Assistant Commissioner of Commercial Taxes and Another Vs. Indian Aluminium Company Limited - Court Judgment

Excerpt:
- karnataka land reforms act, 1961.[k.a. no. 10/1962]. section 48a: [n.k.patil, j] rejection of form no.7-a tribunal dismissed appeal - writ petition - order passed in a cyclostyled format - non-consideration of record of rights for the relevant period - non-speaking order - held, order passed by the assistant commissioner which is affirmed by the karnataka appellate tribunal is contrary to documentary evidence on record. from the record of rights in the original file, it can be seen that for the agricultural years 1963-64 to 2003-04 the names of petitioners are entered in column no.12(2) and the mode of cultivation is shown as 3 which indicates that the petitioners are cultivating the land in question as tenants. impugned orders are unsustainable in the eye of law and the same are liable to be set aside. - 4. it was contended on behalf of the appellants that the learned single judge failed to properly appreciate the contents of entry 11 and erroneously came to the conclusion that the list of scheduled goods set out in the entry is exhaustive in nature and not illustrative. the learned counsel placed strong reliance upon the expression 'that is to say' occurring in the entry and submitted that in view of the decisions of the supreme court, it must be concluded that furnace oil is not liable to duty in the absence of being specifically referred to under entry 11. in view of the rival contentions, the question, which falls for determination, is whether the appellants can recover duty on import of furnace oil under entry 11 of the schedule. the close reading of the entry makes it clear that the scheduled goods, like, petrol, diesel, crude oil, etc. the entry after setting out various scheduled goods, uses the expression 'and others but excluding lpg, kerosene and naphtha for use in the manufacture of fertilisers'.the expression 'others' clearly demonstrates the intention of the legislature that the scheduled goods referred to earlier do not exhaust the scheduled goods which are liable to pay duty. the expressions 'all petroleum products' and 'others' read in conjunct, clearly establish that the scheduled goods set out in between these two expressions are merely illustrative in nature. it is interesting to note that lpg, kerosene and naphtha though petroleum products, are not set out while illustrating the petroleum products which are liable to duty, but, the legislature, while excluding lpg, kerosene and naphtha from levy of duty, prescribed that the exclusion is only in cases where these products are used in the manufacture of fertilisers. it is now well settled by catena of decisions that the entry must be read as a whole and it is not permissible to pick-up some words to ascertain the intention of the legislature. it is, therefore, obvious that the supreme court clearly laid down that the expression 'that is to say' need not in every case, conclude that the definition is exhaustive and eventhough the expression 'that is to say' is used, whether the definition is illustrative, has to be determined with reference to the context in which the words are used and by examining the intention of the rule-maker. in our judgment, the import is clearly liable to payment of duty and the order of the assessing authority on that count was not required to be disturbed.m.l. pendse, c.j.1. these appeals are directed against common judgment dated january 28, 1992, delivered by the learned single judge in writ petitions nos. 16382 to 16385 of 1998. the petitions were filed before the learned single judge to challenge the validity of item 16-b of the schedule to the karnataka tax on entry of goods into local areas for consumption, use or sale therein act, 1979. the respondent filed separate petitions in respect of assessment orders for the years ending december 1982, 1983, 1984 and 1985. at the hearing before the learned single judge, various contentions raised in the petitions were given up and the only controversy required to be determined was levy of tax on furnace oil under entry 11 of the schedule to the act. the learned single judge held that the furnace oil is not liable to levy of tax under entry 11. the learned single judge also quashed the penalties imposed by the assessing authorities by holding that entry 16-b, the constitutional validity of which was under challenge, though not pressed at the hearing, underwent alterations on three occasions. the decision of the learned single judge is under challenge in this group of appeals at the behest of the assistant commissioner of commercial taxes and the state of karnataka. as the issue involved in all the appeals is common, the appeals are disposed of by this judgment.2. the government of karnataka enacted the karnataka tax on entry of goods into local areas for consumption, use or sale therein act, 1979 ('the act'), to provide for the levy of tax on entry of goods into local areas for consumption, use or sale. section 3 of the act is the charging section and, inter alia, provides that there shall be levied and collected a tax on entry of the scheduled goods into a local area for consumption, use or sale therein at such rate not exceeding two per cent ad valorem. the expression 'scheduled goods' is defined under section 2(7) of the act and means goods specified in the schedule to the act. section 5 of the act requires every registered dealer to submit a return to the assessing authority containing particulars as prescribed. sub-section (5) of section 5 of the act provides that while completing the assessment, if the assessing authority finds that the dealer has submitted returns which are incorrect or incomplete, then a penalty not exceeding one and a half times of the amount of tax due, can be levied and recovered. section 13 of the act provides for filing of an appeal by the aggrieved party to the appellate tribunal constituted under the act. it is open for the aggrieved party to challenge the order of the appellate tribunal by filing an appeal to the high court under section 16 of the act. turning to the schedule, the relevant entry 11 reads as follows :'all petroleum products, that is to say, - petrol, diesel, crude oil, lubricating oil, transformer oil, brake clutch fluid, bitumen (asphalt) tar and others but excluding lpg, kerosene and naphtha for use in the manufacture of fertilisers.'3. it is not in dispute that the respondent, which is a public limited company, had imported furnace oil into local areas for consumption. before the assessing authority, it was claimed that though the petroleum products are liable to levy of duty, the import of the furnace oil cannot be taxed. the assessing authority did not accept the contention in view of the circular issued by the commissioner on may 13, 1980. the assessment order indicates the penalty was levied by taking a lenient view in respect of various incorrect statements contained in the returns filed by the respondent-company and these incorrect statements were not in respect of furnace oil, but in respect of import of other scheduled goods.as mentioned hereinabove, though the company had raised diverse contentions in the writ petitions filed before the learned single judge, the sole contention agitated was whether the furnace oil is liable to payment of duty under entry 11 of the schedule. the learned single judge, by referring to the expression 'that is to say', proceeded to hold that the list of the products set out in the entry is exhaustive and as the furnace oil is not included in the entry, it was not open for the assessing authority to demand tax in respect of import of furnace oil. the learned single judge further held that the levy of penalty on furnace oil cannot be sustained as the company was not liable to pay any tax. the decision of the learned single judge is under challenge.4. it was contended on behalf of the appellants that the learned single judge failed to properly appreciate the contents of entry 11 and erroneously came to the conclusion that the list of scheduled goods set out in the entry is exhaustive in nature and not illustrative. it was contended that the expression 'petroleum products' is generic in nature and furnace oil falls within the expression. the appellants further submitted that the reliance placed by the learned single judge on the two decisions of the supreme court is not accurate because the entries in those cases were different and distinct. the learned counsel appearing on behalf of the respondent-company on the other hand, submitted that though the furnace oil does fall within the expression 'petroleum products', the import of the furnace oil is not liable to duty as the list of scheduled goods set out under entry 11 is exhaustive. the learned counsel placed strong reliance upon the expression 'that is to say' occurring in the entry and submitted that in view of the decisions of the supreme court, it must be concluded that furnace oil is not liable to duty in the absence of being specifically referred to under entry 11. in view of the rival contentions, the question, which falls for determination, is whether the appellants can recover duty on import of furnace oil under entry 11 of the schedule.the close reading of the entry makes it clear that the scheduled goods, like, petrol, diesel, crude oil, etc., referred to in the entry, are not the only items which are liable to duty. the goods referred to in the schedule are merely illustrative in nature. the principal portion of the entry is 'all petroleum products' and due weight must be given to the expression 'all'. in case the legislature intended that the scheduled goods set out in the entry are exhaustive in nature, then the expression 'all' was uncalled for and the entry could have been 'petroleum products that is to say, petrol, diesel, etc.'. the expression 'all', in our judgment, is a telltale circumstance to indicate that the legislature never intended that the list of scheduled goods set out under entry was exhaustive. there is other intrinsic evidence in the entry to establish that the scheduled goods set out are merely illustrative in nature. the entry after setting out various scheduled goods, uses the expression 'and others but excluding lpg, kerosene and naphtha for use in the manufacture of fertilisers'. the expression 'others' clearly demonstrates the intention of the legislature that the scheduled goods referred to earlier do not exhaust the scheduled goods which are liable to pay duty. the expressions 'all petroleum products' and 'others' read in conjunct, clearly establish that the scheduled goods set out in between these two expressions are merely illustrative in nature. there is one more factor which cannot be overlooked. after providing all petroleum products, that is to say, petrol, diesel, crude oil, etc., and others, lpg, kerosene and naphtha, which are also petroleum products, are excluded from levy of duty, if used in the manufacture of fertilisers. it is interesting to note that lpg, kerosene and naphtha though petroleum products, are not set out while illustrating the petroleum products which are liable to duty, but, the legislature, while excluding lpg, kerosene and naphtha from levy of duty, prescribed that the exclusion is only in cases where these products are used in the manufacture of fertilisers. in other words, lpg, kerosene and naphtha being petroleum products, if not used in the manufacture of fertilisers, are liable to payment of duty eventhough not specifically set out in the entry. the two products have been excluded if they are used in the manufacture of fertilisers and this, in our judgment, is the conclusive proof that the legislature never intended that the petrol, diesel, crude oil, etc., exhaust the list of petroleum products in respect of which duties are payable. it is now well settled by catena of decisions that the entry must be read as a whole and it is not permissible to pick-up some words to ascertain the intention of the legislature. we are conscious that being a taxing statute, the entry must be read strictly. but, we have no hesitation in concluding that the expression 'all petroleum products', the expression 'others' and the fact that some of the petroleum products, if used for a specific purpose, are excluded from levy, demonstrate the intention of the intention of the legislature and leave no manner of doubt that the contention of the respondent-company that furnace oil not being specifically referred, is excluded from payment of duty, is incorrect.5. the learned counsel for the respondent submitted that the expression 'that is to say' explains the meaning of the principal clause 'all petroleum products' and when such an expression is used, it is not permissible to enlarge the ambit of the list of scheduled goods set out under the entry. stroud's judicial dictionary, volume 5, 1974 edition, on page 2753, set out '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 principal clause; (2) it must neither increase nor diminish it; (3) but where the principal clause is general in terms, it may restrict it. relying on clause (3), it was contended that the principal clause 'all petroleum products' being general in terms, the expression 'that is to say' restricts it to only those scheduled goods which are set out therein. it is not possible to accede to the contention for the reasons set out hereinabove. the learned counsel referred to the decision of the supreme court in state of tamil nadu v. pyare lal malhotra : 1983(13)elt1582(sc) . in the case before the supreme court, section 14 of the central sales tax act declared certain goods of special importance in inter-state trade and commerce and which was liable to levy of tax. clause (iv) reads as follows :'(iv) iron and steel, that is to say,' -and then sets out 16 different categories which enumerates widely different commercial commodities. the supreme court was required to determine whether the expression 'that is to say' is indicative that only those 16 categories set out therein are liable to payment of duty or in other words, exhausts the list of items liable to payment of duty. the supreme court observed that the definition may be exhaustive or otherwise and the terms of the definition may show that it is not meant to be exhaustive. the supreme court then referred to the stroud's judicial dictionary and observed 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. it was then observed that in unusual cases, depending upon the context of the words 'that is to say', this expression may be followed by illustrative instances. the precise meaning of the words 'that is to say' must vary with the context. it is, therefore, obvious that the supreme court clearly laid down that the expression 'that is to say' need not in every case, conclude that the definition is exhaustive and eventhough the expression 'that is to say' is used, whether the definition is illustrative, has to be determined with reference to the context in which the words are used and by examining the intention of the rule-maker. by considering the context in which the expression 'that is to say' is used in entry 11, it must be concluded that the list of scheduled goods set out in the entry is merely illustrative and not exhaustive. the construction employed would subserve the object of the legislature.6. the learned counsel also referred to the decisions of the supreme court in sait rikhaji furnace v. state of andhra pradesh [1992] 85 stc 1 and in royal hatcheries pvt. ltd. v. state of andhra pradesh : 1994ecr200(sc) . the first case does not set out the entry which came up for consideration and only refers to the earlier decision in the case of state of tamil nadu : 1983(13)elt1582(sc) and holds that the expression 'that is to say' employed in the definition refers to oil-seeds and is exhaustive and not illustrative. in the second case, clause (xxvi) of rule 5(2) of the andhra pradesh general sales tax act provided for levy on live-stock, that is to say, all domestic animals, such as, oxen, bulls, cows, buffaloes, goats, sheep and horses, etc. it was held that as the chicks are not mentioned and the chicks are birds and not animals, the chicks would not attract the levy under the clause. we are unable to accede to the contention of the learned counsel for the company that these two decisions, which refer to the earlier decision in the state of tamil nadu : 1983(13)elt1582(sc) , are conclusive for determination of the claim of the respondent-company. in our judgment, the three decisions of the supreme court relied upon did not contain the special features which are noticed in entry 11 of the schedule to the act and therefore it is not possible to conclude that as the expression 'that is to say' occurs in the entry, the conclusion must follow that the list of scheduled goods set out in the entry is exhaustive and not illustrative. reference was also made to the decision of the high court of andhra pradesh in jaiswal & sons v. commissioner of commercial taxes [1992] 86 stc 416. in the case before the andhra pradesh high court, entry 38 read 'all kinds of electrical goods, instruments, apparatus and appliances, that is to say' and then follows enumeration of different items. the andhra pradesh high court referred to the decision of the supreme court in the case of state of tamil nadu : 1983(13)elt1582(sc) and concluded that in view of the expression 'that is to say', the articles mentioned are enumerative and not illustrative. in our judgment, the decision of the andhra pradesh high court is not applicable while considering the ambit of entry 11 of the second schedule to the act as the words employed are entirely different and distinct. it is, therefore, not possible to share the view taken by the learned single judge by the impugned judgment that the import of furnace oil will not attract levy under entry 11 of the second schedule to the act. in our judgment, the import is clearly liable to payment of duty and the order of the assessing authority on that count was not required to be disturbed.7. the appellants also contended that the learned single judge was in error in setting aside the order of the assessing authority levying penalty. we find considerable merit in the contention. the mere fact that entry 16-b underwent changes on three occasions, is not a sufficient ground for setting aside the penalty. the assessing authority had levied penalty as contemplated by action 5 of the act. the respondent-company challenged the vires of the entry and when given up the challenge at the hearing of the petitions, it was not permissible to disturb the order of penalty levied by the assessing authority. the learned single judge proceeded to quash the penalty levied in respect of duty payable for the import of furnace oil and that order is also required to be set aside in view of the finding that import of furnace oil was liable to payment of duty under entry 11 of the second schedule. it is not permissible in exercise of the writ jurisdiction to disturb the levy of penalty and the remedy of the assessee is to file appeal before the appellate authority as prescribed under the provisions of the act. the learned counsel for the respondent submitted that the company would adopt such course, but it is possible that the appeals will not be entertained on the ground of limitation. the government advocate assured that in case such appeals are preferred within a period of two weeks from today, then the appeals will be entertained and disposed of on merits and the objection of limitation will not be revised. in view of the assurance, the apprehension of the respondent no-longer survives. it is open for the respondent to file appeals against the levy of penalty, if so advised.8. accordingly, all the appeals are allowed and impugned judgment dated january 28, 1992, passed by the learned single judge in writ petitions nos. 16382 to 16385 of 1988 is set aside and the writ petitions stand dismissed. the respondent-company shall pay the costs to the appellants throughout.9. appeals allowed.