JUDGMENT
Altamas Kabir, CJ.
1. This writ application involves ‘the interpretation of a notification dated 22nd June, 2001, issued by the State of Jharkhand in exercise of powers conferred by Clause (b) of Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956, which reads as under :
“NOTIFICATION
The 22nd June, 2001
S.O. 25, dated the 25th June, 2001.–In exercise of the powers conferred by Clause (b) of Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (Act 74 of 1958) the Governor of Jharkhand is pleased to direct that tax payable under Sub-section (1) or (2) of Section 8 of the said Act in respect of sale of all types of glass and glass sheets in the course of inter-State sale or commerce from any place of business in the State of Jharkhand shall be calculated at the rate of three per centum and no statutory form in this regard shall be required.
2. This notification shall come into force with effect from 16th June, 2001.
By the order of Governor
of Jharkhand
A. Tiwari
Addl. Secretary to Government
Finance Department,
Jharkhand, Ranchi”
2. The writ petitioner is a public limited company incorporated under the provisions of the Companies Act, 1956, having its industrial unit situated at Madhupur in the district of Deoghar, Jharkhand. The petitioner is also a registered dealer under the provisions of the Bihar Finance Act, 1981, as well as the Central Sales Tax Act, 1956 under the Deoghar Circle. Deoghar.
3. The writ petitioner is engaged in the manufacture of glass and glassware made of opal glass. As indicated hereinabove, the unit is situated at Madhupur in Deoghar. On 25th June, 2001, the State of Jharkhand issued the aforesaid notification reducing the rate of tax in respect of sale of all types of glasses and glass-sheets from 4% to 3% in course of inter-State trade and further exempted dealers from the requirements of filing declaration in Form “C” on such sales.
4. On publication of the aforesaid notification, the writ petitioner started charging tax @ 3% on sales involving inter-State trade since it was under the impression that it was covered by the aforesaid notification. However, by way of abundant precaution, the writ petitioner company wrote to the Assistant Commissioner of Commercial Taxes, Deoghar Circle, on 27th May, 2002, with a copy to the Deputy Commissioner of Commercial Taxes, at Ranchi, informing them that since the petitioner was covered by the said notification, tax on sales of glass and glass-ware in course of the inter-State trade was being charged @ 3% in terms of the notification. It is the petitioner’s case that it did not receive any response to its letter, nor was any objection raised that the petitioner was not covered by the said notification dated 25th June, 2001. For the first time, by letter dated 9th January, 2004, the petitioner was informed by the Assistant Commissioner of Commercial Taxes, Deoghar Circle that it had wrongly deducted and paid taxes @ 3% on its products manufactured out of glass since the correct rate was 4% in case of sale to registered dealers and 12% in case of sale to unregistered dealers. The writ petitioner company was also directed to show cause as to why penalty should not be imposed under Section 16 and Section 16(9) of the Bihar Finance Act, 1981, read with the relevant provisions of the Central Sales Tax Act and to further show cause as to why it should not be directed to correct the returns and to deposit the tax at the correct rate. According to the petitioner, a reply dated 16th January, 2004, was submitted before the Assistant Commissioner of Commercial Taxes, Deoghar Circle, enclosing a copy of the notification and explaining that the petitioner company was liable to charge and deposit tax @ 3% on sale in course of inter-State trade in respect of its products and that returns had, therefore, been correctly filed and taxes has correctly been deposited @ 3% as per the rate prescribed in the notification. The show cause filed on behalf of the petitioner was rejected by an order passed by the Assistant Commissioner of Commercial Taxes, Deoghar Circle, vide Memo No. 246, dated 13th May, 2004, and the petitioner company was directed to deposit tax in relation to its transactions in course of inter-State trade @ 4% in respect of sales to registered dealers and @ 12% in respect of sales to unregistered dealers. Subsequently, the petitioner was informed by a Memo dated 13th July, 2004, written by the Additional Commissioner, Jharkhand, and addressed to the Assistant Commissioner of Commercial Taxes, Deoghar Circle, that the petitioner’s product, namely, “glass-ware” was not covered by the Entry in S.O. No. 25, dated 25th June, 2001, and as such, it would be liable to be taxed @ 4% in relation to its transactions in course of the inter-State trade.
5. Aggrieved by the rejection of its reply dated 16th January, 2004, showing cause in response to the letter dated 9th January, 2004, written by the respondent No. 4 and being further aggrieved by the memo dated 13th July, 2004, written by the Additional Commissioner, Jharkhand, to the Assistant Commissioner of Commercial Taxes, Deoghar Circle that the petitioner’s products were not covered by the notification dated 25th June, 2001, the writ petitioner company has filed the instant writ application.
6. Appearing on behalf of the writ petitioner company, Mr. Sanjay urged that the concerned respondents has wrongly interpreted the provisions of the notification dated 25th June, 2001, in arriving at a conclusion that the products of the petitioner were not covered by the said notification. According to him, the expression, “all types of glass” as used in the said notification include products made from glass where the primary ingredient is glass. Mr. Sanjay also contended that glass is the final form of different components which are fused together to give glass its final form and such form would be in accordance with the moulds in which they were finally manufactured, such as, different forms of glass-sheets or other glass products, namely, crockery, vases, etc.
7. Mr. Sanjay further submitted that the petitioner company had applied to the Central Glass Ceramic Research Institute, Kolkata, for certification of its products, after describing their nature and characteristics and how they come into existence. Mr. Sanjay referred to the certificate issued by the said Institute, which has been made Annexure-9 to the second supplementary reply to the counter affidavit filed on behalf of the petitioner, wherein, upon reference to the chemical composition of the products of the writ petitioner company as well as their physical and chemical properties, it was opined that the products could very well be regarded as “glass”.
8. Mr. Sanjay submitted that the said certificate was sufficient in itself to prove that the products manufactured by the petitioner company were made out glass and consequently came within the expression, “all types of glass” as used in the notification published on 25th June, 2001.
9. In support of his aforesaid submission, Mr. Sanjay firstly referred to the Bench decision of the Patna High Court in the case of Bajrangbali Coke Briquetting Industries v. State of Bihar and Ors., reported in 1987 PLJR 926, wherein the expression, “Coal including coke in all its forms”, had fallen for interpretation and it had been indicated that briquettes are manufactured by mixing coal dust with soil and molasses. It was observed by the Hon’ble Supreme Court that briquettes so prepared have direct connection with coal or coke since coal dust is the main ingredient of the product. On the basis of such finding, coke briquettes were also directed to be treated as a form of coke during the assessment proceedings.
10. Reference was also made to the decision of the Hon’ble Supreme Court in the case of Telangana Steel Industries and Ors. v. State of A.P. and Ors., reported in 1994 Supp. (2) SCC 259, wherein it was held that since they have been placed in the Statute under the same sub-item, iron wires could not be treated as a commodity different from wire rods.
11. Mr. Sanjay concluded his submission by referring to the decision of the Hon’ble Supreme Court in the case of Commissioner of Sales Tax v. Industrial Coal Enterprises, , in which the Hon’ble Supreme Court had observed that in Taxing Statutes, provisions granting incentives for promoting economic growth and development should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. Mr. Sanjay urged that in a Taxing Statute, when a benefit is provided, the same should be interpreted to be in favour of the assessee. Mr. Sanjay submitted that in the instant case, a highly technical stand has been taken on behalf of the Revenue although it had been duly admitted on behalf of the respondents that no expert opinion had been taken before issuance of the impugned notices, which were liable to be quashed.
12. Appearing for the Revenue, Mr. Pradip Modi tried to impress upon us that glass in its primal form could not be equated with the end product of glass where, according to him, a different product was manufactured and even though such product was made of glass, it could not be said to come within the expression “all types of glass” as used in the notification dated 25th June, 2001. According to Mr. Modi, the aforesaid expression was meant to include only glass in its primary form and not as an end product and glass ware, which was the product manufactured by the writ petitioner company, could not be included within the said expression.
13. Mr. Modi submitted that it was the clear intention of the State Government to make the benefits of the notification dated 25th June, 2001, applicable to manufacturers of glass either in the form of glass-sheets or in mass form and glassware could not certainly be made part of such scheme. Mr. Modi urged that interpreting items in Revenue Statutes, the terms and expressions used should be interpreted having regard to their popular meaning and not to their scientific and technical properties. In support of his submissions, Mr. Modi referred to the decision of the Hon’ble Supreme Court in the case of Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, reported in 47 STC 359 (SC), in which various items of hospital equipment and apparatus were held not to be glassware but were referred to with regard to their use and utility.
14. Mr. Modi then referred to another decision of the Hon’ble Supreme Court in the case of Atul Glass Industries (P) Ltd. v. Collector of Central Excise, reported in 63 STC 322 (SC) where the question raised was whether a glass mirror could be included within the expression “glass and glassware” and it was held that it could not, inasmuch as, the original glass-sheet as a result of the process through which it passed, underwent a complete transformation when it emerged as a glass mirror. The evolved product is completely different from the original glass-sheet. The Hon’ble Supreme Court went on to observe that the fundamental function and quality of a glass mirror, its power to reflect, is derived not from the glass-sheet but principally from the silvering and other processes applied to the glass medium. A glass mirror could not, therefore, be regarded as glass.
15. Reference was also made to a Full Bench decision of Madhya Pradesh High Court (Indore Bench) in the case of Commissioner of Sales Tax, Madhya Pradesh v. Triveni Sheet Glass Works Ltd. and Ors., reported in 76 STC 308 (MP), wherein, relying on the decision of the Hon’ble Supreme Court in the case of Atul Glass Industries (P) Ltd. (supra), it was observed that there is undoubtedly a distinction between glass and goods and articles made of glass.
16. Mr. Modi lastly referred to the decision of the Hon’ble Supreme Court in the case of Parle Biscuits (P) Ltd. v. State of Bihar and Ors., reported in 2005 (3) JCR 46 (SC) : 2005 (2) JLJR 3 (SC), wherein paper of all kinds was interpreted only to include the forms of paper mentioned in the relevant notification and not cardboard boxes, which were held to be a product not covered by the Entry in such notification. Mr. Modi contended that it was quite clear that the expression “all types of glass” could not, therefore, include the end products manufactured by the writ petitioner company out of glass. Mr. Modi submitted that the writ petition was wholly misconceived and was liable to be dismissed.
17. We have carefully considered the submissions made on behalf of the respective parties and it appears to us that the interpretation sought to be given by Mr. Modi to the expression “all types of glass” used in the notification published on 25th June, 2001, is neither correct, nor supported by the decisions cited by him.
18. The notification published on 25th June, 2001, brings within its ambit sale of all types of glass and glass-sheets in course of the inter-State trade or commerce from any place of business in the State of Jharkhand. The expression, “all types of glass” appears to us to be an inclusive definition, notwithstanding the attempts made by Mr. Modi to convince us that the products made of glass could not be brought within the ambit of the said expression. For the purpose of the notification of 25th June, 2001, Mr. Modi attempted to make a distinction between glass in its primal form and products made of glass and submitted that products made of glass were not covered by the said notification.
19. In order to emphasize the distinction made by him, Mr. Modi referred to the decision of the Hon’ble Supreme Court in the Atul Glass Industries (P) Ltd. case (supra), which in our view, not only does not support his case but also goes against the submissions made by him. In the said decision, the question, which fell for decision, was as to whether a mirror could be regarded as “glass” or “glassware”. On consideration of the manner in which a mirror is manufactured and its uses as a medium of reflection, the Hon’ble Supreme Court observed that the evolved product is completely different from the original glass-sheet. The fundamental function and its quality of a glass mirror, namely, its power to reflect, is derived not from the glass-sheet but principally from the silvering and other processes applied to the glass medium. In that context, the Hon’ble Supreme Court observed that a glass mirror could neither be regarded as glass, nor glassware. The Hon’ble Supreme Court went on to elucidate that a glass bowl, a glass vase, a glass tumbler, a glass table-top and so on are all articles in which the primary component is glass and they are nothing more and nothing less and any treatment of ornamental nature applied to such articles does not derogate from their fundamental character as glass articles.
20. In the instant case also, the products manufactured by the writ petitioner are articles of different form made out of glass. Their character, even after manufacture, remains that of glass, which in our view, would bring such products within the meaning of the expression, “all types of glass”.
21. In the other judgment, the Madhya Pradesh High Court dealt with the question as to whether glass-sheets fall within the ambit of the expression, “goods made of glass and glassware”. In the said case, the Madhya Pradesh High Court took note of the distinction of products made out of glass and glass-sheets by themselves. The Hon’ble Court observed that there was undoubtedly a distinction between “glass” and “goods or articles made of glass”. The Court went on to give examples of goods made out of glass, such as cup, water-Jug etc. and came to the conclusion that once the liquid form of raw material is placed in a mould, it will be a raw material, which may be used for the manufacture of new goods. Therefore, while a glass-sheet was glass simpliciter, it differed from the products manufactured out of glass.
In our view, the said decision does not also come to the aid of the respondents in the instant case.
22. Even the decision of the Hon’ble Supreme Court in M/s. Parle Biscuits (P) Ltd., 2005 (3) JCR 46 (SC) (supra) does not support the case made out by Mr. Modi, since the expression, “papers of all kinds” was circumscribed by the articles mentioned in the notification in question which is not so in the instant case, where the expression, “all types of glass”, has been used in a generic sense to include glass of all kinds, which would include within its ambit not only glass in its primal form but also objects manufactured out of glass.
23. On the other hand, the decision cited by Mr. Sanjay, in Bajrangbali Coke Briquetting Industries, (supra) appears to have greater application to the facts of the instant case, since in the case also, the Patna High Court was dealing with an inclusive description of coal, including coke in all its forms. Despite the fact that coal briquettes were made by a mixture of coal dust, soil and molasses, the Hon’ble Court observed that the primary ingredient of the product is coal dust and accordingly, coke briquettes must be treated to be a form of coke during assessment proceedings.
24. Apart from the above, we are also in agreement with Mr. Sanjay that when, in a Taxing Statute, certain incentives are granted for promoting economic growth, the same has to be liberally construed so as to advance the objective of the provision.
25. We are convinced that the products of the writ petitioner company, which are made of glass, do fall within the expression, “all types of glass” as used in the notification published on 25th June, 2001, by the State of Jharkhand and that the writ petitioner company had rightly deducted and charged tax @ 3% on sales of its glass products involving inter-State trade and the notices issued by the Assistant Commissioner of Commercial Taxes, Deoghar, Circle, on 9th January, 2004, had been erroneously issued alleging that the petitioner company ought to have charged tax @ 4% in case of sale to registered dealers and 12% in case of sale to unregistered dealers. The order passed by the Assistant Commissioner of Commercial Taxes, Deoghar, Circle, dated 13th May, 2004, rejecting the show cause filed on behalf of the writ petitioner is, in our view, based on the erroneous conception that the petitioner’s products made of glass were not covered by the notification published on 25th June, 2001, and is liable to be quashed.
26. The writ application, therefore, succeeds and the order passed by the Assistant Commissioner of Commercial Taxes, Deoghar Circle, on 13th May, 2004, directing the writ petitioner to deposit taxes in relation to inter-State sales @ 4% and to file revised returns for the periods 2002-03 and 2003-04 is quashed. The respondent No. 3 is directed to issue statutory declaration forms and road permits to the writ petitioner company, which had been withheld by the respondent No. 4. The respondents are also directed to levy tax on the glass products of the writ petitioner company @ 3% without requirement of statutory form as per the notification, S.O. 25, dated 25th June, 2001. There will be no order as to costs.
R.K. Merathia, J.
27. I agree.
