M P AUGUSTINE Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE tax revision cases are filed by the assessee challenging the assessment for the years 1990-91, 1991-92, 1992-93 and 1993-94. The assessee was a dealer in polythene sheets, Polythene tubings and plastic waste. According to the assessee, Polythene sheets and polythene tubings are packing materials. Even though they are liable to be taxed at 8 percent as per the Kerala General Sales Tax Act, 1963 (for short, "the KGST Act"), as per notification issued by the Government of Kerala under section 10 of the kgst Act the tax is reduced to 4 per cent. Hence, the petitioner is liable to be taxed only at that rate. Another contention raise was whether plastic waste is an unclassified item and, hence, the rate adopted is correct. The other dispute raised was with regard to the turnover fixed relating to polythene sheets and Polythene tubings. Regarding the first question, whether Polythene sheets and polythene tubings are to be taxed at 8 per cent or 4 per cent, the assessee relied on notification S. R. O. No. 492 of 1990 and also S. R. O. No. 369 of 1992. Under entry 91, Schedule I, packing cases and packing materials including cork, cork sheet, gunny bags, shooks, tea chests, waste paper, wooden boxes, wooden shavings, wooden crates, wooden cable, drum, etc. , are liable to be taxed at 6 per cent. S. R. O. No. 492 of 1990 was issued in exercise of the powers conferred by section 10 of the KGST Act, 1963. The notification was issued in public interest making a reduction in respect of tax payable under the Act on the sale of certain goods. The first item in the Schedule is empty gunnies, packing materials, papers covers and paper bags. The existing rate of tax for these items was 8 per cent and the reduced rate was put as 4 per cent. A new notification, S. R. O. No. 375 of 1992 was then issued. As per this notification, it notified the goods notified as packing materials under entry 91. The schedule gives 18 items. Item No. 13 is Polythene (plastic), tins, bags and covers of all sizes and varieties. The contention raised by the petitioner before the authorities is that, Polythene sheets and Polythene tubings are used as packing materials and hence, they come under covers mentioned in item No. 13 in S. R. O. No. 375 of 1992. Hence, according to him, these Polythene sheets and Polythene tubings ought to have been assessed at the reduced rate at 4 per cent. Learned counsel for the petitioner relied on the definition of cover in Webster's New international Dictionary. Cover means something that protects or gives shelter. Learned counsel also relied on some decisions of the honourable Supreme court as well as the High Courts. The first decision cited was in Filterco v. Commissioner of Sales Tax 1986 61 STC 318 (SC ). There, the Honourable Supreme court was dealing with the meaning given to the word "cloth". The honourable Supreme Court held as follows : "going by the meaning given in dictionaries as well as by its generally accepted popular connotation 'cloth' is woven, knitted or felted material which is pliable and is capable of being wrapped, folded or wound around. It need not necessarily be material suitable for making garments because there can be 'cloth' suitable only for industrial purpose; but nevertheless it must possess the basic feature of pliability. Hard and thick material which cannot be wrapped or wound around cannot be regarded as 'cloth'. "

(2.) THE court further held that the legal position is now well-settled that words of everyday use occurring in a taxing statute must be construed not in their scientific or technical sense but as understood in common parlance, that is, in their "popular sense". THEir Lordships relied on the decision of Pollock, B. , in Grenfell v. Inland Revenue commissioners 1876 1 Ex D 242 at 248, wherein it was observed that, "if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but 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". Further the court quoted from the observations of Story, J. , in 200 Chests of Tea 1824 9 Wheaton (US) 430 at 438 that, "for the Legislature does not suppose our merchants to be naturalists, or geologists, or botanists". THE learned counsel further referred to the decision in State of Uttar Pradesh v. Kores (India) Ltd. 1977 39 STC 8 (SC); AIR 1977 SC 132. THEre the honourable Supreme Court held as follows : "the word 'paper' not having been defined either in the U. P. Sales Tax Act or the Rules made thereunder, it has to be understood according to the well-established canon of constructions in the sense in which persons dealing in and using the article understand it. THE mere fact that the word 'paper' forms part of the denomination of a specialised article is not decisive of the question whether the article is paper as generally understood. THE word 'paper' in the common parlance or in the commercial sense means paper which is used for printing, writing or packing purposes. " Learned counsel further brought to our notice that in a notification, S. R. O. No. 405 of 1994, Polythene tubings were also brought under packing materials. Learned counsel further contended that plastic waste is nothing but plastic. Learned counsel for the department, Sri Ashokan, submitted that order passed by the authorities are correct. According to him, even though Polythene sheet can be used as a cover, that is not the intention for issuing the notification for exemption. Polythene sheet can be used not only for covering but also for other purposes. Government wanted to encourage small-scale industries which are dealing with packing materials. Polythene sheet is a raw material for the purpose of making Polythene covers. Hence, according to him, Polythene sheets even though can be used to covering, is not entitled to exemption. It could be seen that first notification S. R. O. No. 492 of 1990 gave reduction in tax to empty gunnies, packing materials, paper covers and paper bags. Here we can find that empty gunnies, paper covers and paper bags are made of a particular shape used for purpose of packing. Even though paper can be said to be a packing material, only paper covers and paper bags are given the benefit. What is a packing material is mentioned by notification, s. R. O. No. 375 of 1992. THE Schedule contains 18 items which are as follows :1. Bituminised materials used in packing of goods. 2 Bottles made of glass or any other materials. 3 Carton, boxes, cones, cylinders or tubes made of paper, corrugate paper or cardboard paper, labels, paper cuttings. 4 Cellophane tapes 5 Empty barrels and drums 6 Empty tins 7 Jute hessian cloth 8 Jute twine 9 Packing cases including planks, rafters, battens which when assembled together form packing case. 10 Palm leaf mats. 11 Paper gum tapes. 12 Plastic tapes 13 Polythene (plastic), tins, bags and covers of all sizes and varieties. 14 Rubber bands. 15 THErmocol. 16 Tin containers and tin seals. 17 Wood wool 18 Pilfer proof caps added by S. R. O. No. 684 of 1992 from April 1, 1992.