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Industrial And Commercial Service, Allahabad v. Commissioner Of Sales Tax, U.P, Lucknow
Factual and Procedural Background
This is a reference made by the Judge (Revisions), Sales Tax, under section 11(1) of the U.P. Sales Tax Act at the instance of the assessee. The question referred to the Court was whether, on the facts and circumstances of the case, the word "books" used in section 4 of the Act would include the diaries sold by the applicants.
The particular assessment before the Court concerns the year 1949-50; two connected references were similarly made in respect of the next two assessment years. The assessee is a dealer in books, stationery and diaries and was assessed to sales tax for the relevant years on turnovers that included proceeds of sales of diaries. Section 3 of the Act imposed sales tax on turnover (aggregate proceeds of sale). Section 4 (as it then stood) exempted proceeds of sale of certain goods including "books", and empowered the State Government to exempt other goods by notification. Exercising that power, the State Government had issued Notification No. ST-1433.X-1012-1948 dated 30 March 1949 exempting "exercise books" from taxation.
The diaries in question are described in the opinion as bound like books, one-page-a-day diaries, with a sloka from the Bhagwat Gita printed at the top of each page and a few initial pages containing general information. Most of the pages are otherwise blank and intended for daily memoranda and jottings.
The assessee contended that such diaries fall within the meaning of "books" in section 4 and therefore their sale proceeds should be excluded from turnover. The Commissioner contended that the diaries were neither "books" nor "exercise books" and were therefore taxable (i.e., not exempt under section 4 or under the Notification).
Legal Issues Presented
- Whether, on the facts and circumstances of the case, the word "books" used in section 4 of the U.P. Sales Tax Act includes the diaries sold by the applicants.
- Whether the diaries could be regarded as "exercise books" within the meaning of Notification No. ST-1433 dated 30 March 1949 (as raised by the Commissioner in resisting the assessee's claim of exemption).
Arguments of the Parties
Assessee's Arguments
- The diaries are "books" within the meaning of section 4 of the U.P. Sales Tax Act and therefore proceeds of their sale are exempt from inclusion in the taxable turnover for the assessment years in question.
Commissioner's Arguments
- The diaries are not "books" or "exercise books" and therefore their sale proceeds are not exempt under section 4 or under Notification No. ST-1433 dated 30 March 1949.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| In re Tomline's Will Trusts: Pretyman v. Pretyman [1931] 1 Ch. D. 521 | The case interpreted "books" in the context of a will to include certain bound manuscripts/volumes; a manuscript collection bound in volumes was held to be "books" for the purposes of that instrument. | The Court considered the decision but distinguished it: the observations about "books" in the will context were held to be of little assistance in interpreting "books" in section 4 of the Sales Tax Act; the Court expressly said the term in the statutory context need not bear the same meaning as in the will and answered the reference negatively. |
| Foster v. Diphwys Casson Slate Company (decision under the Metalliferous Mines Regulation Act, 1872) | Applied the principle noscitur a sociis — a word's meaning may be restricted by the words with which it is associated; example in the case: "case" when used with "canister" must mean something like a canister (a solid, substantial container). | The Court relied on the reasoning to support the view that "books" in section 4 should be read with its associates ("magazines, newspapers") and thus limited to printed or written material intended to be read, excluding diaries intended primarily for writing daily memoranda. |
Court's Reasoning and Analysis
The Court's reasoning proceeds in a stepwise and textually grounded manner:
- The Court examined dictionary meanings of "book" and "diary" (Shorter Oxford, Webster's New International, Murray's New English Dictionary). These authorities show that "book" has both a wide meaning (a collection of sheets bound together, blank or written) and a narrower/popular meaning (a literary composition, something to be read for instruction, knowledge or recreation). "Diary" is defined as a daily record or a book prepared for keeping daily memoranda.
- Applying those meanings to the physical characteristics of the diaries (one-page-a-day, spaces with printed dates, most of the page blank, a sloka printed at the top of each page, few introductory pages of general information), the Court found that while a diary falls within the wide dictionary meaning of "book" (bound sheets), it does not fall within the restricted/popular meaning that denotes something intended primarily to be read for knowledge or instruction.
- The Court emphasized the purpose and primary use of the diaries: they are mainly intended to be written on to keep daily records, not primarily to be read as literary or informational works. The presence of some printed matter (slokas or general information pages) was treated as incidental and insufficient to make the diaries equivalent to books in the restricted sense.
- The statutory context of section 4 was analyzed: the word "books" appears alongside items such as "magazines" and "newspapers" and among universally necessary daily-use articles (water, foodgrains, milk, salt, electrical energy). The Court applied the principle noscitur a sociis (words take colour from their associates) to infer that "books" was intended in the restricted sense — i.e., printed or written material meant to be read — and not in the very wide sense that would include diaries and account books.
- The Court addressed the State Government's notification exempting "exercise books" and observed that the notification amounted to an administrative interpretation of "books" so as not to include exercise books; however, the bench held that this administrative interpretation of a legislatively used word was not helpful to the Court's task of statutory interpretation of the word as used by the Legislature.
- The Court considered and distinguished the English authority (Pretyman) relied upon by counsel, noting that the meaning of "books" in a will need not be the same as that in a statutory provision and that the observations in that case did not assist in determining whether diaries fall within section 4 of the Sales Tax Act.
- Based on the foregoing textual, contextual and purposive considerations, the Court concluded that "books" in section 4 is used in the restricted/popular sense and therefore does not include the diaries sold by the assessee.
Holding and Implications
REFERENCE ANSWERED IN THE NEGATIVE
Holding: The Court answered the referred question in the negative — the word "books" in section 4 of the U.P. Sales Tax Act does not include the diaries in question, and thus the proceeds of their sale are not exempt under section 4.
Direct consequences imposed by the Court:
- The Court directed that copies of the judgment be sent to the Judge (Revisions), Sales Tax, U.P., and to the Commissioner, Sales Tax, U.P., under the seal of the Court and signature of the Registrar in accordance with section 11(6) of the U.P. Sales Tax Act.
- The Court ordered that the assessee shall pay to the Commissioner the costs of the reference, assessed at Rs. 100.
Broader implications: The opinion does not assert that it establishes a new general precedent beyond this interpretation of "books" in section 4; the decision's practical effect is to deny the assessee's claim of exemption for the diaries and to require payment of the assessed costs. The Court distinguished prior authority and administrative interpretation rather than adopting them as binding precedent in this statutory context.
M.C Desai, C.J:— This is a reference by the Judge (Revisions), Sales Tax, under section 11(1) of the U.P Sales Tax Act, made at the instance of the assessee, calling for an answer of this Court on the question:
“Whether on the facts and circumstances of the case the word ‘books’ used in section 4 would include the diaries sold by the applicants?”
2. In this case we are concerned with the assessment for 1949-50. The same question is raised in the two connected references which are made at the instance of the same assessee and are for the next two assessment years. The assessee is a dealer in books, stationery and diaries and has been assessed to sales tax in the three assessment years on turnovers which include proceeds of sale of diaries. Under section 3 of the Act sales tax is payable in an assessment year on a turnover, i.e, the aggregate of proceeds of sale of goods by a dealer. Section 4(as it stood then) exempts proceeds of sale of “water, salt, foodgrains, milk, gur, electrical energy for industrial purposes, books, magazines, newspapers and motor spirit”, and empowers the State Government to exempt by notification in the official Gazette proceeds of sale of other goods. In exercise of this power the State Government has issued Notification No. ST-1433.X-1012-1948 dated 30th March, 1949, exempting “exercise books” from taxation under the Act. The question raised before us is whether diaries are books within the meaning of section 4, and, therefore, exempt from taxation under the Act. They are one-page-a-day diaries bound like books. At the top of each page there is a sloka from Bhagwat Gita. In the beginning there are a few pages containing general information on various matters and pages other than them are blank except for the slokas written at the top. Most of the space on each of these pages is blank. The assessee's contention is that the diaries are books within the meaning of section 4 and, therefore, proceeds of their sale are not to be included in a turnover for any of the three assessment years. On the other hand, it was contended on behalf of the Commissioner that they are not books or exercise books and are, therefore, not exempt either under section 4 or under Notification No. 1433 dated 30th March, 1949.
3. Meanings of the words “book” and “diary” given in three of the standard dictionaries are these:
Book: (1) A writing, a written charter or deed. (2) A (written) narrative, record, list, register. (3) (Generally) A collection of sheets of paper or other substance, blank, written, or printed, fastened together so as to form a material whole; especially such a collection fastened together at the back, and protected by covers. (Shorter Oxford English Dictionary).
(1) In general, a written or printed narrative, record, representation, or series of these. Specifically, a. A formal written document. b. A collection of tablets……………of sheets of paper, parchment, or similar material, blank, written, or printed, strung or bound together; commonly, many folded and bound sheets containing continuous printing or writing; especially, when printed, a bound volume, or a volume of some size, as distinguished from a pamphlet, c. A volume without a cover. d. A literary composition, e. A major division of a treatise or literary work. (Webster's New International Dictionary).
(1) A writing, a written document. (2) A (written) narrative or account, record, list, register. (3) (Generally) A written or printed treatise or series of treatises, occupying several sheets of paper or other substance fastened together so as to compose a material whole, a. Specifically such a treatise occupying numerous sheets or leaves fastened together at one edge called the back, so as to be opened at any particular place, the whole being protected by binding or covers of some kind, b. The material articles so make up, without regard to the nature of its contents, even though its pages are occupied otherwise than with writing or printing, or are entirely blank. c. A literary composition such as would occupy one or more volumes, without regard to the material form or forms in which it actually exists. (4) That in which we may read, and find instruction or lessons. (9) A number of sheets of blank writing-paper bound together to form a volume in which to keep records of commercial transactions, minutes of meetings etc. (Murray's New English Dictionary).
Diary: (1) A daily record of events or transactions, a journal. (2) A book prepared for keeping a daily record; also applied to calendars containing daily memoranda. (Shorter Oxford English Dictionary).
(1) A register of daily events or transactions; a daily record; journal; especially, a book for personal notes or memoranda, or for details of experiences or observations of the writer; also, a blank book for daily memoranda. (Webster's New International Dictionary).
(1) A daily record of events or transactions, a journal; specifically, a daily record of matters affecting the writer personally, or which come under his personal observation.
(2) A book prepared for keeping a daily record, or having spaces with printed dates for daily memoranda and jottings. (Murray's New English Dictionary).
4. It will be noticed that the word “book” has got several meanings; in its wider sense it means a writing and a collection of sheets of paper, blank, written or printed, strung or bound together and a diary would come within this meaning. In the restricted sense it means that which we may read and find instructions or lessons, a literary composition. A diary would not come within this restricted meaning because primarily it is meant to be written on and not to be read. That there is some writing printed on it which is intended to be, and can be, read does not make it a book because it is not primarily intended to be read like a book. The diaries in question are primarily meant for keeping a daily record and have spaces with printed dates for daily memoranda and jottings. Though a sloka from Bhagwat Gita is printed at the top of each page, they are not to be treated as Bhagwat Gitas and nobody intending to purchase a copy of Bhagwat Gita will buy such a diary. Though there is some printed material of general information and knowledge, these diaries are not meant to be used like books for acquiring general knowledge. Using them for information on certain matters would only be an incidental use.
5. It seems that the word “books” in section 4 is used not in the wider sense but in the restricted or popular sense. Popularly a book is what one can read for education, knowledge, enlightenment or recreation, what one would find in a literary or in a book-seller's shop. In this sense the word would not cover diaries. The context in which it has been used suggests that it means an article of such universal use and necessity as water, food, milk, salt and electricity. The Legislature evidently intended to exempt articles of universal necessity and daily use, like milk, water, food, salt, etc., and when it included books among them it must have meant books of such universal necessity and daily use as books required for education, knowledge, enlightenment or recreation and not other books, like diaries, exercise books, account books, etc. There was no reason for placing exercise books, account books and diaries in the same class as water, food, milk, salt and electricity.
6. That the Legislature used the word in a restricted sense is borne out by its adding in section 4 “magazines” and “newspapers”. A magazine and a newspaper both are “books” according to their wider meaning and if the Legislature had used it in the wider meaning it would not have added the words “magazines, newspapers”.
“Exercise books” are books according to the wider meaning, but the State Government by including “exercise books” in the notification interpreted the word in the restricted sense so as not to include “exercise books”. I do not think this interpretation of the word by the State Government is of any assistance to us. Had the word been used in a notification an administrative interpretation given to it might be of some value but not an administrative interpretation given to a word used by a Legislature.
7. Sri G.P Bhargava referred us to In re Tomline's Will Trusts: Pretyman v. Pretyman [1931] 1 Ch. D. 521., in which Maugham, J., interpreted the word “books” used in a will. Included in the testator's estate were some original manuscripts of the series of letters and papers known as the Paston letters. They had been inlaid into sheets of paper which had them bound in three volumes. The testator had acquired them so bound, and they were still so bound at the time of his death. Maugham, J., held that they were “books”. He observed that a book is not necessarily a printed book, that there are many books which are not necessarily the sort of books which one finds in a library at all, and which yet are books, like a judge's note-book, that a volume containing manuscript music, the sheets of music being bound together with an outer cover with considerable care by a book-binder, is a book, that manuscript notes of a physician relating to his attendances upon King George III and the Queen and a manuscript journal containing private memoranda and observations on the state of health and the malady of the King were books and that a log-book is a book. He held the three volumes to be books because they were in book form, to the outward eye they looked like books and in the ordinary course they could be and were handled like books, they could be used like books in the sense that, as one turned over the sheets, one could read the various letters as a collection of letters bound up in the books and that they were not detachable letters but were in substance permanent parts of the volumes. Those observations are hardly of any assistance in the determination of the question whether a diary is a book within the meaning of section 4 of the Sale of Goods Act or not. “Book” used in section 4 of the Sales Tax Act does not necessarily bear the same meaning as the word used in an Englishman's will. It is also by no means certain that Maugham, J., would have interpreted “books” to include diaries. My answer is, therefore, in the negative.
8. R.S Pathak, J.:— I have had the advantage of reading the judgment of my Lord the Chief Justice and generally agree with the conclusions to which he had arrived. In a case like the present, when the word “books” is used by the Legislature along with “magazines, newspapers”, noscitur a sociis, it is known by its associates. Where the meaning of a particular word is doubtful or obscure, being capable of wide import, the intention should be ascertained by looking at adjoining words. The words take their colour, it has been said, from each other, and the more general is restricted to a sense analogous to the less general.
9. In Foster v. Diphwys Casson Slate Company, the Court was called upon to determine the true meaning of the word “case” when used in sub-section (2) of section 23 of the Metalliferous Mines Regulation Act, 1872, which required inter alia that “it (gunpowder) shall not be taken into the mine except in a case or canister containing not more than four pounds”. Gunpowder had been carried in calico or linen bags, and the question arose whether such bags were included within the meaning of the word “case”. Now a case could mean a box or cabinet or crate or bag or sheath. But Lord Coleridge, C.J, observed:
“I should say that here the words ‘case or canister’ explain one another, that the word ‘case’ which is used in this place and in connection with ‘canister’, must mean a case in the nature of a ‘canister’, not strictly speaking a canister, but a solid and substantial thing of wood, or metal, or some other such solid substance, which can be covered over so as to prevent ignition from a spark.”
10. The Legislature has used the words, “books, magazines, newspapers,……………” in section 4 of the U.P Sales Tax Act, 1948. According to the several dictionary meanings to which the word is amenable, “books” could mean anything from a collection of blank sheets strung or bound together to a written or printed narrative or treatise. Magazines or newspapers must necessarily be printed or written material. Therefore, to fall in the same distinct category, the word “books” used here must be confined to a printed or written record. Accordingly, I agree that the diaries sold by this dealer are not covered within the meaning of the word “books” used in section 4 of the aforesaid Act. In the result, I would answer the question referred to this Court in the negative.
By the Court
11. Our answer to the question is in the negative.
12. We direct that copies of this judgment shall be sent to the Judge (Revisions) Sales Tax, U.P, and the Commissioner, Sales Tax, U.P, under the seal of the Court and the signature of the Registrar, as required by section 11(6) of the U.P Sales Tax Act. We further direct that the assessee shall pay to the Commissioner the costs of this reference, which we assess at Rs. 100.
13. Reference answered in the negative.
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