Porritts & Spencer (asia) Ltd. v. State of Haryana

BIIAGWATI, J.-The short question which aris.es for determination in this nppeal is whether 'dryer felts' manufactured by the assessce fall within the category of "all varieties of cotton, woollen or silken tex­ tiles" specified in Item 30 of Schedub 'B' of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act). If they are covered by this description, they would be exempt from Sales Tax impooed under the provisions of the Act, otherwise they would b~ liable to sales tax. The assessing authorities held that the 'dryer felts' manufactured by the assessce were not "textiles" within the meaning of Item 30 of Schedule 'B' and they were, therefore, not . exempt from sales tax. The Tribunal, on appeal, also took the same view and rejected the claim of the assessee to exemption from sales tax in respect of sale§ of 'dryer felts'. The assessee thereupun moved the Tribunal for 111aking a reference to the Hi&]i Court and on this application, the following question of law was referred by the Ttibunal for the opinion of the High Court : "Whether on the facts and circumstances of the case, the products manufactured by the petitioner are not covered by Item 30 of Schedule 'B' of the Punjab General Sales Tax Act, 1948, and therefore, not exe111pt from sales tax both under the P11njab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956." I ·~ ' PORR!TTS V. HARYANA (Bhagwiiti, !.) 547 The Reference was heard by n Division Bench and on a difference of opinion between the two Judges constituting the Division Bench, the Reference was placed befor~ a third Judge. The third Judge hdd that ·dryer felts' were not included in the expression 'textiles' occurring in Item 30 of Schednle 'B' df the Act and were, therefore, net exempt from sales tax and on this view the question referred to rl:e High Court was answered against the assessee and in favour of the Revenue. The assessee thereupon preferred the present appeal with special leave obtained from this Court. It is clear from section 5 sub-section ( 1) of the Act that it levies sales tax on the taxable turnover of a dealer subject to the provisions of the Act. Sub-section (2) of section 5 defines "taxable turnover" to mean tliat part of a dealer's gross turnover during any period which remains after deducting therefrom inter alia his turnover on the sale of goods cledared tax free under section 6. Section 6 provides that no tax shoul<l be payable on the sale of goods specified in the first column of Sehedule 'B' subject ts the conditions and exception, if any, set out it•. the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which arc declared tax-free from time to time under this section. Sched11le 'B' sets out in the first column, various categories of goods which are declared tax-free under secti<m 6 and Item 30 specifies the following category of tax-free goods : "All rnrieties of cotton, woollen or silken textiles includ­ ing rayon. artificial silk or n)lon whether manufactured by handl.oom or power!ciom or otherwise but not including pure silk fabrics, carpets, druggets, woollen durees and cotton Jloor dur~es." TJ1c question is : whether 'dryer felts' manufactured by the assei- .. see fell within this category of goods so as to be exempt from s~le,, tax ? Can it be said that 'dryer felts' constitute a variety of cotfoii or woollen textiles ? The answ~r to the question depends on what is the true meaning of the word "textiles' as used in Item 30 of Sche. dule 'B'. Now, the word 'textiles' is not defined in the Act, but i\ is well settled as a result of several decisions of this Court. of which we may mention only a few, namely, Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Ako/a(') and Mis Motipur Jamindary Co. Ltd. v. State of Bihar(') and the State of West Bengal .v. Wash! Ahmed(6) (I) A. I. R. 1961 SC.1325. (2) A. I. R. 1962 SC 660. (3)" [l 977) 3 SCR 149. that in a taxing statute words of every day use must be construed not in their scientific or technical sense but as understood in common par­ lance. The question which arose in Ramm·ata:/s case (supra) was whether betel leaves are vegetables and this Court held that they are not indllded within that term. ·:-his Court quoted with approval the following passage from the judgment of the High Court of Madhya Pra­ desh in /'.1ad/;ya Pradesh Pan '''lerchanl'':' Association, Santara Market, Nagpur v. State of Madhya Pradesh(') : In our opinion, the word "vegetables'' cannot be given the comprehensive meaning the term bears in natural history and has not been given that meaning in taxing statutes be- e fore The term "vegetabies" is to be understood as com­ monly understood denoting those classes of vegetable matter which arc grown in kitcl1rn gardens and are used for the table." • )<' And observed that "the word 'vegetables' in taxing statutes is to be understood as in common parlance i.e. denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table." This meaning of the wore' 'vegetables' was reiterated in M/s Motipur Jamindary case where sugarcane was held not fc\ fall within the definition of the word 'vegetables' and the same mean· ing was given to the word 'vegetables' in Washi Ahmed's case (svpra) where green ginger was held!'.) be 'vegetables' within the meaning of that word as used in common parlance. It was pointed out by this Court in Washi Ahmed's case (supra) that the same principle of construction in :·daticm to words used in a taxing statute has also been adopted in English, Canadian and American Courts. Pollock B. pointed out in Gretfell v. l. R. C. ('). that "if a statute contains language which is capable of being construed in a popular sense, such a statute h 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 which people conversant with the subject-matter w;th which the statute is dealing would attribute it." So also the Supreme Cour: of Canada said in Plant'''" Nut and Chocolate Co. Ltd. v. The King(') while interpreting the words 'fruits' and 'vegetables' in the Excise Act." They are ordinary words in every day use and are, t11erefore, to be construed according to their popular sense". The same ruk was expressed in slightly different language by Story, J., in 200 Chests of Tea( 4 ) where the learned Judge said that "the parti- (I) 7 S. T. C. 99 at 102. (3) ll951j l D. L. R. 385. (2) 118761 I fa. D. 242 at 248. (4) [1824] 9 Wheaton (US.) 430 at 438. ' PORRITTS v. HARYANA (Bhagwati, J.) 549 cu!ar words used by the Legis)ature in the denominat:on of articles A are to be understood according to the common commercial understand- ing of the terms used, and not in their scientific or technical sense, for the Legislature does "not suppose our merchants to be naturalists, or geologists, or botanists.". " There can, therefore, be no doubt that the word 'textiles' in Itrm 30 of Schedule 'B' must be interpreted according to its popular sense, meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it". There we are in compft•te agreement with the Judge~ who held in favour of the Revenue and against the assesst'e. But' the question is : What result does the applirntion of this test yield ? Are 'dryer felts' not 'textiles' within the ordinary accepted meanini; of that wor<;I ? The word 'textiles' is derived from the Latin 'texere' which means 'to weave' and it means any woven fabric. When yarn, whether cotton, silk, woollen, ;ayon, nylon or of any other description or made out of any other material is w0'ven into a fabric, what comes into being is a 'textile' and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other kind of textile. The method of weaving adopted may be the warp and wonf pattern as is gen~rally the case in most of the textiles, or it may be any other process er technique. There is such phenomenal advance in science· and technology, so woncjrous is the varietv ~! fabrics manufactured from materials hithereto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise W confln~ the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be 'textiles'. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by S'lmc process so as to fo'rm a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in sm•·ll pieces or in big rolls : it may k weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. It may-be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapes­ try or upholstery or as duster for cleaning or as towel for drying the body. A trxtile may have diverse uses and it is not the use which determines its character as rextile. It is, therefore, no argument against the assessee f.haf 'dryer felts' are used only as absorbents of moisture in the process of manufactur~ in a paper manufacturing umt. That cannot militate against 'dryer felt>' falling within the category of 'textilos', if otherwise they satisfy the description of 'textiles'. 8 Now, wt.a, are 'dryer felts' ? They are of two kinds, cotton dryer felts and woollen dryer felts. Both are made of yarn, cotton in one case and woollen in the other. Some synthetic yarn is also used. 111e process employed is that of weaving according lo warp and woof pattern. This is how the manufacturing process is des­ cribed by the assessing authority in its order dated 12th November, B · 1971 "the raw material used 11y the company is cotton and woollen yarn which they themselves manufacturecl from raw cotton and wool l•nd the finished products called 'felts'. are manufactured on power .looms from ccittO'n and woollen yarn." 'Dryer felts' are, therefore, clearly woven fabrics and m~1st be held to fall within the ordinary I) II meaning of the word 'textiles'. \Ve do not think that the word 'tex· tiks' has any narrower meaning in common parlance other than the ordimry meaning given in the dictionary, namely, a woven fabric. There may te wide ranging varieties df woven fabric and they may go on muit;pJying and proliferating with new developments in science and leclmology and inventions of new method~, materials and techni- ques, but nonetheless they would all be textiles. The analogy of cases where the word 'vegetables' was held not to include betel leaves or sugaHane is wholly inappropriate. There, what was disapprrNed by the Court was resort to the botanical meaning of the word 'vege­ tatles' when that word had acqulrcd a popular meaning whicl1 was different. It was said by Holmes, J., in his inimitable style : KA word is not a crystal, transparent and unchanged; it is the skin of a living lhought and may vary greatly in colour and content accdrding to the cfrcumstances and the time in which it is used." Where a word has a scientific or t~hnical meaning and also an ordinary moaning according to common parlance, it is in the latter sense \hat in a taxing statute the word must be held to have been used, unless con- trary intention is clearly expressed by the Legislature. The rcaw11 is that, as pointed out by Story, J., in 200 Chests of Tea (supra), the Legislature does "not suppose our merchants to be naturalists, or geO: logists, or botanists". But here the word 'textiles' is not sought by the assessee to be given a scientific or technical meaning in preference to its p0pufar meaning. It lias· only one meaning, namely, a woven fabric and that is the meaning which it bears in ordinary parlance. It is true that out minds are conditioned by old and antiquated notioi1s of what are textiles and, therefore, it may sound a little strange to regard 'dryer felts' as 'textiles' : But it must be remembered that the concept of 'textiles' is not a stat'.c concept. It has, having regard to newly developing materials, methods, techniques and processes, a conti­ nually expanding content and new kinds of fabric may be invented which may legitimately, Without doing auy Violence to the language, be regarded as 'textiles'. Take for example rayon and nylon fabrics J PORRITTS v. HARYANA (Bhagwati, J.) 551 which have now become very popular for making w~ing apparel. When they first came to be made, they must have been intruders in the field of 'textiles' because only cotton, silk and woollen fabrics were till then recognized as 'textiles'. But today no one can dispute that rayon and nylon fabrics are textiles and can properly be described as such. We may take another example which is nearer to the ca$e be[ore us. It is COJll}IlOn knowledge that certain kinds of hats are made out of felt and though felt is not ordinarily used for making wear- ing apparel, can it be suggested that felt is not a 'textile.' ? The character of v fabric or material as textile does not depend upon the use to which it may be put. The uses of textiles in a fast develop- ing economy are manifold and it is quite common now to find 'textiles' being used even for industrial purposes. If we loo'k at the Customs Tariff Act, 1975, we find in Chapter 59 occurring in section XL of tl1e First Schedule that there is a reference lo 'textile fabrics and textile articles, of a kind commonly used in machinery or plant' and clause -8 ( 4) of that Chapter provides that this expression shall be taken to apply inter alia to 'woven textile felts. . . . . . of a kind commonly used D in paper making or other machinery ...... ". This reference in a ~tatute which is intended to apply to imports made by the trading community clearly shows that 'dryer felts' which are woven textile felts ....... of a kind commonly used in paper making machinery" are regarded in common parlance, according tO' the sense of ordinary traders and merchants, textile fabrics. We have, therefore, no doubt E that 'dryer felts' are 'textiles' withh the meaning of that expression in Item 30 of Schedule 'B'. We accordingly allow the appeal, set aside the Judgment of the High Court and answer the question referred by the Tribunal in favour of the a6sessee and against the Revenue. The State will pay to the assessee costs thr()'Ughout. S.R. Appeal aliowed .