Full Judgment
Rajendra Babu, J.
1. The respondents in these appeals are dealers registered under the Karnataka Sales Tax Act, 1957, and engaged in the manufacture of beaten rice and parched rice. They were enjoying the benefit of exemption upto 1981 as provided under 25-A of the Karnataka Sales Tax Rules (hereinafter referred to as the Rules) as covered by Entry 28 of V Schedule to the Karnataka Sales Tax Act. When they again applied for grant of recognition certificates, the Commissioner of Commercial Taxes issued notices proposing to refuse grant of recognition certificate. Some of the respondents filed their objections to the said notice issued to them. They explained the process of making beaten rice as follows:-That the paddy is cleaned and then soaked in water. Afterwards the soaked paddy is friend in Cast. Iron pans and this fried paddy is pressed into beaten rice in 'poha' machines run by electric power. They have stated that the intention of the said provision was to give benefit not only for hand pounding paddy but to all types of industries which manufacture beaten rice and parched rice and submitted that at all stages beaten rice is manufactured by hand except at the stage of pressing the paddy and only when the paddy is pressed to make beaten rice machines are used and at no other stage they use machines. However, the Commissioner was not impressed by this line of reasoning and he took the view that the object of exemption was only to encourage hand-pounding of paddy along with it the manufacture of beaten rice not by using machine run by electricity. He held that the expression of manufacture of 'beaten rice and parched rice' was added to the 'industry of hand pounding of paddy' only to encourage the manufacture of beaten rice and parched rice where only hand pounding is in practice. The respondents are not entitled to that benefit and refused to grant certificate of recognition as provided under Rule 25 of the Rules.
2. Aggrieved by that order, the respondents filed Writ Petitions before this Court. The learned Single Judge who heard the matter allowed the Writ Petitions. The State being aggrieved by the order of the learned Single Judge has filed these appeals.
3. Under Section 8 of the Karnataka Sales Tax Act read with V Schedule, certain goods are exempted from taxation under the Act. Item 28 of the V Schedule refers to the products of village industry which satisfy prescribed conditions and limitations when sold by a bona fide producer recognised by the Commissioner and Rule 25-A of the Rules provides, for the purpose of Item 28 of the V Schedule, conditions and also enumerates the types of industries in respect of which such exemption could be granted and a table is appended thereto. For the purpose of proper understanding of this aspect, the table is set out hereunder:-
SI.No.
VillageIndustries
1.
Bamboo and Cane Industry.
2.
Bee Keeping Industry.
3.
Gas Plant Industry.
4.
Collection of Forest Plants andFruits for medicinal purposes.
5.
Groundnut with Jaggery SweetIndustry.
6.
Cottage Oil Industry (OilChanas).
7.
Cottage Manufacture of Matches.
8.
Hand made Paper and Hand made PaperProducts including Hand made Boards.
9.
Hand-operated andBullock-driven chakkies.
10.
Palmgur.
11.
Pottery.
12.
Hand Pounding of Paddy includingmanufacture of beaten rice (poha) and parched rice (Churmura and Murmura).
13.
Black Smithy.
14.
Carpentry.
15.
Cottage leather industry includingtanning bark-industry.
16.
Fibre Industry.
17.
Gur and Khandasari.
18.
Soap Making, Predominantly withnon-edible oils.
19.
Lime Stone Industry.
20.
Smithy Industry.
21.
Fruit Processing and FruitPreservation industry.
22.
Manufacture of household utensilsfrom Aluminium.
23.
Katha Manufacturing Industry.
24.
Manufacture of Shell
25.
Manufacture of LacwueredWooden-Toys and Dolls
26.
Manufacture of Gum and Resin.
What is exempted under Item 12 in Table appended to Rule 25A uses the expression hand pounding and paddy and thereafter its meaning is sought to be qualified using the word 'including' manufacture of beaten or parched rice. The Courts have taken the view that when the word 'including' is used often in interpretation clauses it is with a view to enlarge the meaning of the words or phrases occurring in the body of the statute. When it is so used, these words must be construed as comprehending not only such things as they signify according to their natural import, but also those things which the interpretation clauses declares that they shall include. In Item No. 12 with which we are concerned the expression used is 'including' after the words 'hand pounding of paddy' to bring within it the manufacture of beaten rice and parched rice which does not otherwise fall in that category. Thus, the word 'including' is a term of extension importing addition to enlarge the subject matter already comprised in the word. Otherwise there was no need to use such expression. Viewed from that angle also, it cannot be said that the expression hand pounding should qualify the words 'manufacture of beaten rice and parched rice'. If that were to be the position then by whatever process, beaten rice and parched rice is manufactured 'hand pounding' would have been added to it, instead of the expression 'including manufacture of beaten rice and parched rice'. In fact, there is yet another reason to support this view. Whenever the Rule makers wanted to state that the activity must be by hand, they have used the word 'hand made' as is clear from Item No. 8 which reads as: hand made paper and hand made paper products including hand made boards. They are all goods qualified by the word 'hand made'. Thus it is clear that whenever the Rule makers wanted to use such expression, they had taken great care to use such words. When they did it so in relation to Item No. 8 it is obvious that while the first part of Item No. 12 refers to hand pounding of paddy, the latter part refers to beaten rice and parched rice produced by whatever process including the process by electrically operated machines.
4. We agree with the conclusion of the learned Single Judge in the order though for different reasons. The Commissioner will now consider the applications made by the respondents afresh without reference to the earlier order and in the light of the order made by us and dispose of them in accordance with law.