REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3605 OF 2011
[Arising out of SLP (C) No. 21999/2010]
M/s. Bansal Wire Industries Ltd. & Anr ...Appellants
Versus
State of U.P. & Ors. ...Respondents
WITH
CIVIL APPEAL NO. 3606 OF 2011
[Arising out of SLP (C) No. 22499/2010]
WITH
CIVIL APPEAL NO. 3607 OF 2011
[Arising out of SLP (C) No. 22218/2010]
WITH
CIVIL APPEAL NO. 3608 OF 2011
[Arising out of SLP (C) No. 23855/2010]
WITH
CIVIL APPEAL NO. 3609 OF 2011
[Arising out of SLP (C) No. 23858/2010]
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WITH
CIVIL APPEAL NO. 3610 OF 2011
[Arising out of SLP (C) No. 24023/2010]
JUDGMENT
Dr. Mukundakam Sharma, J.
1. Leave granted.
2. The issue that falls for consideration in these appeals is, as
to whether the `stainless steel wire’ falls under the category,
“tools, alloys and special steels of any of the above
categories” enumerated in entry no. (ix) of clause (iv) of
Section 14 of the Central Sales Tax Act, 1956 (for short the
“Central Act”) and therefore the following question emerges
for our consideration:-
“Whether stainless steel wire, a product of the
appellant, on a proper reading of Section 14 of
the Central Sales Tax Act along with the
qualifying words `that is to say’ would fall under
the category “tools, alloy and special steels of
any of the above categories” enumerated in
entry no. (ix) of clause (iv) or under entry no.
(xv) of same clause (iv)”
3. In all these appeals identical issues are involved. We
therefore, proceed to dispose of all these appeals by this
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common Judgment and Order. In order to arrive at a finding
on the issue raised, it will be necessary to set out certain
facts leading to filing of the present appeals.
4. The appellant is a Public Limited Company incorporated
under the Indian Companies Act, 1956 and is engaged in the
business of manufacture and sales of “stainless steel wires”.
An assessment order was passed under Rule 41(8) of the UP
Trade Tax Rules for the assessment year 1999-2000 under
the UP Trade Tax Act, 1948 (for short “the UP Act”) as well as
under the Central Act. As per the said assessment order, the
tax on sales of “stainless steel wire” was levied @ 4% and
sales covered by Form 3-kh were taxed @ 2%.
5. The respondent, however, thereafter held that the sales of
“stainless steel wire” has wrongly been taxed @ 4% treating
the same as a “declared commodity” and that in fact
“stainless steel wire” is not a declared commodity because it
is outside the ambit of “Iron and Steel”, which is a declared
commodity under Section 14 of the Central Act.
6. In view of the satisfaction arrived at by the respondent, a
proposal was sent to the Additional Commissioner, Grade-I,
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Trade Tax, Ghaziabad Zone, Ghaziabad requesting him for
permission to re-open the case of the appellant for the
assessment year 1999-2000.
7. The Additional Commissioner, Grade-I, Trade Tax, Ghaziabad
Zone, Ghaziabad issued a notice dated 22.03.2006 directing
the appellant to show cause as to why the permission should
not be granted to the assessing authority for re-opening of
the case under Section 21(2) of the UP Act.
8. Respondent No. 3 on 24.3.2006 issued a notice under
Section 10-B of the U.P. Act for revising the assessment order
passed for the assessment year 2000-01. The appellant
states that similar notices for the assessment years 2001-02
and 2002-03 were also issued to the appellant by
Respondent No. 3.
9. The appellant filed its reply dated 27.3.2006 to the notice
dated 24.3.2006 and, inter alia, stated that “stainless steel
wire” is a declared commodity under clause (iv) of Section 14
of the Central Act, hence in view of Section 15 thereof, no tax
can be imposed on the declared commodities in excess of 4%.
The appellant had also submitted identical replies to the
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notices relating to assessment years 2001-02 and 2002-03
respectively.
10.After considering the reply as furnished by the appellant, the
Additional Commissioner, Grade-I, Trade Tax, Ghaziabad
Zone, Ghaziabad by its order dated 27.03.2006 granted
permission to the assessing authority to re-open the case
under Section 21(2) of the UP Act for the assessment year
1999-2000.
11. Being aggrieved by the issuance of the aforesaid notice, the
appellant herein filed a Writ Petition before the Allahabad
High Court, which was registered as Writ Petition No. 770 of
2006, wherein, the respondent filed a counter affidavit. The
Allahabad High Court, thereafter heard the counsel
appearing for the parties and by its judgment and order
dated 21.05.2010 dismissed the Writ Petition holding that
the “stainless steel wire” is not covered under the item “tools,
alloys and special steel” on entry no. (ix) and, therefore, does
not fall under “Iron and Steel” as defined under clause (iv) of
Section 14 of the Central Act and therefore the provision of
Section 15 of the Central Act does not apply.
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12.Being aggrieved by the judgment and order dated
21.05.2010 passed by the Allahabad High Court, the present
appeals were filed by the appellants on which we heard the
learned counsel appearing for the parties.
13.The learned counsel appearing for the parties during the
course of their submissions relied upon various notifications,
some of which are required to be extracted at this stage.
14. The first reference that was made was to the notification
dated 26.10.1991. The aforesaid notification was issued by
respondent No. 1 in exercise of powers under clause (d) of
sub-section (1) of section 3-A of the U.P. Act, whereby under
Item 7, Sheets and Circles made wholly or principally of
stainless steel and all remaining articles (excluding wares
and surgical instruments) made wholly or principally of
stainless steel were taxable @ 12%.
The relevant part of the said notification is extracted herein
below:
"S.No. Description of goods Point of tax Rate of tax
(a) Sheets and circles made M or I 12%
wholly or principally of
stainless steel.
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(b) All remaining articles M or I 12%
(excluding wares and surgical
instruments) made wholly or
principally of stainless steel."
15.Subsequently another notification dated 23.11.1998 was
issued by Respondent No. 1 by exercising power under
clause (d) of sub-section (1) of section 3-A of the U.P. Act,
whereby under Item 7, Sheets and Circles made wholly or
principally of stainless steel and all remaining articles
(excluding wares and surgical instruments) made wholly or
principally of stainless steel were taxable @ 15% and steel
wires were sought to be taxed @ 15% presuming to be an
article made of stainless steel.
The relevant part of the said notification is extracted herein
below:
"S.No. Description of goods Point of tax Rate of tax
percentage
(i) Sheets and circles made M or I 15%
wholly or principally of
stainless steel.
(ii) All remain articles M or I 15%
(excluding wares and
surgical instruments made
wholly or principally of
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stainless steel."
16.Later, on 15.01.2000, Respondent No. 1 issued a notification
superseding the notifications dated 26.10.1991 and
23.11.1998 respectively, and Item No. 8 of the said
notification provided for levy of tax @ 15% on sheets and
circles made wholly or principally of stainless steel and also
all remaining articles excluding ware and surgical
instruments made wholly or principally of stainless steel @
15 %.
The relevant part of the said notification is extracted herein
below:
“S.No. Description of goods Point of tax Rate of tax
percentage
8.
(i) Sheets and circles made M or I 15%
wholly or principally of
stainless steel.
(ii) All remain articles M or I 15%
(excluding wares and
surgical instruments) made
wholly or principally of
stainless steel."
17. Section 14 (iv) of the Central Act is the relevant provision in
the present appeals and we therefore extract the relevant
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portion of Section 14 (iv) of the Central Act and the same is
as under: –
“14. Certain goods to be of special importance in
inter-State trade or commerce. – It is hereby
declared that the following goods are of special
importance in inter-State trade or commerce, –
xxxxxxxxxxxxxxxxx
(iv) iron and steel, that is to say, –
(i) pig iron and caste iron including ingot
moulds, bottom, plates, iron scrap, caste iron
scrap, runner scrap and iron skull scrap;
(ii) steel semis (ingots, slabs, blooms and billets
of all qualities, shapes and sizes);
(iii) skull bars, tin bars, sheet bars, hoe-bars
and sleeper bars;
(iv) steel bars (rounds, rods, squares, flats,
octagons and hexagons, plain and ribbed or
twisted, in coil form as well as straight lengths);
(v) Steel structurals (angels, joists, channels,
tees, sheet piling sections, Z sections or any
other rolled sections);
(vi) sheets, hoops, stripe and skelp, both black
and galvanized, hot and cold rolled, plain and
corrugated, in all qualities, in straight lengths
and in coil form, as rolled and in riveted
condition;
(vii) plates both plain and chequered in all
qualities;
(viii) discs, rings, forgings, and steel castings;
(ix) tool, alloy and special steels of any of the
above categories;
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(x) steel melting scrap in all forms including
steel skull, turnings and borings;
(xi) steel tubes, both welded and seamless, of all
diameters and lengths, including tube fittings;
(xii) tin-plates, both hot dipped and electrolytic
and tin free plates;
(xiii) fish plates bars, beaming plate barn,
crossing sleeper bars, fish plates, bearing
plates, crossing sleepers and pressed steel
sleepers, railsheavy and light crane rails;
(xiv) wheels, tyres, axles and wheel sets;
(xv) wire rods and wires-rolled, drawn,
galvanized, aluminized, tinned or coated such
as by copper;
(xvi) defectives, rejects, cuttings or end pieces of
any of the above categories.”
18. Section 15 of the Central Act is also a relevant provision and
the same is extracted hereunder :-
“15. Restrictions and conditions in regard to tax on
sale or purchase of declared goods within a State –
Every sales tax law of a State shall, insofar as it
imposes or authorises the imposition of a tax on the
sale or purchase of declared goods, be subject to the
following restrictions and conditions, namely:-
(a) the tax payable under that law in respect of any sale
or purchase of such goods inside the State shall not
exceed four per cent, of the sale or purchase price
thereof,;
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx”
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19. The Commissioner of Commercial Taxes issued a circular
on 25.11.2005 to the Joint Commissioner Trade Tax, Ghaziabad
directing that sale of stainless steel pipe, tubes, sheets shall not
be taxable as declared goods under Section 14 (iv) of the Central
Act since stainless steel is an alloy which consists of nickel etc.
In view of the said circular the Commissioner issued direction
to the authorities under him for proceeding under Sections 21
and 10(b) of the U.P. Act for initiating the re-assessment
proceedings for different years.
20. The learned counsel appearing for the appellant submitted
before us that the “stainless steel wire” is one of the species of
“Iron and Steel” and therefore would fall within the aforesaid
“declared commodity” and consequently rate of tax that is
leviable on the goods of the appellant is 4% as originally
assessed by the Department itself.
21. He also submitted that the expression “Iron and Steel”
mentioned in clause (iv) of Section 14 of the Central Act is a
genus and “stainless steel wire” being a form of “Iron and Steel”
is a specie thereof and therefore such “stainless steel wire”
which the appellant produces would come within the expression
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of entry no. (xv) stating words “wire rods and wires-rolled,
drawn, galvanized, aluminized, tinned or coated such as by
copper” of any kind of “Iron and Steel” referring to the main
expression of clause (iv) and that the Department had
committed an error of law in restricting the expression of
“stainless steel wire” through entry no. (ix), namely, “tools, alloy
and special steels of any of the above categories”.
22. He also submitted that the Government of India in its
Reference No. F No. 24/20/76 ST Department of Revenue and
Banking dated 17.11.1976 has clarified that stainless steel is a
type of alloy steel and is, therefore, covered within the definition
of the term “iron and steel” for the purposes of entry no. (ix) of
Section 14(iv) of the Central Act. He further submitted that once
the Central Government has taken a stand, it is not open to the
authorities of the State Government to take a different view. He
has also referred to the object and reason for the amendment
which is referred at page 1338 of Chaturvedi’s Central Sales Tax
Act, 1956 Vol. I.
23. The aforesaid submissions of the counsel appearing for the
appellants were however refuted by the learned counsel
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appearing for the respondent who relied upon the expression
“that is to say” as used in clause (iv) of Section 14 of the Central
Act to contend that the word `user’ makes the expression “Iron
and Steel” exhaustive and restrictive and not an expansive or
extensive.
24. He also referred to the expression “of any of the above
categories” occurring in entry no. (ix) of clause (iv) of Section 14
of the Central Act contending inter alia that the said expression
plays an instrumental role in determining the scope and ambit
of the aforesaid item. Relying on the same, he submitted that
any product of stainless steel is confined within entry nos. (i) to
(ix) of clause (iv) of Section 14 of the Central Act and it cannot
be given a wider meaning to include “stainless steel wire” in
entry No. (xv) of clause (iv) of Section 14 of the Central Act. He
specifically relied upon the decision of this Court in State of
Tamil Nadu vs. M/s. Pyare Lal Mehrotra, reported in (1976) 1
SCC 834.
25. In the light of aforesaid submissions made by the counsel
appearing for the parties, we proceed to answer the issue which
arises for our consideration by recording our reasons therefor.
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26. In the aforesaid decision in Pyare Lal Mehrotra (supra)
the very word “that is to say”, as per Section 14 of the Central
Act was considered and it was held that originally expression
“that is to say” is employed to make clear and fix the meaning of
what is to be explained or defined and that such words are not
used, as a rule, to amplify a meaning while removing a possible
doubt for which purpose the word “includes” is generally
employed. In the context of Section 14 of the Central Act, this
Court in the said decision held that the expression “that is to
say” is used in Section 14 apparently to mean to exhaustively
enumerate the kinds of goods in a given list. It was also held in
the said decision that the purpose of an enumeration in a
statute dealing with sales tax at a single point in a series of
sales would, very naturally, be to indicate the types of goods
each of which would constitute a separate class for a series of
sales. In paragraph 15 of the said Judgment, this Court
observed as under:
“15. It appears to us that the position has been
simplified by the amendment of the law, as indicated
above, so that each of the categories falling under
“iron and steel” constitutes a new species of
commercial commodity more clearly now. It follows
that when one commercial commodity is transformed
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into another, it becomes a separate commodity for
purposes of sales tax.”
27. Therefore, in view of the position settled by this Court, it is
clearly established that so far the items as mentioned in clause
(iv) of Section 14 of the Central Act is concerned, each of the
categories falling under “iron and steel” constitutes a new
species and each one of them is separate commodity for the
purposes of sales tax.
28. The expression “of any of the above categories” appearing
in entry Nos. (ix) and (xvi) of clause (iv) of Section 14 of the
Central Act would indicate that they would each be items
referred in the preceding items. Therefore, even the expression
“of any of the above categories” in entry No. (ix) of clause (iv)
would only relate to steel and alloy produced for any of the
materials mentioned in item nos. (i) to (viii). Thus “stainless
steel wire” produced by the appellant cannot be read into item
no. (xv) which reads as “wire rods and wires-rolled, drawn,
galvanized, aluminized, tinned or coated such as by copper”.
29. This Court in the case of Pyare Lal Mehrotra (supra), in
paragraph 5, observed as under:-
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“5. It will be seen that “iron and steel” is now
divided into 16 categories which clearly embrace
widely different commercial commodities, from mere
scrap iron and leftovers of processes of
manufacturing to “wires” and “wheels, tyres, axles,
and wheel sets”. Some of the enumerated items like
“melting scrap” or “tool alloys” and “special steels”
could serve as raw material out of which other goods
are made and others are definitely varieties of
manufactured goods. If the subsequent amendment
only clarifies the original intentions of Parliament, it
would appear that Heading (iv) in Section 14, as
originally worded, was also meant to enumerate
separately taxable goods and not just to illustrate
what is just one taxable substance: “iron and steel”.
The reason given, in the Statement of Objects and
Reasons of the 1972 Act, for an elucidation of the
“definition” of iron and steel, was that the “definition”
had led to varying interpretations by assessing
authorities and the courts so that a comprehensive
list of specified declared iron and steel goods would
remove ambiguity. The Select Committee, which
recommended the amendment, called each specified
category “a item no.” falling under “iron and steel”.
Apparently, the intention was to consider each “item
no.” as a separate taxable commodity for purpose of
sales tax. Perhaps some items could overlap, but no
difficulty arises in cases before us due to this feature.
As we have pointed out, the statement of reasons for
amendment spoke of Section 14(iv) as a `”definition”
of “iron and steel”. A definition is expected to be
exhaustive. Its very terms may, however, show that it
is not meant to be exhaustive. For example, a
purported definition may say that the term sought to
be defined “includes” what it specifies, but, in that
case, the definition itself is not complete.”
30. It is thus clear, that if the object of newly substituted
clause (iv) of Section 14 of the Central Act was to make iron and
steel taxable as one substance, the item could have been
“Goods of iron and steel” or, to be more clear, “Iron and steel
irrespective of change of form or shape or character of goods
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made out of them”. The more natural meaning, therefore is that
each item specified in Section 14(iv) forms a separate species for
each series of sales. When one commercial commodity is, by
manufacturing process etc., transformed into another, it
becomes a separate commodity for sales tax purposes. If iron
bars were drawn into “wire”, such wire shall be a different
taxable commodity.
31. Parliament can restrict powers of State Government to tax
“declared goods”. Section 2(c) of the Central Act defines
“declared goods” as those declared under Section 14 of Central
Act as `goods of special importance in Inter State Trade or
Commerce. Section 14 of the Central Act gives a list of such
goods and Section 15 specifies restrictions on power of States to
tax such goods.
32. This Court in the case of Rajasthan Roller Flour Mills
Assn. vs. State of Rajasthan, reported in 1994 Supp (1) SCC
413, observed as under:-
16. …… “that is to say” assigned in Stroud’s Judicial
Dictionary (Fourth Edn.) Vol. 5 at page 2753 to the
following effect:
“That is to say.– (1) `That is to say’ is the
commencement of an ancillary clause which explains
the meaning of the principal clause. It has the
following properties: (1) it must not be contrary to the
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principal clause; (2) it must neither increase nor
diminish it; (3) but where the principal clause is
general in terms it may restrict it:…..”
17. ……………..
“The quotation, given above, from Stroud’s Judicial
Dictionary shows that, ordinarily, the expression,
`that is to say’ is employed to make clear and fix the
meaning of what is to be explained or defined. Such
words are not used, as a rule, to amplify a meaning
while removing a possible doubt for which purpose
the word `includes’ is generally employed … but, in
the context of single point sales tax, subject to
special conditions when imposed on separate
categories of specified goods, the expression was
apparently meant to exhaustively enumerate the
kinds of goods in a given list. The purpose of an
enumeration in a statute dealing with sales tax at a
single point in a series of sales would, very naturally,
be to indicate the types of goods each of which would
constitute a separate class for a series of sales.
Otherwise, the listing itself loses all meaning and
would be without any purpose behind it.”
33. It is thus clear, that the language used in entry no. (ix) is
plain and unambiguous and that the items which are
mentioned there are “tools, alloy and special steel”. By using the
words “of any of the above categories” in entry Nos. (ix) would
refer to entries (i) to (viii) and it cannot and does not refer to
entry no (xv). However, entry (xvi) of Clause (iv) would be
included in entry (xvi) particularly within the expression now
therein any of the aforesaid categories. Therefore, the specific
entry “tool, alloy and special steel” being not applicable to entry
(xv), the contention of the counsel for the appellant has to be
rejected. It is, therefore, held that the stainless steel wire is not
18
covered within entry (ix) of clause (iv) of Section 14 of Central
Sales Tax Act.
34. It is a settled principle of law that the words used in the
section, rule or notification should not be rendered redundant
and should be given effect to. It is also one of the cardinal
principles of interpretation of any statue that some meaning
must be given to the words used in the section. Expression
“Wire rods and wires” which is mentioned in item no. (xv) would
not and cannot cover the expression “tools, alloy and special
steels” of entry no. (ix) nor it would refer to the expression “Iron
and Steel” as each item used in entry nos. (ix) and (xv) are
independent items not depending on each other at all as has
been held in the case of Pyare Lal Mehrotra (supra).
35. In arriving at the aforesaid conclusion, we find support
from the decision of this Court in Union of India vs. Hansoli
Devi reported in (2002) 7 SCC 273 wherein this Court held
that it is a cardinal principle of construction of a statute that
when the language of the statute is plain and unambiguous, the
court must give effect to the words used in the statute.
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36. Besides, in a taxing Act one has to look merely at what is
clearly said and there is no room for any intendment. In a
taxing statute nothing is to be read in, nothing is to be implied,
one can only look fairly at the language used.
37. Therefore, the findings and the decision arrived at by the
High Court that stainless steel wire is not covered under the
entry of “tools, alloys and special steels” in entry no. (ix) and,
therefore, does not fall under “Iron and Steel” as defined under
Section 14(iv) of the Central Act have to be upheld. Hence, the
said commodity cannot be treated as a declared commodity
under Section 14 of the Central Act and provision of Section 15
of the Central Act does not apply to the facts of the present
appeals.
38. In our considered opinion, the findings arrived at by the
High Court does not suffer from any infirmity. Consequently,
we find no merit in these appeals and the same are dismissed
without any order as to costs.
……………………………………..J
[Dr. Mukundakam Sharma ]
……………………………………..J
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[ Anil R. Dave ]
New Delhi,
April 26, 2011.
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