Sri Om Prakas Gupta v. Commissioner Of Commercial Taxes And Others

The Judgment of the Court was delivered by

B.N Banerjee, J.:— The petitioner, Om Prakas Gupta, carries on business, under the trade name of Messrs S.D Gupta & Co., in camphor cubes. He says that he purchases camphor in powder form from the market, converts camphor powder into camphor cubes and sells such cubes in the market, under brands—“Elephant”, “Moon” and “Arati”.

2. The petitioner says that he was registered as a dealer under section 7 of the Bengal Finance (Sales Tax) Act, 1941, and that the Commercial Tax Officer, Jorasanko Charge, assessed him to sales tax, under section 11(2) of the Bengal Finance (Sales Tax) Act, for the period 15th November, 1955, to 30th June, 1958, by an order dated 9th February, 1959. Thereupon, the petitioner filed an application before the Commercial Tax Officer for cancellation of his registration as a dealer under the Bengal Finance (Sales Tax) Act, on the plea that camphor was not a taxable commodity under the Bengal Finance (Sales Tax) Act and he, as a dealer in camphor, need not remain as a registered dealer under the said Act. He followed up the application by a second one, therein taking up the plea that camphor was a drug within the definition of Indian Drugs Act and that the provisions of Bengal Finance (Sales Tax) Act were not applicable thereto and as such the assessment of tax upon the petitioner for sale of camphor during the period 15th November, 1955, to 30th June, 1958, should be set aside.

3. The Commercial Tax Officer rejected both the applications by an order dated 9th September, 1955. The petitioner moved the Assistant Commissioner of Commercial Taxes against the aforesaid order. The Assistant Commissioner thereupon directed the Commercial Tax Officer to make an on-the-spot enquiry at the petitioner's place of business and submit a report on the following two points: (1) whether camphor tablets manufactured by the petitioner were exclusively made of camphor powder, and (2) whether the petitioner had any liability to pay tax under the Bengal Finance (Sales Tax) Act. The Commercial Tax Officer made an enquiry, as directed, and submitted the following reports:

“The dealer is engaged in making ‘camphor’ tablets and sells them.

The dealer claims that the camphor does not come under the purview of B.F (ST) Act, 1941.

It comes under the jurisdiction of 1954 Act (See section 23 of 1954 Act).

As such the dealer has surrendered the R.C No. JK/2884A for favour of issue of a R.C under 1954 Act.

The current Rokar and cash memo are signed.”

4. In paragraph II of the affidavit-in-opposition it is stated that the reports of the Commercial Tax Officer also mentioned that the petitioner was found to manufacture tin containers for camphor tablets. Mr. Banking Chandra Dutt, learned Advocate for the respondents, in his fairness, conceded that the aforesaid statement in the affidavit-in-opposition was incorrect and expressed his regret for the untrue embellishment sought to be introduced by the affidavit-in-opposition.

5. On receipt of the report, the Assistant Commissioner of Commercial Taxes made the following order, on 24th April, 1960, upon the application made by the petitioner:

“Camphor has by recent decision of this Directorate been treated as a kind of medicine and it is, therefore, being taxed under the West Bengal Sales Tax Act, 1954. Finding that the petitioner is nothing but a manufacturer of camphor tablets, I hold that the petitioner would not be liable to pay tax under the Bengal Finance (Sales Tax) Act, 1941, so long as his business is restricted to dealing on camphor tablets or camphor. The registration certificate granted under the Bengal Finance (Sales Tax) Act, 1941, would, therefore, no longer remain in force.”

6. The respondent Commercial Tax Officer thereafter felt that it was necessary to assess the petitioner under section 9(3) of the West Bengal Sales Tax Act, 1954, and issued a notice in Form VI, dated 2nd May, 1960, calling upon the petitioner to show cause why he should not be so assessed. In paragraph 10 of the petition the purpose of the notice in Form VI is described as a notice calling upon the petitioner to show cause why he should not be declared as a “dealer” under section 2(b) of the West Bengal Sales Tax Act, 1954. Mr. Provat Kumar Sen Gupta, learned Advocate for the petitioner, in his fairness, conceded that the aforesaid statement in the petition was wholly misconceived and erroneous. In reply to the notice the petitioner took up the position that by purchasing camphor powder from the local market and by making camphor cubes out of such powder he did not become liable to pay tax under the West Bengal Sales Tax Act, 1954 [misdescribed, in paragraph 11 of the petition, as Bengal Finance (Sales Tax) Act, 1954]. The Commercial Tax Officer rejected the plea and held that the petitioner was liable to assessment under the West Bengal Sales Tax Act.

7. The petitioner appealed against the order but the Assistant Commissioner of Commercial Taxes rejected the appeal as premature.

8. Thereafter, on 6th January, 1961, the respondent Commercial Tax Officer assessed the petitioner to sales tax under the West Bengal Sales Tax Act and also imposed a penalty upon the petitioner under section 9(3)(a)(ii) of the West Bengal Sales Tax Act. The tax assessed and the penalty together came up to Rs. 2,761.12 paise. The petitioner challenged the assessment order and the order imposing the penalty upon him before the Assistant Commissioner of Commercial Taxes. The appellate authority overruled the petitioner's contention that he was not at all liable to taxation under the West Bengal Sales Tax Act with the following observations:

“It is also contended by the petitioner that making camphor granules into camphor cubes cannot be an act of manufacturing inasmuch as camphor granules and camphor cubes are essentially the same thing. Although I agree that by this the petitioner did not manufacture a new thing but he can be regarded as a processor. The petitioner processed camphor granules into camphor cubes and sold the ultimate products under their distinct brand. Under the West Bengal Sales Tax Act if a person sells any notified commodity processed by him in West Bengal, he becomes a dealer and in this aspect the petitioner can be rightly considered as a dealer for the purpose of the West Bengal Sales Tax Act, 1954.”

9. The Assistant Commissioner, however, set aside the assessment on the finding that the petitioner's claim for exemption from taxation in respect of inter-State sales had not been properly considered by the Commercial Tax Officer.

10. The petitioner appealed against the order before an Additional Commissioner of Commercial Taxes and the latter, by his order, dated 26th June, 1962, dismissed the appeal with the following observations:

“It is however admitted by the petitioner that camphor granules are made into camphor cubes by means of small machines operated by electricity. This operation can no doubt be called a process. The meaning of the word ‘process’ appearing in Chambers' 20th Century Dictionary, Revised Edition, is a series of actions or events, a sequence of operation or changes undergone. In the present case there has no doubt been some action as a result of which camphor granules had undergone a change to camphor cubes. I am, therefore, satisfied that the learned Assistant Commissioner was justified in his observation that the petitioner processed camphor granules to camphor cubes and as such they are dealers as provided under the Act.”

11. Aggrieved by the order of the Additional Commissioner of Commercial Taxes, the petitioner moved this Court, under Article 226 of the Constitution, praying for a writ of certiorari for the quashing of the appellate order, dated 26th June, 1962, and for a writ of mandamus upon the respondents directing them not to give effect to the order, dated 6th January, 1961, whereby the petitioner was held to be liable to assessment under the West Bengal Sales Tax Act, and for a writ of prohibition upon the respondents prohibiting them from proceeding with the assessment of the petitioner under the West Bengal Sales Tax Act, 1954. He obtained this Rule.

12. Mr. Provat Kumar Sen Gupta, learned Advocate for the petitioner, contended, in the first place, that camphor was not a notified commodity under the West Bengal Sales Tax Act, 1954, and neither camphor powder nor camphor cubes could be taxed under the said Act. In my opinion, this argument cannot be sustained. The West Bengal Sales Tax Act, 1954, was an Act, as its long title shows, “to impose tax on cigarettes and other commodities.” Section 25 of the Act empowers the State Government to specify the commodities made taxable under the West Bengal Sales Tax Act. In exercise of the powers under section 25 the State Government published a notification No. 1658 F.T dated 1st August, 1956, which was couched in the following language;

“Whereas the Governor is of opinion that it would be in the public interest that the commodities mentioned below, being commodities liable to taxation under the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), should be taxed under the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954);

Now, therefore, in exercise of the power conferred by section 25 of the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954), the Governor is pleased hereby to specify such commodities under that section.

The commodities referred to above:

(1) ‘Drug’ as defined in clause (b) of section 3 of the Drugs Act, 1940 (XXIII of 1940).

(2) “Patent or proprietory medicine” as defined in clause (d) of section 3 of the Drugs Act, 1940 (XXIII of 1940).

(3) ‘Surgical dressing’ which expression shall include gauze, lint, and cotton wool, which have been sterilised and conform to the accepted standards of the medical profession.”

13. The word “drug” as defined in section 3(b) of the Drugs Act, 1940, reads as follows:—

“(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals other than medicines and substances exclusively used or prepared for use in accordance with the Ayurbedic or Ungil systems of medicine; and

(ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermins or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette.”

14. It is beyond dispute that camphor is a drug. The British Pharmaceutical Code, which Mr. Sen Gupta produced before me, recognises camphor as a drug and gives the following description of action and uses of camphor:—

“Camphor taken by mouth in small dose is a carminative and has a mild expectorant action. Applied externally it is a mild analgesia and rubefacient, and is used in liniments, such as camphor liniment, as a counter-irritant, in the treatment of fibrositis and neuralgia. A 10 per cent. solution in sterilised olive oil has been administered by intramuscular injection as a circulatory and respiratory stimulent, but there is little evidence of its value for this purpose.

Poisoning has occurred through the accidental administration of camphorated oil to young children in mistake for castor oil. The symptoms are nausea, vomiting, colic, disturbed vision, delirium, and epileptic form convulsions. Recovery is the rule, but in rare cases death may occur from respiratory failure.”

15. I have, therefore, to overrule the first branch of the contention of Mr. Sen Gupta that camphor as a commodity is outside the scope of the West Bengal Sales Tax Act, 1954.

16. Mr. Sen Gupta contended in the alternative that even if camphor be treated as a drug within the meaning of the Drugs Act, it was never notified as a notified commodity after the amendment of the West Bengal Sales Tax Act, 1954, by the West Bengal Sales Tax (Amendment) Act, 1958, and the specification made under section 25 of the unamended West Bengal Sales Tax Act, 1954, would not make camphor as a notified commodity, under the amended Act. In my opinion, this argument also is unworthy of being sustained. Notified commodity as defined in section 2(a) of the West Bengal Sales Tax Act, 1954, is couched in the following language:

“‘Notified commodity’ means any commodity specified under section 25 of this Act, whether before or after the commencement of the West Bengal Sales Tax (Amendment) Act, 1958.”

17. That being the definition of “notified commodity”, such commodities as had been specified under section 25 of the Act prior to the amendment of 1958 Act automatically became notified commodities under the definition quoted above.

18. Faced with this position Mr. Sen Gupta retraced his steps and contended that camphor may be a notified commodity but by selling camphor cubes only the petitioner did not become a dealer within the meaning of section 2(b) of the West Bengal Sales Tax Act. In order to appreciate the force of this contention I have to examine the definition of “dealer” in section 2(b) of the West Bengal Sales Tax Act, 1954, which is set out below:

“‘Dealer’ means any person who sells notified commodities manufactured, made or processed by him in West Bengal, or brought by him into West Bengal from any place outside West Bengal for the purpose of sale in West Bengal and includes Government.”

19. Mr. Sen Gupta argued that the petitioner made camphor cubes out of camphor powder by application of mechanical force or pressure upon camphor powder, without addition or admixture of any other material and without application of any process. According to Mr. Sen Gupta unless as a result of the process the raw material was converted into any other form, which conversion did not take place when camphor was made into cubes from camphor powder, the process would not be a process within the meaning of section 2(b) of the West Bengal Sales Tax Act. In support of this contention he relied upon the following decisions: State Of Madras v. R. Saravana Pillai [1956] 7 S.T.C 541, A.V Pachiappa Chettiar v. State of Madras [1962] 13 S.T.C 202., and Deputy Commissioner (C.T), Coimbatore Division v. C. Abdul Shukoor Sahib Co. [1964] 14 S.T.C 670. In my opinion, the above decisions do not help Mr. Sen Gupta. According to the Oxford Dictionary one of the meanings of the word “process” is,

“a continuous and regular action or succession of actions, taking place or carried on in a definite manner, and leading to the accomplishment of some result.”

20. The activity contemplated by the word “process” is general, requiring only continuous and regular action or succession of actions leading to the accomplishment of some result but it is not one of the requisites that the activity should involve some operation on some material in order to its conversion to some other stuff. In my opinion, the word “process” used in section 2(b) of the West Bengal Sales Tax Act, 1954, has been used in the general sense. In this general sense also the word “process” was interpreted by this Court in the case of Khodabux v. Manager, Caledonian Press A.I.R 1954 Cal. 484..

21. That being the view, by converting camphor powder into camphor cubes the petitioner processed camphor powder into camphor cubes and fell within the definition of “dealer” in the West Bengal Sales Tax Act, 1954.

22. All the arguments in support of the Rule made by Mr. Sen Gupta, therefore, fail and I discharge this Rule. But I make no order for costs.

23. Rule discharged.