BARGARH YARN TRADERS Vs. STATE OF ORISSA

JUDGEMENT

(1.) WHETHER the artificial silk yarn is included within the expression "silk yarn" is the subject-matter of reference made under section 24 of the Orissa Sales Tax Act, 1947.

(2.) THE petitioner is a dealer and is doing business in yarn. During the assessment year 1980-81 though he sold artificial silk yarn but did not pay tax thereon on the ground that the sale of artificial silk yarn is exempted from levy of sales tax as per item 7 of list of goods exempted from Orissa sales tax. The assessing officer, however, being of the opinion that the "artificial silk yarn" is not "silk yarn" and, therefore, not exempted from levy of sales tax, held the sale to be taxable at the rate of 10 per cent and accordingly determined the taxable turnover of the petitioner for the assessment year in question. The petitioner carried an appeal. The appellate authority confirmed the conclusion of the assessing officer and held that the "artificial silk yarn" is by its very nature a silk which is not natural and not indigenous or anything which is not real and as such it cannot be treated as a "silk yarn". The petitioner then carried a second appeal to the Tribunal. The Tribunal relying upon the decision in the case of Deputy Commissioner of Sales Tax v. Dharmaprakasha S. V. Sreenivasa Setty [1954] 5 STC 180 (Mys) affirmed the conclusion of the appellate authority and held that the expression "silk yarn" appearing in item No. 7 of the tax-free Schedule refers to only pure silk yarn and not artificial silk yarn. Having dismissed the appeal, on an application for reference being made under section 24 (1) of the Orissa Sales Tax Act the Tribunal referred the case and referred the following question for the decision of this Court :

(3.) MR . Patnaik, the learned Standing Counsel for the department, on the other hand, contends that artificial silk is not silk at all and, therefore, by no stretch of imagination the expression "silk yarn" would bring within its sweep "artificial silk yarn". According to Mr. Patnaik, the expression "silk yarn" would only mean "pure silk yarn" both in common parlance as well as in giving a dictionary meaning to the same and, therefore, the court cannot give an extended meaning by including the artificial silk yarn within the said entry. In order to examine the correctness of the rival submissions it is necessary to notice some general rules of interpretation of statute as well as some case laws cited at the Bar. But before that, it would be appropriate to notice the relevant entry.