High Court · 2012

In WP(C) 839 of 2010 the petitioner therein had sought for a cla [2] rification from the Commissioner of Taxes as to whether the items, polyester fil m, metallised pet, metallised BOPP, aluminium foil film and poly film which the petitioner firm had been importing to Assam would be taxable under the Assam Ent ry Tax Act, 2008 under Entry 28. The Commissioner of Taxes by the impugned clari ficatory order dated 19.12.2009 held that the aforesaid items are liable to be t axed @ 4% as they are covered by Entry No.28. The petitioner in the said WP(C) 8 39 of 2010 has challenged the said clarificatory order dated 19.12.2009. Based on the aforesaid clarificatory order dated 19.12.2009, the Superintendent of Taxes conducted search and seizure in the business premises of various firms and served them with the show-causes as to why in addition to the realisation of taxes, penal proceeding should not be initiated against the petitioners for non -payment of the entry tax under the aforesaid Act of 2008 which are being challe nged separately in this batch of writ petitions, W.P.(C) no. 839 of 2010, W.P. ( C) NO. 2783 OF 2011, W.P.(C) No. 2784 of 2011 and W.P.(C) No. 4324 of 2011. As similar issues are involved in these writ petitions, these are heard together and disposed of by this common judgment and order. [3] Under the Assam Entry Tax Act, 2008, taxes on entry of specified goods into local area for consumption, use or sale therein at the rates specifi cally specified against each item in the schedule are leviable. Goods to be taxable under the said Act are notified in the Sched ule attached to the Act and the rate of taxes against each item is also mentione d. The relevant scheduled Entry No.28 of the Assam Entry Tax Act, 2008 reads as follows:- (cid:28)Entry No.28: Films of all kinds including X-ray The case of the petitioners is that the aforesaid Entry has no n exus with the articles, polyester film, metallised pet, metallised BOPP, alumini um foil film and poly film which are being imported by the petitioners to Assam as these are totally different items having no nexus with the item (cid:28)X-Ray films (cid:29) and/or (cid:28)Films of all kinds (cid:29). Further, it has been contended that if the intenti on of the legislature was to include films of all kinds in the said Entry, there was no necessity of adding the words (cid:28)including X-Ray films (cid:29) after the words (cid:28)F ilms of all kinds (cid:29). The inclusion of the said words (cid:28)including X-Ray films (cid:29) make s it clear that the real intention of the legislature was to include only such f ilms which are of the nature of X-Ray films and not to tax all kinds of films. T herefore, only such goods which are in the nature of X-Ray films can be included within the purview of the said Entry and since the aforesaid goods imported by the petitioners are totally different in nature from (cid:28)X-Ray films (cid:29), the said Ent ry cannot cover those articles. films\ According to the petitioners, the aforesaid articles, polyester film, metallised pet, metallised BOPP, aluminium foil film and poly film are (cid:28)We b Substrate (cid:29) and are not films. The said materials are used mainly for packaging of food articles like biscuits, bread, chocolate, etc. The petitioners clarify that metallised BOPP means Metalised Biaxially oriented Polypropylene web (BOPP) which is used for packaging and food contact applications. Aluminium foil is used for packaging purpose as well as in pharmaceuticals and poly films are idea l for food packaging. They have other applications in construction and agricultu ral uses. The aforesaid articles, for their various uses, are sometimes printed and in order to increase the strength, are toughened by multi-layering and the a foresaid items cannot be considered as films in any sense of the term. It has al so been stated that except aluminium foil, the aforesaid products are cleared un der the Excise Laws as different items and are not included under (cid:28)Films (cid:29). Accor ding to the petitioners X-Ray films are taxable under the Excise laws under Chap ter 370110 and Metallised PET (BOPET) are taxable under Tariff heading 39206220, PE(Poly)- Plain under 39201012, Metallised BOPP under 39202020, Aluminium Foil under 76071991 and BOMPET under 39219093. The petitioners contend that even if these materials are treated as (cid:28)films (cid:29), the use of the word (cid:28)including (cid:29) in the Entry 28 makes it clear that it is to take within its sweep only such items which are included within the de fined term and therefore the films of all kinds must include items which are X-R ay films and/or of the nature and kind of X-Ray films and the aforesaid material s are not even remotely connected with X-Ray films. On the other hand, the contention of the respondents is that the Entry uses the words (cid:28)of all kinds (cid:29) which clearly indicates that the words (cid:28)Fil m of all kinds (cid:29) will cover all kinds of films and as such, it is not necessary t hat the said item may be similar in nature to X-Ray films. The aforesaid items b eing films, therefore, are covered by the aforesaid Entry and the said Entry ca nnot be qualified by the words (cid:28)X-Ray films (cid:29). It was thus contended that had the legislative intent been to tax only X-ray films of various kinds as the petitio ners seek to assert, the Entry would have straightaway mentioned as (cid:28)all kinds of X-ray films (cid:29) instead of the present enumeration (cid:28)Films of all kinds including X-ray films (cid:29). [4] Therefore, the issue to be decided by this Court is whether the aforesaid items, polyester film, metallised pet, metallised BOPP, aluminium foil film and poly film are covered by Entry No.28 of the Assam Entry Tax Act, 2008 i.e. (cid:28)Films of all kinds including X-ray films\ making these liable to be taxed. [5] It is now well settled that taxing statutes must receive strict interpretation and there cannot be taxation by implication and there must be cle ar and express language imposing tax. Further, the intent of the legislature is to be gathered from the words used in the statute and once it is shown that the assessee falls within the letter of law, he must be taxed howsoever great the ha rdship it may appear to be. On a cursory glance of the Entry, it would appear that films of any kind or nature would be covered by the aforesaid Entry. Thus the aforesaid i tems, polyester film, metallised pet, metallised BOPP, aluminium foil film and p oly film, if they are to be understood as films would be apparently covered by t he said Entry. However, the problem has arisen because of the use of the words (cid:28) including X-Ray films (cid:29) in the said Entry. As discussed above, the Revenue has ta ken the stand that use of the said words is by way of abundant caution, merely t o emphasise the comprehensiveness of the scope of the Entry so as not leave out any kind of film including X-Ray film and as such, any item which can be conside red film even if does not bear any common element with X-ray film is liable to b e taxed. According to them it is merely clarificatory and does not restrict the scope of the Entry. On the other hand, the petitioners have claimed that the exp ression (cid:28)Films of all kinds (cid:29) has been qualified by the use of the words (cid:28)includi ng X-ray films (cid:29) to mean only those films which are in the nature of X-Ray film a nd does not contemplate any other or all kinds of films. As we proceed to examine the rival contentions of the parties, a [6] s to whether the meaning of the word (cid:28)Films of all kinds (cid:29) has been expanded or r estricted by the use of word (cid:28)including (cid:29), we may note the meaning of (cid:28)film (cid:29) firs t. In the Assam Entry Tax Act, 2008, the word (cid:28)film (cid:29) has not been d efined. Therefore, we may try to understand the meaning of the word (cid:28)film (cid:29) by re ferring to the dictionary meaning as understood in the common parlance as held b y the Supreme Court in S.Samuel, M.D.Harrisons Malayalam v. Union of India, (200 4) 1 SCC 256 that when a word is not defined in the Act itself, it is permissibl e to refer to dictionaries to find out the general sense in which that word is u nderstood in common parlance. As per Oxford dictionary, the meaning of (cid:28)film (cid:29) is (cid:28) Film:- 1. Thin coating or covering layer, 2. Strip or sheet of plastic etc. coated with light sensitive emulsion for expos ure in a camera, 3a. A story, episode, etc. on film with the illusion of movement. 3b. The cinema industry 4. Slight veil or haze etc. 5. Dimness or morbid growth affecting the eyes - v. 1 make a photographic film of (a scene, story, etc.) 2. Cover or become cov ered with or as with a film. [Old English]. (cid:29) From the above definition, when one uses the word (cid:28)film (cid:29) referri ng to a substance, it would normally mean either a thin sheet of any material us ed to cover another material or any strip or sheet of plastic coated with photo sensitive materials used for photographic or cinematographic purposes. Thus the word ’film’ can mean two different substances. According to the first definition , any thin material which is used to cover any other material can be considered a (cid:28)film (cid:29). However, this definition is too amorphous and omnibus and devoid of an y specific characteristic except the fact of the material of being a thin substa nce. Other than this characteristic of thinness of the material, nothing else is discernible regarding the character of the material from the first meaning of t he word (cid:28)film (cid:29). In this connection we may observe what the Supreme Court held in Union of India vs. Gujarat Woollen Felt Mills, (1977) 2 SCC 870 : (cid:28)The well-known rule in interpreting items in statutes like the one we are conce rned with is that (cid:28)resort should be had not to the scientific or the technical m eaning of such terms but to their popular meaning or the meaning attached to the m by those dealing in them, that is to say, to their commercial sense & &. (cid:29) Therefore, if we ignore the scientific or technical aspect of th e meaning of the word (cid:28)film (cid:29) and go by the popular meaning of the word (cid:28)film (cid:29), i t normally refers to the photosensitive thin plastic material which is used for the purpose of photography or cinematography and not to any other substances. Th erefore, even if the aforesaid articles, namely, polyester film, metallised pet, metallised BOPP, aluminium foil film and poly film are considered to be films i n technical and scientific terms, it is to be ascertained whether they are also known as ’films’ in the market or in the popular parlance so as to be unambiguou sly covered by the said Entry. However, as regards whether these materials are a lso known as (cid:28)films (cid:29) in popular parlance, there is no such finding by the author ity in the impugned clarificatory order dated 19.12.2009. [7] including (cid:29) after the words (cid:28)Films of all kinds (cid:29) in the aforesaid Entry No.28. We now proceed to consider as to the effect of the use of word (cid:28) In N.D.P. Namboodripad v. Union of India, (2007)4 SCC 502 the Su preme Court held that: (cid:28)18. The word ’includes’ has different meanings in different contexts. Standard dictionaries assign more than one meaning to the word ’include’. Webster’s Dicti onary defines the word ’include’ as synonymous with ’comprise’ or ’contain’. Ill ustrated Oxford Dictionary defines the word ’include’ as: (i) comprise or reckon in as a part of a whole; (ii) treat or regard as so included. Collins Dictionar y of English Language defines the word ’includes’ as: (i) to have as contents or part of the contents; be made up of or contain; (ii) to add as part of somethin g else; put in as part of a set, group or a category; (iii) to contain as a seco ndary or minor ingredient or element. It is no doubt true that generally when th e word ’include’ is used in a definition clause, it is used as a word of enlarge ment, that is to make the definition extensive and not restrictive. But the word ’includes’ is also used to connote a specific meaning, that is, as ’means and i ncludes’ or ’comprises’ or ’consists of’. (cid:29) From the above, what one notices is that when one uses the word ’includes’, it can be used as a word of enlargement and also to connote a specif ic meaning. What may further be noted is that when this word (cid:28)includes (cid:29) is used, it indicates that there is some commonality, certain common attribute or charac teristic between the thing that is included and that to which the thing is inclu ded. The use of the word (cid:28)includes (cid:29) has received further consideratio [8] n in a number of decisions of the Supreme Court. We may refer to some of these. The Supreme Court in Karnataka Power Transmission Corporation v. Ashok Iron Work s Private Limited, (2009) 3 SCC 240 had observed as follows. (cid:28)14. The learned counsel also submitted that the word (cid:28)includes (cid:29) must be read as (cid:28)means (cid:29). In this regard, the learned counsel placed reliance upon two decisions of this Court, namely; (1) South Gujarat Roofing Tiles Manufacturers Assn. v. S tate of Gujarat1 and (2) RBI v. Peerless General Finance and Investment Co. Ltd. 2 15. Lord Watson in Dilworth v. Stamps Commr.3 made the following classic stateme nt: (AC pp. 105-06) (cid:28) & The word ’include’ is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehendin g, not only such things as they signify according to their natural import, but a lso those things which the interpretation clause declares that they shall includ e. But the word ’include’ is susceptible of another construction, which may beco me imperative, if the context of the Act is sufficient to shew that it was not m erely employed for the purpose of adding to the natural significance of the word s or expressions defined. It may be equivalent to ’mean and include’, and in tha t case it may afford an exhaustive explanation of the meaning which, for the pur poses of the Act, must invariably be attached to these words or expressions. (cid:29) 16. Dilworth3 and few other decisions came up for consideration in Peerless Gene ral Finance and Investment Co. Ltd.2 and this Court summarised the legal positio n that (Peerless case2, SCC pp. 449-50, para 32) inclusive definition by the leg islature is used: (cid:28)32. & (1) to enlarge the meaning of words or phrases so as to take in the ordin ary, popular and natural sense of the words and also the sense which the statute wishes to attribute to it; (2) to include meanings about which there might be s ome dispute; or (3) to bring under one nomenclature all transactions possessing certain similar features but going under different names. (cid:29) 17. It goes without saying that interpretation of a word or expression must depe nd on the text and the context. The resort to the word (cid:28)includes (cid:29) by the legisla ture often shows the intention of the legislature that it wanted to give extensi ve and enlarged meaning to such expression. Sometimes, however, the context may suggest that word (cid:28)includes (cid:29) may have been designed to mean (cid:28)means (cid:29). The setting , context and object of an enactment may provide sufficient guidance for interpr etation of the word (cid:28)includes (cid:29) for the purposes of such enactment. (cid:29) 1: (1976) 4 SCC 601 2: (1987) 1 SCC 424 3: 1899 AC 992 [9] We may also refer to the decision of the Supreme Court in South Gujarat Roofing Tiles Manufacturers Assn. v. State of Gujarat, (1976) 4 SCC 601 wherein the Supreme Court held that, (cid:28)3. .......................... It is true that (cid:28)includes (cid:29) is generally used as a word of extension, but the meaning of a word or phrase is extended when it is s aid to include things that would not properly fall within its ordinary connotati on. We may refer to the oftenquoted observation of Lord Watson in Dilworth v. Co mmissioner of Stamps1 that when the word (cid:28)include (cid:29) is used in interpretation cla uses to enlarge the meaning of words or phrases in the statute (cid:28)these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which t he interpretation clause declares that they shall include. (cid:29) Thus where (cid:28)includes (cid:29) has an extending force, it adds to the word or phrase a me aning which does not naturally belong to it. It is difficult to agree that (cid:28)incl udes (cid:29) as used in the explanation to Entry 22 has that extending force. The expla nation says that for the purpose of Entry 22, potteries industry includes the ma nufacture of the nine (cid:28)articles of pottery (cid:29) specified in the explanation. If the objects specified are also (cid:28)articles of pottery (cid:29), then these objects are alread y comprised in the expression (cid:28)potteries industry (cid:29). It hardly makes any sense to say that potteries industry includes the manufacture of articles of pottery, if the intention was to enlarge the meaning of potteries industry in any way. (cid:29) 1: 1899 AC 99. [10] The Supreme Court in the said case of South Gujarat Roofing Tile s Manufacturers Assn. (Supra) repelled the argument advanced that use of the exp ression (cid:28)includes (cid:29) was by way of abundant caution. (cid:28)4. We are also unable to agree with Mr Patel that the articles specified in the explanation may have been mentioned out of abundant caution to emphasize the co mprehensive character of the entry, to indicate that all varieties of pottery ar e included therein. This argument, though more plausible, does not also seem acc eptable. It is possible that one might have doubts whether things like refractor ies or electrical or textile accessories would pass under the description potter y as that word is used in common parlance, but the explanation also mentions cro ckery and toys regarding which there could be hardly any doubt. The inclusion in the list of objects which are well-recognised articles of pottery makes it plai n that the explanation was added to the entry not by way of abundant caution. 5. The contention of Mr Tarkunde for the appellants is that the articles mention ed in the explanation were intended to be exhaustive of the objects covered by E ntry 22. According to Mr Tarkunde if the legislature wanted to bring within the entry all possible articles of pottery then there was hardly any point in mentio ning only a few of them by way of explanation. To this Mr Patel’s reply is that it is well-known that where the legislature wants to exhaust the significance of the term defined, it uses the word (cid:28)means (cid:29) or the expression (cid:28)means and include s (cid:29), and that if the intention was to make the list exhaustive, the legislature w ould not have used the word (cid:28)includes (cid:29) only. We do not think there could be any inflexible rule that the word ’include’ should be read always as a word of exten sion without reference to the context & &. (cid:29) [11] From the above decisions of the Supreme Court, we may infer the following as regards the use of the word (cid:28)includes (cid:29) or (cid:28)including (cid:29) in any statut e. The word (cid:28)includes (cid:29) or (cid:28)including (cid:29) is normally used in any statute to en i) large the scope of the definition or expression to include things that would not properly fall within its ordinary connotation. In other word, it is used as an extensive word. However, depending on the context, it can be also used to give an exhaus ii) tive or restrictive meaning. It may be taken as equivalent to (cid:28)means (cid:29) and also (cid:28)means and includes (cid:29). iii) The setting, context and object of an enactment may provide sufficient g uidance for interpretation of the word (cid:28)includes (cid:29) for the purposes of such enact ment. [12] In the present case, the words (cid:28)X-Ray films (cid:29) would normally be c overed by the words (cid:28)Films of all kinds (cid:29) and as such, there was no need to speci fically mention (cid:28)X-Ray films (cid:29) again in the said Entry. The expression (cid:28)Films of all kinds (cid:29) in its sweep would normally take into account any kind of film includ ing (cid:28)X-Ray film (cid:29). Therefore, it is clear that the word (cid:28)including (cid:29) has not been used as an enlarging or extensive word, for it could not have been the intentio n of the legislature to include something which in normal course would already s tand included. The contention of the Respondent authorities that the said word (cid:28) including (cid:29) has been used as an abundant caution to emphasis the fact that (cid:28)X-Ray films (cid:29) have been included to clarify that nothing should be left out from the a ll inclusive and comprehensive character of the expression (cid:28)Films of all kinds (cid:29), stands repelled in view of the decision of the Supreme Court in South Gujarat R oofing Tiles Manufacturing Assn. (Supra). Therefore, we have to understand the intention of the legislature in using the s aid expression (cid:28)including X-Ray films (cid:29) in the Entry. Admittedly, we are concerne d with a taxing statute and by the use of the words, (cid:28)Films of all kinds (cid:29) the in tention of the legislature was to tax films of all kinds and not restrict to any particular kind of film which is clear from the use of words (cid:28)of all kinds (cid:29). Ye t by adding the words (cid:28)including X-Ray films (cid:29) to the expression (cid:28)Films of all ki nds (cid:29), the said expression stands qualified. It is evident that the legislature i ntended to restrict the scope of the expression (cid:28)Films of all kinds (cid:29) by adding t hese words (cid:28)including X-Ray films (cid:29). We have already seen that the word (cid:28)includes (cid:29) apart from its use an enlargement word, can be understood as (cid:28)means (cid:29) and also (cid:28)means and includes (cid:29). However, if the expression (cid:28)Films of all kinds (cid:29) is to mean only (cid:28)X-Ray films (cid:29), it will reduce all the other words in the Entry, (except (cid:28)X -Ray films (cid:29)) redundant. Therefore, it cannot be understood to mean only (cid:28)X-Ray f ilms (cid:29). As held in Peerless General Finance and Investment Co. Ltd. (supra) it ca n be used to include meanings about which there might be some dispute or to brin g under one nomenclature all transactions possessing certain similar features bu t going under different names. The word (cid:28)including (cid:29) could indicate the restricti ve meaning of the expression (cid:28)Films of all kinds (cid:29) to confine to such materials w hich possess certain similar characteristics to the included material (cid:28)X-Ray fil ms (cid:29). The ambiguity of the all sweeping words (cid:28)Films of all kinds (cid:29) could be clar ified by the subsequent words. We have already observed that (cid:28)film (cid:29) can mean dif ferent things depending on the nature of the material. In the light of the judgments referred to above, what we can leg [13] itimately infer is that by using the word (cid:28)including (cid:29) in Entry 28, the legislatu re did not wish to include an article which would normally be covered by the gen eral terms (cid:28)Films of all kinds (cid:29) but to give an exhaustive meaning to the words (cid:28)Films of all kinds (cid:29) by clarifying and indicating the nature of film by referrin g to X-ray films. In doing so, the substances covered by the expression, (cid:28)Films of all kinds (cid:29) would possess such characteristics which are also discernible in (cid:28) X-Ray films (cid:29). Thus, the words (cid:28)Films of all kinds (cid:29) would envisage only those fil ms which also possess certain characteristics as discernible in an X-Ray film. A s to what are the attributes of (cid:28)X-Ray films (cid:29) we may refer to the meaning of (cid:28)X -Ray (cid:29). X-Ray, as per Oxford dictionary, means (cid:28)X-Ray - electromagnetic radiation of short wavelength, able to pass through opa que bodies. 2 photograph made by X-Rays, esp. showing the position of bones etc. by their greater absorption of the rays. - v. photograph, examine, or treat wit h X-rays. (X, originally with ref. to the unknown nature of the rays). The aforesaid definition of (cid:28)X-ray (cid:29) in juxtaposition with the wo rd (cid:28)film (cid:29) would clearly indicate the photosensitive character of the film materi al. The expression (cid:28)X-ray films (cid:29), therefore, would act as the indicator of the natur e of the kinds of films contemplated under tjhe expression (cid:28)Films of all kinds (cid:29). Therefore, the words (cid:28)Films of all kinds (cid:29) would be such films which possess any of the characteristics or attributes of (cid:28)X-Ray film (cid:29), i.e., photosensitive mate rials and not any other film which does not possess such character. The kinds of films which would be covered by Entry 28 would be only those films which have c ertain photosensitive materials. It will cover all those films possessing certai n characteristics which may be also found in (cid:28)X-Ray film (cid:29) but going under diffe rent names. This corresponds to the second definition of (cid:28)film (cid:29) as discussed abo ve. In view of the above, (cid:28)Films of all kinds (cid:29) referred to in entry 28 would be the films which possess photosensitive elements in them. In the present case, as observed before, the articles, polyester film, metallised pet, metallised BOPP, aluminium foil film and poly film do not possess any such photosensitive chemical or substances which would qualify them to be treated as films under Entry 28 and accordingly, these substances cannot be covered under Entry 28 and not liable to be taxed under the said Entry. [14] In the result, for the reasons discussed above, we are of the vi ew that the clarificatory order dated 19.12.2009 cannot be sustained and accordi ngly, set aside. Resultantly, all the consequential show cause and recovery noti ces issued to the petitioners on the strength of the clarificatory order dated 1 9.12.2009 holding the articles, polyester film, metallised pet, metallised BOPP, aluminium foil film and poly film as films within the sweep of Entry 28 are lia ble to be recalled and accordingly, are recalled.