JUDGMENT
L.N. Ray, Judicial Member.
1. The point which falls for consideration in this case is whether “non-cotton yarn waste” is included in the term “non-cotton yarn” in the relevant notification issued under Section 25 of the West Bengal Sales Tax Act, 1954 (“the 1954 Act”, for short). The applicant-company filed this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987. It manufactures non-cotton yarn being a notified commodity under the 1954 Act. The Commercial Tax Officer made an assessment order dated June 29, 1984, for four quarters ending June 30, 1980, disallowing a claim of Rs. 1,25,682.93 representing sales of non-cotton yarn waste and thereby imposed sales tax on such sales at 8 per cent under the Bengal Finance (Sales Tax) Act, 1941 (we may call it “the 1941 Act”). An appeal was preferred by the applicant before the Assistant Commissioner of Commercial Taxes, who by an order dated June 30, 1986, rejected the claim on this account and maintained the assessment order. Then a revision was preferred before the West Bengal Commercial Taxes Tribunal which by an order dated April 27, 1989, rejected the claim and confirmed the assessment on the sales of non-cotton yarn waste. The applicant contends that all the authorities below committed error in holding that non-cotton yarn waste is different from non-cotton yarn within the meaning of the 1954 Act. It is alleged that all non-cotton yarns, excluding coir yarn and pure silk yarn but including non-cotton yam waste were covered by the notification under Section 25 of the 1954 Act.
2. The further case of the applicant is that during the process of manufacture of goods out of non-cotton yarn, short-lengths of such fibres fall on the floor of the mill. Such left-over pieces are collected and sold in the market at cheaper rates. People buying and selling them generally treat and understand them as non-cotton yarn sweepings. Despite the change undergone in regard to length and size no new commercial commodity comes into being. The test of user of the articles is said to be irrelevant in deciding whether such waste comes within non-cotton yarn from which it originates. Reference has been made to Section 14(iib) of the Central Sales Tax Act, 1956, in which cotton yarn waste has been excluded from “cotton yarn”. It has been contended that in the absence of such exclusion in the notification under the 1954 Act, non-cotton yarn waste is intended to be included in “non-cotton yarn”.
3. The respondents, however have made out a case in the affidavit-in-opposition that non-cotton yarn waste is different from non-cotton yarn which was notified under Section 25 of the 1954 Act. Such non-cotton yarn waste ceases to be yam for the reason that it lost its capability of being used for manufacture of textile. It was not necessary, therefore, to specifically exclude non-cotton yarn waste from the term “non-cotton yarn”. The two goods are differently understood in trade and commerce. Non-cotton yarn waste is said to be left-over material after manufacture out of non-cotton yarn is over. The applicant has preferred to file an affidavit-in-reply in which it maintains the original stand that non-cotton yarn and non-cotton yarn waste are the same and not different commodities.
4. The impugned assessment was for the year ending June 30, 1980. The last notification under Section 25 of the 1954 Act is No. 1206-F.T. dated March 26, 1979, which gives the list of notified commodities under that Act. Item 63 thereof runs as :
“(i) All non-cotton yarn, as specified in Notification No. 1914-F.T. dated the 10th May, 1963, as amended, other than coir yarn and pure silk yarn.
(ii) Coir yarn.
(iii) Pure silk yarn.”
The latest position of the relevant item, as amended, was : “AH non-cotton yarn including non-cotton hosiery yarn.”
5. It is common ground that non-cotton yarn and non-cotton yarn waste are made of the same basic physical substance. In fact, non-cotton yarn waste is derived in course of manufacture of different commodities out of non-cotton yarn, the former admittedly being left-over short-lengths of different sizes collected from the mill floor and the latter, being the parent material. It is nobody’s case that non-cotton yarn waste can be used for manufacture of textiles, for which primarily non-cotton yarn is put to use. The analogy of exclusion of cotton yarn waste from cotton yarn under Section 14(iib) of the Central Sales Tax Act, 1956, does not appear to have any bearing on the interpretation of “non-cotton yarn” as necessarily encompassing in it “non-cotton yarn waste” under the notification of the 1954 Act The two Acts were enacted for different purposes by different legislatures and anything provided or not provided in one Act does not give vent to the legislative intent in the other.
6. According to Webster’s New World Dictionary, Second Concise Edition, “yarn” means “a continuous strand or thread of spun wool, silk, cotton, nylon, glass, etc., for weaving, knitting, rope-making, etc.” According to the New Encyclopaedia Britannica, 15th Edition, the word “yarn” in this context means–“continuous strand of fibres grouped or twisted together and used to construct textile fibres”. There is, in fact, no controversy at all as to the meaning of “yarn” or, for that matter, “non-cotton yarn” as such. The expression “non-cotton yarn” has not been defined either in the 1954 Act, or the Rules made thereunder or the notification concerned. That being the position, as well-settled, while interpreting items in statutes like Sales Tax Acts, resort should be had not to the scientific or technical meaning but to their popular meaning or the meaning attached by those dealing in them, that is to say, in the commercial sense. We are, therefore, called upon to undertake the task of finding out the trade or commercial parlance meaning of the term “non-cotton yarn” in the limited sphere as to whether or not, “non-cotton yarn waste” is understood as the same as “non-cotton yarn” or as a different commodity.
7. In the pleadings, namely, the affidavits, and at the hearing, the parties relied on or distinguished this case from certain reported decisions. Mr. P.K. Bose, learned advocate for the applicant, relied on a decision of the Allahabad High Court reported in [1970] 26 STC 464 (District Cooperative Development Federation Ltd. v. Commissioner, Sales Tax) in which it was held that “coal dust” is included in “coal” as used in entry 33 of the notification dated March 31, 1956 under the U.P. Sales Tax Act, 1948, and also on a decision of the Madhya Pradesh High Court reported in [1972] 29 STC 413 (Binod Mills Co. Ltd. v. Commissioner of Sales Tax) in which “coal” and “coal ash” were held to be the same within the meaning of entry 1 of Part III of Schedule II to the M.P. General Sales Tax Act, 1958. These decisions rendered in the context of those particular enactments do not really lay down any ratio having a bearing one way or the other in our present search for the correct interpretation. We are inclined to agree with the applicant that the decision of the Gujarat High Court reported in [1973] 31 STC 115 (Hind Engineering Co. v. Commissioner of Sales Tax) is clearly distinguishable. In that case, the question for determination was whether rubber beltings were comprehended within “cotton fabrics” as defined by item 19 in the First Schedule to the Central Excises and Salt Act, 1944. The decision of the Madras High Court reported in [1977] 39 STC 359 (Muthusavari Pillai & Sons v. State of Tamil Nadu) was relied on by the respondents. It was held in that case that a bunch of spun thread could also come within the definition of “cotton yarn” if it was capable of being used for the manufacture of textiles under item 4 of the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959. Respondents wanted to get assistance from this decision on the point that non-cotton yarn waste is a different commodity because it cannot be used for manufacture of the same goods as non-cotton yarn is capable of. This was also a decision in the context of the provisions of a different Act. Moreover, the real issue in that case was fundamentally different There the question was whether a bunch of spun thread came within the meaning of “cotton yarn”. In the instant case, we have a distinct issue to contend with. In the same decision it was also held that cotton bandings and cotton ropes (though made of the same basic material) were not textiles within the meaning of item 4 of the same Schedule. So, we feel that this decision does not lend any assistance in arriving at the true interpretation of the term under our consideration.
8. Reference was made to the decision of the Andhra Pradesh High Court in [1978] 41 STC 437 (Narayan Venkat & Co. v. State of Andhra Pradesh). It was held in that case that what was necessary to make an article “cotton fabric” was the manufacture of the same wholly or partly from cotton as stated in item 19 of the First Schedule to the Central Excises and Salt Act, 1944, and the fact that subsequently such cotton fabrics became rags would not make any difference and such rags would not cease to be cotton fabrics. This decision, again, takes us nowhere, because it is related to a particular definition given in that Act, and that definition apparently attached importance to the pre-manufacture raw material.
9. Mr. Bose, appearing for the applicant, sought to rely on the decisions reported in [1987] 66 STC 128 (Pat) (Bajrangbali Coke Briquetting Industries v. State of Bihar) and [1987] 66 STC 415 (Ker) (Deputy Commissioner of Sales Tax v. Kerala Industrial Works). The first case involved construction of the definition of “coal” in Section 14(ia) of the Central Sales Tax Act, 1956, vis-a-vis “coal briquettes”. The second case involved the question whether the left-over portion of soft-wood used for wood-wool was entitled to exemption in a particular context. Both these decisions appear to have no bearing on the question before us. Mr. Bose also strongly relied on the decisions of the Supreme Court in AIR 1977 SC 597 (Dunlop India Ltd.’s case) and [1978] 42 STC 433 [Porritts & Spencer (Asia) Ltd. v. State of Haryana]. In these two decisions it was held that the user or the end-use of the article is irrelevant or immaterial. In [1978] 42 STC 433 (SC) [Porritts & Spencer (Asia) Ltd. v. State of Haryana] it was further held that in order to become “textiles” within entry 30 of Schedule B to the Central Sales Tax Act, 1956, the article need not be of any particular size, strength or weight. The principles laid down in these cases are binding. We also do not attach importance to the end-use or length or size of the impugned article, namely, “non-cotton yarn waste”. But the fundamental factor is how it is understood or dealt with in the trade or commercial circle. Similarly, the decision in [1977] 39 STC 386 (Bom) (Punjab Business & Supply Co. Pvt. Ltd. v. State of Maharashtra) relied on by the applicant does not really assist us in our present task, although it also rules out the test of user, and held that rags and chindhis sold for use in paper manufacture are “cotton fabrics” within entry 15 of the First Schedule to the Bombay Sales Tax Act, 1959.
10. Mr. P.K. Chakraborty, learned State Representative, relied on the decision of G.N. Ray, J., of the Calcutta High Court in the case of Sri Annapurna Cotton Mills and Industries Ltd. reported in (1981) 14 STA 76. The relevant portion of the said judgment is reproduced below (from page 84 of the Report) :
“There is, however, a serious dispute on the question as to whether or not in commercial parlance ‘cotton waste’ is understood as a separate article and not as ‘cotton’ and it may not be possible to decide such disputed question of fact in the writ jurisdiction without taking expert evidence. Although I am inclined to follow the decisions of the Gujarat and Madras High Courts in holding that ‘cotton waste’ is understood as a distinct and separate article in the commercial parlance and it is not accepted as ‘cotton’, it is, however, not necessary to decide the said question in this Rule, simply because the commercial tax authorities have decided the case of the petitioner-company on a clear finding that cotton waste is understood as a separate and distinct product in the common parlance and it does not appear to me that such adjudication made on such finding is wholly capricious, perverse or without any reason and as such calls for interference in the writ jurisdiction.”
To our mind, the foregoing decision finally turned upon the finding of a question of fact that “cotton waste” is understood in the commercial parlance as distinct from “cotton”. That being so, it does not help us in any manner. We will have to find out whether the authorities below committed any error in this case, having regard to the rule of commercial parlance meaning.
11. Mr. Chakraborty, appearing for the respondents, referred to, in his support, the Supreme Court’s decision in the case of Indian Express (P.) Ltd., reported in [1987] 67 STC 474. Mr. Bose for the applicant submitted that it has no application here. It was a case where it was held that surplus, old or waste newspapers were different from newspapers and, therefore, sales of old newspapers were taxable. In our view, the ratio laid down therein is that in the popular sense old newspapers are regarded as a commodity different from current newspapers. May be that user has a role to play in this finding, but the real test is how the commodity is dealt with in the common or commercial parlance, where multiple factors (including or not including the use to which the commodity is put or capable of being put) combine in a complex manner. We are not required to investigate those factors. What we are required to ascertain is the product of all those factors, namely, the meaning ultimately attached by the trade circle. In the case of old newspapers, it was held that the reading public do not treat them as newspapers qua papers containing information or news, as stale news are not regarded as news.
12. Reference was also made on behalf of the applicant to the decisions of the Supreme Court reported in [1988] 69 STC 226 (Collector of Central Excise v. Kiran Spinning Mills) and [1988] 70 STC 314 [Collector of Central Excise v. Kutty Flush Doors & Furniture Co. (P.) Ltd.]. In both these cases the question involved was whether a new and different article came into existence so that the activity could be called “manufacture” within entries 18 and 68 of the First Schedule to the Central Excises and Salt Act, 1944. Therefore, the ratio of these decisions appears to have no bearing on the question under consideration before us.
13. Mr. P.K. Bose, learned advocate for the applicant, lastly relied on a recent decision of the Gauhati High Court in the case of Assam Cotton Mills reported in [1990] 76 STC 6. In that case a Division Bench of that High Court held that “cotton yarn” includes cotton yarn waste within the meaning of item 43 of Schedule III to the Assam Sales Tax Act, 1947. In holding so, the Division Bench explained as follows :
“For the purpose of these references we adopt what is referred to as common sense rule of interpretation or as understood in English language, we hold the common man understands cotton waste is covered by cotton and cotton yarn waste is covered by the words cotton yarn.”
It does not appear to be a settled law that in interpreting items in statutes like Sales Tax Acts, a “common sense” view can be taken. Rather, the settled law is that the meaning attached by the trade circle or those dealing in the article will be the guiding rule of interpretation. The Supreme Court has repeatedly held so and we may refer to one of the recent decisions of that Court in the case of United Offset Process Pot. Ltd. reported in [1989] 74 STC 81 ; AIR 1989 SC 622. That case related to the Customs Tariff Act, 1975, but it was held that where there was no meaning attributed to the expressions used in the particular enacted statute, then the items in the customs entries should be judged and analysed on the basis of how these expressions were used in the trade or industry or in the market or in other words how these are dealt with by the people who deal in them, provided that there is a market for these types of goods. It was further held that “in incorporating items in the statutes like excise, customs or sales tax whose primary object is to raise revenue and for which to classify diverse products, articles and substance, resort should be had not to the scientific and technical meaning of substance but to their popular meaning, viz., the meaning attached to these expressions by those dealing in them”–(para 4). In the case reported in [1990] 76 STC 6 (Gauhati) (Assam Cotton Mills v. Commissioner of Taxes) it was argued for the Revenue that in the commercial circle cotton yarn and cotton yam waste are specified goods and are identified by their names and one was different from the other. However, the Gauhati High Court took the “common sense” rule of interpretation and held as already mentioned. We find ourselves unable to agree with the ratio of that decision.
14. The applicant’s own case is that non-cotton yarn waste is priced in the market less than non-cotton yarn and is bought and sold as a commodity different from non-cotton yarn. In paragraph 12 of the application, the applicant has stated that non-cotton yarn waste is bought and sold in the market as left-over non-cotton yarn of different lengths “fetching much less value” and that “people buying and selling them generally treat and understand them as non-cotton yam sweepings.” The applicant also has canvassed in the same paragraph that the taxing authorities should adopt interpretation of this expression by the trade and popular meaning. That being so, we have no hesitation in holding that non-cotton yarn waste is treated and understood in the trade circle or in common parlance as a commodity different from non-cotton yarn.
15. In view of our foregoing conclusion, we have no reason to interfere with the finding of the West Bengal Commercial Taxes Tribunal in its order dated April 27, 1989. Our reasons are, of course, different from those of the Tribunal below. We hold that non-cotton yarn waste is clearly different from non-cotton yarn within the meaning of the notifications issued under Section 25 of the 1954 Act. The application thus fails and is dismissed. No order is made as to costs.
B.C. Chakrabarti, Chairman.
16. I agree.
P.C. Banerji, Technical Member.
17. I agree.