State of Uttar Pradesh v. M/S KORES (INDIA) LTD.

837 STATE OF UTTAR PRADESH _v._ M/S. KORES (INDIA) LTD. _October_ 18, 1976 [H. R. KHANNA AND JASWANT SINGH, JJ.] _U.p, Sales_ _Tl!fx_ _Act,_ 1948, _s._ _3-A, Notification issued_ _under-Rule_ _for con-_ _structing words-W/zetlzer carbon paper is taxable as 'Paper'-Whetlzer ribbon_ _is_ _accessof'y or part_ _of typewriter._ A B The Governor of U. P. issued a Notification under Section 3-A of the U.P. Sales Tax Act/ 1948, and the Sales Tax Officer (Section IV) Kanpnr, ordered the respondent company to pay tax on the turnover of carbon paper at 6%, and that of ribbon at 10%, as per entry 2 of the Notification.· The respondent challenged C the order in a :writ petition before the High Court. contending that carbon paper was not 'paper' with the meaning of entry 2 and its turnover was therefore to be assessed at the rate of 2% prescribed for unclassified goods, and that 'ribbon' being an accessory and not a part of -the typewriter, could only be taxed at the rate of 6 % and. not l 0%. The High Court allowed: the writ and Quashed the levy. The appellant contended that carbon paper does not lose its character as !Japer in spite of being subjected to chemical processes, and that ribbon is not an D accessory but an essential part of the typewriter. Dismissing thCI appeal the Court, HELD :: (1) A word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs. It has to be understood according to the well established canon of con struction in th~ sense in, which persons dealing in and using the article understand it. [839' A-Bl _Allol'lley General_ v. _Winstanley_ (1831) 2 _Dow_ & _Clark_ 302==(1901) 6 E.R. 740, and _Grenfell_ v. _Commissioner_ _of_ _Inland_ _Re1·e11ue_ (1876) l Ex. D. 242 at p. 248 applied. E (2) The word 'paper· is understood as meaning a substance which is used for bearing writing or printing, or for packing, or for drawing on, or for decoraling, or covering the walls. Carbon paper cannot be used for these purposes but is used for making replicas or carbon copies, and cannot i:roperly be described as paper, [839 G, 840 A-Bl F _K. Ki/bul'll_ _&_ _Co. Ltd._ v. _Commissioner_ _of_ _Sales Tax, U.P._ _Lucknow_ (31 S.T.C. 625), _Sree_ _Rama_ _Trading Company_ v. _State_ _of_ _Kera/a_ (28 S.T.C. 469), _State_ _of_ _Orissa_ v. _Gestetner Duplicators_ (P) _Ltd._ (33 S.T.C. 333) _Commissioner_ _of_ _Sales Tax, U.P._ v. S. _N._ _Brothers_ (31 S.T.C. 302) applied. (3) The above mentioned rule of construction equally applies to ribbon. It i·s an al:Cessory and 110t a part of the typewriter, though it may not be possible t..o type out any matter without it. [841 D-E] G 'I _State of' Mysore_ v. _Kores (India) Ltd._ (26 S.T.C. 87) approved. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1773 of 19'71. (From the Judgment and order dated 20-2-1970 of the Allahabad High Court in Civil Misc. Writ Petition No. 2943/69) ##### • _S._ C. _Manchanda_ and _0._ _P._ _Rana,_ for the Appellants. H _V._ _S._ _Desai,_ _P._ _B. Agarwala_ and _B._ _R._ _Agarwala,_ for the Respondents. \_ . _(-_ A B ### c D E F G H 838 SUPREME COURT REPORTS LI 97'1] 1 S.C.R. The Judgment of the Court was delivered by JASWANT SINGH, J.-This appeal by certificate which is directed against 0e judgment and _order elated February 20, 1970, passed by the High Court of Judicature at Allahabad in writ petition No. 2943 of 1969 raises two interesting questions viz. (1) whether carbon paper is paper falling within the purview of the word 'paper' as used in serial No. 2 of Notification N:o. ST-3124/X-1012(4)-1964 dated July 1, 1966, issued by the Governor of Uttar Pradesh in exercise #### of the power vested in him under section 3-A of the u.-e. _Sales fax Act, 1948 (U.P. Act No. XV of 1948) so as to be liaole to sales tax at the point and at the rate specified in the Schedule to tl1e Notification and (2) whether ribbon is an accessory or a rent of the typewriter. It appears that the respondent which is a company incorporated under the Indian Companies Act dealing in carbon paper, typewriter, ribbon, stepler machines and stepler pins, despatches the said goods from its head office at Bombay to its branch office at Kanpur wherefrom sales thereof are effected in the State of Uttar Pradesh. During the course of the assessment proceedings for the assessment year 1956-57, the respondent claimed that carbon paper not being paper falling within the ambit of Entry No. 2 of the Schedule to the aforesaid Notification but a specialised article used for copying purposes, its turnover had . to be assessed at the rate of 2 per cent prescribed for unclassified goods and not at the rate of 6 paise per rupee i.e. 6% prescribed in the aforesaid Notification. The respondent further claimed that ribbon being an accessory and not a part of the typewriter, its turnover could not be subjected to sales tax at the rate of 10% prescribed _inter alia_ for typewriters and parts thereof by Notification No. ST-1738/X-1012-1963 dated June 1, 1963. The Sales Tax Officer, (Section IV), Kanpur, did not accede to the contentions of the respondent and holding that carbon paper remained paper even after going through certain chemical processes and that ribbon was a part of the typewriter, taxed the turnover of carbon paper for the period commencing from July 1, 1966, to the end of March, 1967 at 6% and that of ribbon at 10%. He, however, taxed the turnover of carbon paper for the period April 1, 1966 to June 30, 1966 at 2%. The validity and correctness of this order in so far as it related to the levy of tax Oil carbon paper at 6% and ribbon at 10% was challenged by the respondent by means of the aforesaid writ petition before the High Court at Allahabad which by its aforesaid judgment and order allowed the same and quashed the levy. Hence this appeal. Appearing in support of the appeal, Mr. Manchanda has assailed the reasoni11g and approach of the High Court and has vehemently urged that carbon paper does not lose its character as paper even after being subjected to chemical processes and that ribbon is not an accessory but an essential part of the typewriter. We have carefully considered the submission made by Mr. Manchanda but find ourselves unable to accept the same. L:. P. 1'. KORES (lNDlA) LTD. _(Jaswant_ _Si11gh_ _J.)._ 839 It is well settled that a word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs. _In_ _Attorney-General_ v. _Winstanley_ ( [1] ), Lord Tenterdcn started as follows : # . ## .. "Now, when we look at the words of an Act of Parlia- B ment, which are not applied to any particular science or art, we arc to construe them as they are understood in common language." _I_ _£11•Gre111ell_ v. _Commissioners of_ _Inland_ _Revenue_ (2) Pollock, J. pointed out : •'As to the construction of the Stamp Act, I think it was very properly urged that the statute is not to be construed according to the strict or technical meaning of the language contained in it, but that it is to be construed in its popular sense, meaning, of course, by the words 'popular sense' that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it." The wont 'paper' admittedly not having been defined either in the U.P. Sales Tax Act, 1948 or the Rules made thereunder, it has to be understood according t0 the aforesaid well established canon of construction in the sense in which persons dealing in and using the article understand it. It is, therefore, necessary to know what is paper as commonly or generally understood. The said word which is derived from the name of reedy plant papyrus and grows abundantly along the Nile river in Egypt is explained in 'The Shorter Oxford English Dictionaiy (Volume 2) (Third Edition) l!_S "a substance composed of fibres interlaced into a compact web, made from linen and cotton rags, straw, wood, certain grasses, etc., which are macrated into a pulp, dried and pressed; it is used for writing, printing, or drawing on, for wrapping things in, for covering the interior of walls, etc." In 'Encyclopaedia Britannica', (Volume 13), (15th Edition), 'paper' has been defined as the basic material used for written communication and the dissemination of information." In the Unabridged Edition of "The Randon House Dicitionary of the English Lan~age'', the word 'paper' has been defined as "a substance made from 0 rags, straw wood' or other fibrous material, usually in thin sheets, used to bear writing or printing or for wrapping things, decorating walls etc." From the above definitions, it is clear that in popular parlance, the word 'paper' is understood: as meaning !\. substance which is used for bearing, writing, or printing, or for packing, or for drawing on, or for ~".Corating, or_.c<>_~!ing the walls. Now carbon paper which is manu(1) [183112 Dow & Clark 302=(1901) 6 E.R. 740. (2) [1876] 1 Ex.D. 242 at 248. ### c D F G H A B ##### c D F H 840 SUPREME COURT REPORTS [1977] 1 S.C.R. factured by coat'11g the tissue paper with a thermo-setting ink (mack to a liquid consistency) based mainly on wax, non drying oils, pigments and dyes by means of a suitable coating roller and equalising rod and then passing it through chilled rolls cannot be -used for the aforesaid purposes)mt is us~ according to 'The Randon House Dictionary of the English Language' between two sheets of plain paper in order to reproduce on the lower sheet that which. is written or typed on the upper sheet i.e. making replicas or carbon copies cannot properly be described as paper. It will be well at this stage to refer to a few decisions whir.Ji confmn our view. In _Kilburn_ _&_ _Co. Ltd._ v. _Commissioner_ _of_ _Sales_ _Ttx_ _U.P.,_ _Lucknow(!)_ a Bench of Allahabad High Court while examining the very same entry in the Notification with which we are concerned in the instant case and holding that "Ammonia paper and ferro paper used for obtaining prints and sketches of site plans are not paper as understood generally and, therefore, will not come within the expression 'paper other than hand-made paper' as used in Notification No. ST 3124/X-1012(4) dated 1st July, 1966, issued under section 3-A of the U.P. Sales Tax Act, 1948" observed : "The word 'paper' has not been defined in the Act or the Rules, and, as such, it has to'be given the meaning which it has in ordinary parlance. Paper, as understood in common parlance, is the paper which is used for printing, writing and packing purposes." In _Sree_ _Rama_ _Trading Company_ v. _State_ _of_ _Kera/a(_ _[2]_ _)_ _the High_ Court of Kerala after a good deal of research held that cellophane is not paper coming within entry 42 in the First Schedule to the Kerala General Sales Tax Act, 1963, as it stood at the time relevant to the year 1966-67. In _State_ _of_ _Orissa_ v. _Gestetner Duplicators_ (P) Ltd.( [3] ) _the High_ Court of Orissa held that stencil paper was not paper within the meaning of serial No. 7-A of the Schedule to the Notification issued by the State Government under the first proviso to section _5_ ( 1) of the Orissa Sales Tax Act, 1947 and that sale of stencil paper was, ,therefore, not taxable at the rate of 7 per cent but is exigible to tax at the rate of _5_ per cent. In _Commissioner_ _of_ _Sales Tax,_ _U.P._ v. _S. N. Brothers(_ _[1 ]_ _)_ this Court while upholding the decision of the Allahabad High Court which held that 'food colours' and 'syrup essences' are edible goods while 'dyes and. colours and compositions thereof' and 'scents and perfumes' did not seem _prima_ _f_ _acie_ to connote that they arc edible goods observed: (!) 31 S.T.C. 625. (2) 28 S.T.C. 469. (3) 33 S.T.C. 333. (4) 31 S.T.C. 302. _I_ u. P. _v._ KORES (lNDlA) LTD. _(Jaswant Singh_ _J.)_ 841 "The words 'dyes and colours' used in entry No. 10 and the words: scents and perfumes' used in entry No. 37 have to be construed in their own context and in the sense. as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. Similarly, the words "food colours" and ''syrup essences", which are descriptive of the class of goods the sales of which are to be taxed under the Act, have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them." Bearing in mind the ratio o~ the above mentioned decisions, it is quite cle~r !hat the mer~ f~ct that.the ~ord 'pap~r.' forms part of !he denomination of a specialised article is not dec1s1ve of the question whether the article is paper as generally understood. The word 'paper' in the colillilon parlance or in the commercial sense means paper which is used for printing, writing or packing purposes. We are, therefore, clear of opinion that carbon paper is not paper as envisaged by entry 2 of the aforesaid Notification. Regarding ribbon also to which the above mentioned rule of construction equally applies, we have no manner of doubt that it is an accessory and not a part of the typewriter ( un-like spool) though it may not be possi:blei to use the latter: without the former. Just as aviatio~ petrol is l!ot a pa.rt of J:?e aeroplane nor diesel is a part of a bus m the same way, nbbon is not a part o~ the typewriter though it niay not be possible to type out any matter without it. The very same question with which we are here confronted came up for decision before the High Court of Mysore in _State_ _of_ _Mysore_ v. _Kores (India)_ _Ltd._ (1) where it was held : "Whether a typewriter ribbon is a part of a typewriter is to be considered in the light of what is meant by a typewriter in the commercial sense. Typewriters are being sold in the market without the typewriter ribbons and therefore typewriter ribbon is not an essential part of a typewriter so as to attract tax as per entry 18 of the Second Schedule to the Mysore Sales Tax Act, 1957." A B ### c D E F . F01: the. fo:egoing re~sons, w.e do not find any force in this appeal wlueh is d1sm1ssed ~mt m the circumstances of the case without any G order as to costs. M.R. _Appeal_ _dismissed._ (I) 26 S.T.C. 87.