M/S. Janajivan Foods... v. The Sales-Tax Office...

G.B Patnaik, J.:— The question raised in this writ petition is whether “vermicelli” commonly known as “Semiya” is covered by Entry No. 1 or Entry No. 12 of List-C for which the rate of tax on the taxable turnover is 4 per cent, as contended by the petitioner, or it is covered under the residuary item under Entry No. 101 for which the rate of tax is 8 per cent, as has been held by the taxing authority under the Orissa Sales Tax Act.

2. The petitioner is a registered dealer and carries on business in “Vermicelli (Semiya)” on wholesale basis on receiving the stock from Hyderabad. The Taxing Authority issued a notice under section 12(4) of the Orissa Sales Tax Act pursuant to which the petitioner produced the Sales Register, Stock Register, Sale Bills and Stock Transfer Notes at cetera for examination of the assessing authority. The entire records produced by the petitioner were examined and the assessing officer found the gross turnover of the Rs. 4,88,585.90. The petitioner had paid sales-tax on the taxable turnover at the rate of 4 per cent, but the assessing officer has calculated the tax at the rate of 8 per cent and, therefore, deducting the amount already paid, has directed the petitioner to pay the balance sum of Rs. 19,543/. It is this order of the assessing authority, the petitioner has challenged in this writ petition. Though the impugned order is appealable and no appeal has been filed, yet Mr. Pasayat for the petitioner contends that no disputed question of fact being involved and the petitioner having not challenged the gross turnover of taxable turnover found by the assessing authority but merely challenging the rate of tax at which on the taxable turnover sales-tax has to be paid, the petitioner has directly approached this court under Article 226 of the Constitution. In view of the admitted position that no disputed question of fact is involved and the case involves a pure interpretation of law we do not think it appropriate to close the doors of this Court on the ground of an available alternative remedy.

3. Section 5(1) of the Orissa Sales Tax Act, on the relevant date, was as follows:—

“The tax payable by a dealer under this Act shall be levied on his taxable turnover at such rate, not exceeding sixteen per cent and subject to such conditions as the State Government may from time to time, by notification, specify”.

4. Pursuant to this provision, a notification has been issued vide No. 12531 CTA, 62/82-F, dated 22-3-1982, effective from 1-4-1982 enumerating 101 entries and defining the rate of tax to be paid on the same. All these goods have been compendiously included in a list called List-C. List-A contains a list of goods exempted from tax as provided for under section 6 of the Orissa Sales Tax Act and List-B contains a list of goods which are subjected to purchase tax as provided for under section 3-B of the said Act. We are, however, concerned in this case with the list of goods, subjected to sales-tax. In the said List, Entry No. 1 is “Atta, Maida and Suji” and the rate of tax as provided for is 4 per cent with effect from 1-4-1982. Entry No. 13 is “Cereals other than wheat, paddy, rice/broken rice jower, Suan, Gurji, Kangu, Ragi and Maize” for which also the rate of tax provided for is 4 per cent. Mr. Pasayat, the learned counsel for the petitioner, contends that “vermicelli” or “Semiya” is nothing but preparation out of “Maida” and, therefore, the same is covered either under Entry No. 1 or under Entry No. 13.

5. There is no dispute that vermicelli or “Semiya” is prepared out of “Maida” and “Maida” is one of the products of wheat. The process which is undergone for preparation of “Semiya” out of “Maida” is that “Maida” is mixed up with water in certain proportion and is made into a paste and then it is pushed through an apparatus as a result of which slander threadlike article comes out which on being dried is called “Semiya”. Therefore, the original form of “Maida” is no longer retained and “Maida” undergoes a transformation though, of course, the process of transformation is rather little. Mr. Pasayaf, the learned counsel for the petitioner, relying upon certain decisions of different High Courts urges that “Semiya” is nothing but “Maida” and, therefore, is a cereal within the ambit of Entry No. 13. In this connection, the learned counsel places reliance on the decision of the Bombay High Court in the case of Commissioner Of Sales Tax v. Sultan Shev Co. . 1977 40 S.T.C 583., and a decision of the Patna High Court in the case of Commissioner of Commercial Taxes Patna v. India Sewai Co. . 1980 45 S.T.C 28.. Undoubtedly in those two cases, vermicelli has been construed to be included with in item “cereals”, but looking at the different entries under the Orissa Sales Tax Act, it is difficult for us to include “vermicelli” within Entry No. 13. In the Bombay case Commissioner Of Sales Tax v. Sultan Shev Co., under the Bombay Sales Tax Act, Schedule-A contained several items of goods which were exempted from payment of sales-tax and Entry No. 10 of the said Schedule was.

“Cereals and pulses in all forms and flour including atta, maida, bessan, suji and bran prepared therefrom, but excluding maize flour”

6. and the rate of tax prescribed for these goods was 2 per cent, whereas the general rate of tax prevalent during the period was 4 per cent. The learned Judges on looking to the notification under which several items of the genus “cereals” and “pulses” came to the conclusion that the items included therein were merely illustrative and not exhaustive and all the said items belonged to the main genus namely “cereals” and, therefore, even though an item might not have figured in the list, the same could not be excluded from the category of “cereals” so long as the “cereals” retain their character of being an edible item and identifiable as having been formed out of the “cereal”. On the aforesaid analysis and on coming to the conclusion that “Semiya” is prepared out of “Maida” and “Maida” is admittedly included in the Entry “cereals”, “Semiya” also was held to be a cereal. But on a bare look at the different entries contained in List-C under the Orissa Sales Tax Act, in our view, “Semiya” cannot be considered to be a “cereal”. In the very Entry, namely Entry No. 13, from the genus “cereal”, the species “wheat paddy, rice/broken rice, jower, Suan, Gurji, Kangu, Ragi and Maize” have been excluded and “Semiya” is a preparation out of “Maida” which is prepared from the species “wheat”. Then again, “atta, Maida and Suji” all of which are prepared out of “wheat” have been clubbed together in another Entry, namely Entry No. 1. “Wheat” itself has been notified under Entry No. 97. In this view of the matter, by no stretch of imagination, “Semiya” can be included within Entry No. 13 meant for “Cereals”. We would accordingly reject the submission of Mr. Pasayat on that score without any hesitation. The next question which arises for consideration is whether it can be included within Entry No. 1 which is for “Atta, Maida and Suji”. It has been an accepted principle of construction that when a word to be construed is used in a taxing statute or a notification issued thereunder, it should be understood in its commercial sense. In the case of Porritts & Spencer (Asia) Ltd. v. State of Haryana . 1979 1 SCC 82, the question for consideration was whether “dryer felts” fall within the category of “all varieties of cotton, woolen or silken textiles” specified in item 30 of schedule-B of the Punjab General Sales Tax Act, 1948. Bhagwati, J (as he then was) speaking for the Court, stated thus:—

“Now, the word ‘textiles’ is not defined in the Act, but it is well settled as a result of several decisions of this Court, of which we may mention only a few, namely, Ramavatar Budhiprasad v. Asst. Sales Tax Officer, Akola, A.I.R 1961 S.C 1325 and Motipur Jamindary Co., Ltd. v. State of Bihar, A.I.R 1962 S.C 660 and State of West Bengal v. Washi Ahmed, (1977) 3 S.C.R 149 ((1977) 2 SCC 246 : A.I.R 1977 S.C 1638) that in a taxing statute words of every day use must be construed not in their scientific or technical sense but as understood in common parlance. The question which arose in Ramavatar's case (supra) was whether betel leaves are vegetables and this court held that they are not included within that term………”

7. To the same effect is the observations of Pathak, J, in Delhi Cloth & General, Mills Co. Ltd. v. State of Rajasthan . 1980 4 SCC 71, wherein his Lordship observed:—

“Now, in determining the meaning or connotation of words and expressions 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 sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted. As sales-tax the liability falls on the seller, who in his turn passed it on to the consumer, As purchase tax, the liability falls directly on the purchaser. A long train of authorities supports that view, and the need refer only to the recent judgment of this Court in Porritts and Spencer (Asia) Ltd. v. State of Haryana, 42 STC 435 ((1979) 1 SCC 82 : A.I.R 1979 S.C 300) in which reference has been made to some of them.”

8. Bearing in mind the aforesaid principles of construction, we would examine the correctness of the alternative submission of Mr. Pasayat that “Semiya” whether can be included under Entry No. 1, namely “Atta, Maida and Suji”. Mr. Pasayat relies on a Bench decision of the Andhra Pradesh High Court in the case of State of Andhra Pradesh v. Karnatakam Govindayya Setty and Sons . 1984 55 S.T.C 160.. No doubt, the aforesaid decision supports Mr. Pasayat's contention fully, but we are in respectful disagreement with the aforesaid view of the Andhra Pradesh High Court. The learned Judges in that case have been swayed away by the factor that “Semiya” is a commodity of common use and an article of food and, therefore, it would not be appropriate to treat it as outside the net of higher taxability, That cannot be, in our opinion, a rule of construction. The learned Judges of the Andhra Pradesh High Court rejected the contention of the counsel appearing for the Revenue to apply the common parlance test, simply by saying:—

“……We are not impressed by this argument…” without giving any reasons therefor. But in view, relying upon the observations of Pathak, J. in Delhi Cloth and General Mills' case, the common parlance test has been accepted to be a fairly well-settled principle to construe the meaning of any word or expression describing an article or commodity in a taxing statute. Applying the said test to the case in hand, “Semiya” would not come within Entry No. 1, namely “Atta, Maida and Suji”. Neither a dealer nor a consumer would understand “Semiya” to be the same thing as “Maida”. If a consumer goes to a dealer and asks for “Semiya”, obviously the dealer will not give him “Maida”, nor if a consumer asks for “Maida” no dealer will give him “Semiya”. Howsoever little the process of transformation there might have been, “Semiya” is a commercially different article altogether, so much so that a dealer of “Atta, Maida and Suji” may not be dealing with “Semiya” at all. In this view of the matter, we are unable to accept the contention of Mr. Pasayat that “Semiya” is included within Entry No. 1 meant for “Atta, Maida and Suji”. Necessarily, therefor, it has to be taxed under the residuary Entry No. 101 meant for “all other articles” and the rate of tax is 8 per cent, The order of the assessing officer, therefore, is wholly justified and we do not find any infirmity in the same.

9. In the result the writ application fails and the same is accordingly dismissed, but in the circumstances, there will be no order as to costs.

L. Rath, J.:— I agree.

10. Application dismissed.