television receiver sets" and the "projection television sets" are two entirely different products and the consumes in this country, as at present, do not identify these two as one and the same product. When you go to the market to buy a 'television set' you mean the conventional 'Broadcast Television Receiver set' and the dealer will never understand you to mean the 'Hotline Projector Vision 203 etc.
13. In Atul Glass Industries Ltd. and Anr. v. Collector of Central Excise and Ors. Supreme Court observed as follows-
The test commonly applied to 'such cases is: How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition. Porritts and Spencer (Asia) Ltd. v. State of Haryana (1978) 42 S.T.C. 433 : 1983 E.L.T. 1607 (S.C.). It is generally by its functional character that a product is so identified. In Commissioner of Sales Tax U.P. v. Macneill & Barry Ltd., Kanpur , this Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Duplicators (P) Ltd. (1974) 33 S.T.C. 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of common experience that the identify of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental, association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in his mind. In the case o/a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The has if or fundamental character of the article lies in its being a mirror. It was observed by this Court in Delhi-Cloth and General Mills Co. Ltd. v. State of Rajasthan and Ors. which was a case under the
Sales Tax law:
In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sens'e in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted.
That was also the view expressed in Geep Flashlight Industries Ltd. v. Union of India and Ors. 1985 (22) ELT 3. Where the goods are not marketable that principle of construction is not attracted. Indian Aluminium Cables Ltd. v. Union of India and Ors. . The question- whether thermometers, lactometers, syringes, eye-wash glasses and measuring glasses could be described as 'glassware' for the purpose of the Orissa Sales Tax Act 1947 was answered by the Orissa High Court in State of Orissa v. Janta Medical Stores (1976) 37 STC 33 in the negative. To the same effect is the decision of this Court in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh , where hypodermic chemical
syringes were regarded as falling more accurately under the entry relating to " hospital equipment and apparatus" father than under the entry which related to "glasswares" in the U.P. Sales Tax Act.
It is pointed out that glass mirrors have been classified by the Indian Standards Institution as ''glass find glass ware" in the glossary of terms prepared by it in respect of that classification. That, to our mind, furnishes a piece of evidence only as to the manner in which the product has been treated for the purpose of the specifications laid down by the Indian Standards Institution. It was a test employed by this Court in Union of India v. Delh (Cloth & General Mills (1963) Supp.1 S.C.R.586 : 1997 ELT (J 199) but was regarded as supportive material only of the expert opinion furnished by way of evidence in that case. The considerations to which we have adverted should, in pur opinion, have greatly weighed in deciding the question raised in this appeal. So also in Union Carbide Co. Ltd. v. Assistant Collector of Central Excise and Ors. 1978 ELT 180, the description set forth in the publications of the Indian Standards Institution was regarded as a piece of evidence only. There were other more tangible considerations which weighed with the, Court in reaching its conclusions.
We are firmly of the view that glass mirrors cannot be classified as 'other glass and glassware' set forth in Tariff No. 23A(4), and must therefore, fall under the residuary Tariff Item No. 68.
14. The Supreme Court in Ramavatar Budhuprasad v. The Assistant Sales Officer, Akola and Anr. 1961 (XII) 286 observed as follows-
Thus under the Act all articles mentioned in the schedule were exempt from sales tax and articles not so specified were taxable. In the Schedule applicable there were originally two items which are relevant for the purposes of the case. They were items Nos. 6 and 36;
Item 6 "Vegetables-Except when sold in sealed containers ",
Item 36 "Betel leaves".
The Schedule was amended by the C.P. & Berar Sales Tax (Amendment) Act (Act XVI of No. 36 was omitted. It is contended 948) by which item that in spite of this, ed conteded that in spite of this omission they were exempt from sales tax as they are vegetables. The intention of the legislature in regard to what is vegetables is shown by its specifying vegetables and betel leaves as separate items in the Schedule exempting articles from sales tax. Subsequently betel leaves were removed from the Schedule which is indicative of the legislature's intention of not exempting betel leaves from the imposition of the tax. But it was submitted that betel leaves are vegetables and therefore, they would be exempt from sales tax under item 6. Reliance was placed on the dictionary meaning of the word "vegetable" as given in Shorter Oxford Dictionary where the word is defined as "of or pertaining to, comprised or consisting of or derived, or obtained from plants or their parts." But this word must be construed not in any technical sense nor from the botanical point of view but as Understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it." It is to be construed as understood in common language" Craies on Statute Law, page 153 (5^th Edition)... Therefore apart from the fact that the legislature by using two distinct and different items i.e. item No. 6 " vegetables" and item No. 36" betel leaves", has indicated its intention, decided cases also show that the word "vegetables" in taxing statutes is to be understood as in common parlance, i.e. denoting class of vegetables which are grown in a kitchan garden or in a farm and used for the table.
In Dunlop India Ltd. v. Union of India and Ors. AIR 1977 SC 597, the Supreme Court observed as follows-
...It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question, Technical and scientific tests offer guidance only, within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficult classification under a particular entry.
...It is not for the Court to determine for itself under Article 136 of the Constitution under which item a particular article falls. It is best left to the authorities entrusted with the subject. But where the very basis of the reason for including the article under a residuary head in order to charge higher duty is foreign to a proper determination of this kind. This court will be loath to say that it will not interfere.
15. In Dy. Commissioner, (Law) Board of Revenue (Taxes) v. M.R.F. Ltd. 2000 U.P. T.C-754 the Supreme Court observed :-
It is the contention of the Revenue that compounded runner is not a finished rubber product and that the word " finished" must be understood as the last or concluding product in a chain. We are of the view that due weight must be given to the uncontested evidence of those in the trade who have stated that compounded rubber is understood in that trade as a finished rubber product and that, accordingly, the Tribunal and the High Court cannot be faulted for the view that they took in this behalf.
... The next item that we are concerned with is the scrap that was sold by the respondent. The scrap consisted of butyl rubber, banbury tailings, brass valves, empty drums and gunny bags. The Tribunal found, taking into consideration the nature of the articles and the manner in which they were sold, that they had been treated as condemned articles and not as articles which could be put to use again and, accordingly, should be treated as scrap, it was contented on behalf of the Revenue that each of these items of butyl rubber, banbury tailings etc. should have been assessed under the particular tariff entry in which they fell and that the Tribunal was in error in taking into account the intention of the buyer and the seller in this behalf. It was not only the intention of the buyer and the seller that was taken into a account but the nature of the articles that were being sold and, obviously, the Tribunal was satisfied that they were really no more than scrap and found that they should be taxed accordingly. The High Court, was, therefore, right is not interfering.
16. In Collector of Customs, Bombay v. Swastic Woollen (P) Ltd. and Ors. 1988 U.P.T.C. 1284 Supreme Court observed-
4, We are of the opinion that when no statutory definition is provided in respect of an item in the Customs Act or the Central Excise Act, the trade understanding, meaning thereby the understanding in the opinion of those who deal with the goods in question is the, safest guide....
4. The expression 'industry' has many meanings. It means 'skill ' 'ingenuity', 'dexterity', 'diligence', 'systematic work or labour', 'habitual employment in the productive arts', 'manufacturing establishment' etc. But while construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that very document it must be given the same meaning which it receives in ordinary parlance or understood (n the sense in which people conversant with the subject matter of the statute or statutory instrument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more SO when such statute or statutory instrument is not dealing with any more cognate subject....
5. When 'the word to be construed isused in a taxing statute or a notification issued thereunder it should be understood in its commercial sense....
18. In Goel Industries (Private) Ltd. v. The Commissioner of Sales Tax, U.P. Lucknow 1971 U.P.T.C. 697 Allahabad High Court observed as follows-
...The short question involved in this case is as to whether ice and water are the same thing. It is true that ice is manufactured from water without addition of any f,'' chemical or substance. The chemical composition of ice and that of water is the same but even then ice cannot be regarded as water. It is a matter of common experience that while water is generally available free, ice is always sold in the market.,
It is now well settled that unless it is defined in the Act or the rules, a term in the Sales Tax Act must be interpreted in a sense in which it is understood generally and in the commercial world and not in a technical sense. Chemically ice and water may have the same composition but in commercial and popular sense: they are different commodities.
19. The principles that emerge from the decisions referred to above are that while interpreting statues like the Trade Tax Act, the primary object of which is to raise revenue and for which purpose various products are differently classified, resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, that is to say the meaning attached to them by those using the product; that merely because the percentage of medicament in a product is less does not also ipso facto mean that the product is not a medicament; that the main criterion for determining classification is normally the use it is put to by the customers who use it that there is a mental association in the mind of the consumer in respect of certain products keeping in view the utility of the product and also the reputation the name of the product has acquired in the market and amongst the consumers: that when a consumer buys an article, he buys it because it performs a specific function for him; and that it is not for the Court to determine for itself under which item a particular article falls, and it should be best left to the authorities. entrusted with the subject, but where the very basis for including the article under a residuary head in order to charge higher duty is foreign to a proper 'determination of this kind, the Court will be loath to hold that it will hot interfere.
20. We shall now examine the decisions which deal with insecticides and Pesticides'. In Sonic Electrochent (P) Ltd. v. State of Orissa and Ors. 1992 STC 117, Orissa High Court considered whether 'Mosquito Repellent Mats' which admittedly were 'insecticides', were entitled to exemption as 'pesticides' and it observed :-
...The authorities having exempted "pesticides" from the levy of tax in exercise of powers under Section 6 of the Orissa Sales Tax Act without having any limitation with regard to the kind of pesticides, it is difficult for us to give a limited meaning to the aforesaid expression "pesticides". In our considered opinion, " insecticide" being also a species of sticides " would he entitled to the exemption from levy of tax in view of the notification of the State Government under Section 6 of the Orissa Sales Tax Act and since the appellate authority has come to the conclusion that the goods manufactured by the assessee are "insecticide", the said item is entitled to exemption in question....
21. In Transelektra Domestic Products Pvt. Ltd. and Ors. v. Commercial Tax Officer, Porpur Assessment Circle, Madras and Ors. 1990 STC 436 the Madras High Court considered whether Mosquito; Mats marketed under brand name "Good knight" could be treated as 'insecticides' and consequently fall under Item No. 66 of the Scheduled to the Act. It is in this context that High Court observed:-
5. On going through the decision of the Tribunal, 1 am in entire agreement with the line of reasoning adopted therein. Even that apart, the entry No. 66 of the First Schedule to the Act while describing the various commodities as falling within it refers to insecticides generally and not with or of any particular percentage of combination or composition. As a matter of fact, the concluding portion of the entry " and combinations thereof' without prescribing any particular percentage is an indicator that what was envisaged therein is that the product may he an insecticide simpliciter or a combination of an insecticide to bring it within the meaning of the entry and it need not necessarily he of any particular percentage of combination of any one or more of the category of goods referred to in the entry. The stand taken to the contra for the Revenue is wholly misconceived....
22. It may be relevant to point out that the Madras High Court in the aforesaid case of Transelektra Domestic Products (supra) had placed strong reliance upon the observations made by West Bengal Taxation Tribunal in Transelektra Domestic Products Limited v. Inspector of Commercial Taxes (l992) 86 STC 497 (W.B.T.T.) wherein it was observed :.-
...In trade circle the mat is understood as an insecticide in view of the existence of the label on the package "d-Allethrin 4 per cent mosquito mat insecticide". The traders deal with insecticides in accordance with the provisions of the Insecticides Act, 1968. The preamble to that Act shows that Insecticides Act, 1968, is for regulating the import, manufacture, sale, transport, distribution and use of insecticides. We have already referred to the relevant provisions of the Insecticides Act, 1908 for the purpose of showing that nobody can deal with insecticides otherwise than in accordance with the provisions of the Insecticides Act. Accordingly, we are to hold that mat manufactured by the applicant is understood in commercial parlance or trade circle as an insecticide and as such it will be governed by the Act of 1954....
23. In Transelektra Domestic Products Private Limited v. State of Kerala and Ors. 122 STC 229, the Kerala High Court also considered whether Mosquito Repellent Mats manufactured in the name " Good Knight" and "Banish" could be classified as 'insecticide' for the purpose of levying Sales ft Tax under the Kerala General Sales Tax Act, 1963 and after placing reliance of the Madras High Court in the aforesaid case of Transelektra Domestic Products (supra) observed:-
3 These goods are covered by the provisions of the Insecticides Act and these goods can be classified if a specific entry and cannot be included in unclassified items., When we can attach a parentage to a product it need not be sent to orphanage, that is residuary entry as held by the Supreme Court in Dunlop India Ltd. v. Union of India (1976) 2 SCC 241, Since the mosquito repellent, mat contains insecticide allethrin chemicals, which is manufactured and sold under licence issued under the Insecticides Act and it will fatally affect the nervous system of mosquitoes, we are of the opinion that it can be classified as an insecticide till it was specifically classified from April 1, 1991 onwards. Government mosquito repellent mat as coming specifically classified order entry 123 B from April 1, 1991 under item 85 from April 1, J992 making it a single point rate.
24. A learned Single Judge of this Court in the case of Commissioner Trade Tax v. Priya Distributor Trade Tax Revision No. 334 of 1996 connected with Trade Tax Revision No. 338 of 1996, The Commissioner of Trade Tax U.P. v. Priya Distributor, Ghaziabad considered whether the Trade Tax Tribunal was justified in holding that Mosquito Mats fall under the category of 'insecticides'. The Court placed reliance upon the decision of the Madras High Court and Orissa High Court in the case of Transelektra Domestic Products (supra) and Sonic Electrochem (supra) respectively arid held that Tribunal was justified in holding that Mosquito Mats fall under category 'insecticides' and liable to tax accordingly.
Special Leave Petitions No. 13187 of 2003 and 17018 of 2003 against the aforesaid decisions dated 20-2-2003 in TTR No. 334 of 1996 and in TTR No. 338 of 1996 were filed. Both the SLPs were dismissed on 23.2.2004 and the order passed by Supreme Court is quoted below-
We see no reason to interfere. The special leave petitions are dismissed.
However, in Commissioner of Trade Tax of Tax, U.P. Lucknow v. Britania Agencies 2004 (36) STJ 67 and Commissioner of Trade Tax U.P. Lucknow v. Hindu Superstore 2004 (36) STJ 76 another learned
Single Judge of this Court took a contrary view and held that "Kachuwa Chap Agarbatti" was a Mosquito Repellent and not an 'insecticide' or 'pesticide'. In coming to the aforesaid conclusion the Court placed reliance upon those decisions of the Supreme Court wherein it was held that entries in sales tax should not be construed in any technical sense but in a manner as understood in common parlance and then concluded that "Good Knight" mats have been treated by persons dealing with it as repellent'.
Having considered the submissions advanced by learned Counsel for the parties, the material on record and examination of the facts of these petitions, we find from the pleadings that Articles/goods sold by the petitioners, though used as household articles, is never the less house hold 'insecticide' which fact is also mentioned on their products. The chemical composition used in manufacturing the goods in question (though widely known and popularly understood as Mosquito Repellent) is allethrin which is an 'insecticide. The petitioners are using chemicals for manufacturing the finished goods which have been treated as 'insecticides' and under the provisions of the Insecticides Act, 1968 a certificate has been issued by Government of India, Ministry of Agriculture which leave no scope of doubt that allethrin which is used in the product sold by the petitioners is 'insecticide'. Insecticides Rules, 1971 provides for the manner of labelling. Labelling/packing of the products of the petitioner is as per the afore-quoted Rule 19(4) of the Rules.
25. D-Trans 'allethrin' and 'pallethrin' are used in manufacturing the goods which have been described as household 'insecticides' on their products as per the statutory requirement under Insecticides Act. In the absence of any specific entry relating to Mosquito Repellent/Mosquito Destroyer and at the same time there being an entry mentioning 'insecticides', it can reasonably be said that an ordinary person will ordinarily understand the product of the petitioners falling under category of the insecticides.
26. These facts coupled with the Principles enunciated in the decisions referred to above leave us in no doubt that the products sold by the petitioners are basically in the categories of 'insecticides' particularly in the absence of any indication in the Notification in question.
27. It has, however, been urged by Sri Kesarwani, learned Counsel for the Revenue that the petitioner applied for registration under Section 8A of the Act ''Form 14" wherein in column 7 it has been mentioned that the commodity traded is "Mosquito Repellent Mats/Coils etc.". Similarly under Section 7 of the Central Sales Tax Act, 1956, the petitioner applied for registration in Form-A wherein in column 16 it has been mentioned that the purchase and sales of "Mosquito Repellent Mats/Goils etc".
28. We are, however, unable to persuade ourselves to hold that merely because the petitioners have at various stages contended that the product is described or commonly traded as 'Mosquito Repellant' it should not fall in the category of insecticides'. We would have accepted such a contention if there was separate or specific exclusion entry of Mosquito Repellant in the existing entry of 'Pesticide & Insecticide'. In that case there would have been no difficulty but in the absence of specific mention as indicated above, the product in question falls under the entry insecticides'. The percentage of 'allethrin' used in the product is of no consequence at all, since it is admittedly an 'insecticide'.
29. We entirely agree with the view taken by the Madras High Court in Transelektra Domestic Products Pvt. Ltd. (supra), and by Kerala High Court in Transelektra Domestic Products Private Ltd. (supra) The learned Judge in M/s. Priya Distributor (supra) had also placed reliance upon the said decisions.'
30. Sri S.P. Kesarwani, learned Counsel appearing on behalf of the Respondents also urged that 'Writ Petition No. 1214 of 2005 has become infructuous in as much as pursuant to the notice dated 21.7.2005 issued under, Section 21 of the Act, the proceedings were finalised and the assessment order was passed on 30-8-2005 and was also served upon the petitioner along with demand notice. It is true that the petitioner was required to challenge the Assessment Order dated 30-8-2005 but since the main question whether the Good Knight mats" are "insecticides", or not is required to be examined in the other two Writ Petitions, we consider it appropriate to decide all the matters and do not intend to dismiss Writ Petition No. 1214 of 2005 on this ground.
31. It was also urged by the learned Counsel for the respondents that the petitioners have sought the quashing of the notices issued under Section 21(2) of the Act and so these petitions should not be entertained at this stage.
32. Learned Counsel appearing for the Petitioners, however, urged that notices issued under Section 21(2) of the Act are liable to be quashed since if they are based upon the decisions rendered by this court in the case of Britania Agencies (supra) and Hindu Super Store (supra) which decisions contrary to the earlier decision of this Court in the matter of M/S Priya Distributor (supra). Learned Counsel submitted that decisions of this Court in Britania Agencies (supra) and Hindu Super Store (supra) do not lay down the correct law and therefore it would be in the interest of all concerned that this matter is decided by this Court, particularly when there is already decision of this court in the matter of M/S Priya Distributor (supra) holding to the contrary.
33. Taking into consideration the overall facts and circumstances, we consider it appropriate to decide the issue and matter finally at this stage and reject the objection raised by the learned Counsel for the respondents, that the petitioners seeks to challenge, at this stage, show cause notice issued under Section 21(2) of the Act.
34. In view of the above discussion, all the above writ petitions are liable to succeed. In Writ Petition No. 1214 of 2005 the order dated 9.3.2005 parsed by the Additional Commissioner, Trade Tax (Annexure 14, to the Writ Petition) and the consequent notices dated 21.7.2005 (Annexure 23, to the petition), in Writ Million No. 584 of 2005 the order dated 18/19.3.2005 passed by the Additional Commissioner, Trade Tax (Annexure 15 to the petition) and the notices dated 19.3.2005 (Annexure 24 to the petition), in Writ Petition No. 651 of 2005 the order dated 19.3.2005 passed by the Additional Commissioner, Trade Tax (Annexure 17 to the petition) and the notices dated 21.3.2005 Annexure 26 to the petition) are hereby quashed.
35. All the above Writ Petition Nos. 1214 of 2005, 584 of 2005 and 651 of 2(k)5 are allowed.
36. There shall be, however, in the facts of the case, no orders as to costs.