PETITIONER:
STATE OF UTTAR PRADESH
Vs.
RESPONDENT:
M/S. KORES (INDIA) LTD.
DATE OF JUDGMENT18/10/1976
BENCH:
SINGH, JASWANT
KHANNA, HANS RAJ
CITATION:
1977 AIR 132 1977 SCR (1) 837
1976 SCC (4) 477
ACT
U.P. Sales Tax Act, 1948, s. 3-A, Notification issued und-
er----Rule for constructing words--Whether carbon paper is
taxable as ’Paper’--Whether ribbon is accessory or part of
typewriter.
HEADNOTE
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) Kanpur, 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 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 10%. The High Court allowed the writ and quashed the
levy.
The appellant contended that carbon paper does not lose
its character as paper in spite of being subjected to chemi-
cal processes, and that ribbon is not an accessory but an
essential part of the typewriter.
Dismissing the 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
construction in the sense in which persons dealing in and
using the article understand it. [839 A-B]
Attorney General v. Winstanley (1831) 2 Dow & Clark
302:(1901) 6 E.R. 740, and Grenfell v. Commissioner of
Inland Revenue (1876)1 Ex. D. 242 at p. 248 applied.
(2) The word ’paper’ is understood as meaning a sub-
stance which is used for bearing writing or printing, or for
packing. or for drawing on. or for decorating, or covering
the wails. Carbon paper cannot be used for these purposes
but is used for making replicas or carbon copies, and cannot
properly be described as paper. [839 G, 840 A-B]
K. Kilburn & Co. Ltd. v. Commissioner of Sales Tax, U.P.
Lucknow (31 S.T.C. 625), Sree Rama Trading Company v. State
of Kerala (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. an accessory and not a part of the typewriter,
though it may not be possible type out any matter without
it. [841 D-E]
State of Mysore v. Kores (India) Ltd. (26 S.T.C. 87) ap-
proved.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1773
of 1971.
(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 O.P. Rana, for the Appellants.
V.S. Desai, P.B. Agarwala and B.R. Agarwala, for the
Respondents.
838
The Judgment of the Court was delivered by
JASWANT SINGH, J.---This appeal by certificate which is
directed against the judgment and order dated February 20,
1970, passed by the High Court of Judicature at Allahabad in
writ petition No. 2943 of 1969 raises two interesting ques-
tions viz. ( 1 ) whether carbon paper is paper falling
within the purview of the word ’paper’ as used in serial No.
2 of Notification Ng. 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.P. Sales
’Fax Act, 1948 (U.P. Act No. XV of 1948) so as to be liable
to sales tax at the point and at the rate specified in the
Schedule to the Notification and (2) whether ribbon is an
accessory or a part of the typewriter.
It appears that the respondent which is a company incor-
porated 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 there-
of 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 unclassi-
fied 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 anti 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-I012-1963 dated June 1, 1963. The Sales Tax
Officer, (Section IV), Kanpur, did not accede to the conten-
tions of the respondent and holding that carbon paper re-
mained 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 on 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 reasoning 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 essen-
tial part of the typewriter. We have carefully considered
the submission made by Mr. Manchanda but find ourselves
unable to accept the same.
839
It is well settled that a word which is not defined in
an enactment has to be understood in its popular and commer-
cial sense with reference to the context in which it occurs.
In Attorney-General v. Winstanley (1), Lord Tenterden
started as follows:
"Now, when we look at the words of an
Act of Parliament, which are not applied to
any particular science or art, we are to
construe them as they are understood in common
language."
In Grenfell v. Commissioners of Inland
Revenue (2) Pollock, J, pointed out:
"As to tile 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 sub-
ject-matter with which the statute is dealing
would attribute to it."
The word ’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 to the afore-
said 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 Dictionary (Volume 2) (Third
Edition) as "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
wails, 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 Dicition-
ary of the English Language", the word ’paper’ has been
defined as "a substance made from 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 a sub-
stance which is used for bearing, writing, or printing, or
for packing, or for drawing on, or for decorating, or cover-
ing the walls. Now carbon paper which is manu
(1) [1831] 2 Dow & Clark 302=(1901) 6 E.R. 740.
(2) [1876] 1 Ex.D. 242 at 248.
840
factured by coating the tissue paper with a thermo-setting
ink (made to a liquid consistency) based mainly on wax, non
drying oils, pigments and dyes by means of a suitable coat-
ing roller and equalising rod and then passing it through
chilled rolls cannot be used for the aforesaid purposes but
is used. 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 deci-
sions which confirm our view.
In Kilburn & Co. Ltd. v. Commissioner of Sales Tax
U.P., Lucknow(I) 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 us 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
Kerala(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 Sates 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 es-
sences’ arc .edible goods while ’dyes and colours and compo-
sitions thereof and ’scents and perfume’ did not seem prima
facie to connote that they are edible goods observed:
(1) 31 S.T.C. 625. (2) 28 S.T.C. 469.
(3) 33 S.T.C. 333. (4) 31 S.T.C. 302.
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 attribut-
ed to these words by people usually conver-
sant with and dealing in such goods. Simi-
larly, 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 of the above
mentioned decisions, it is quite clear that
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 comercial sense means paper which is
used for printing, writing or packing pur-
poses. 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 construction equally applies,
we have no manner of doubt that it
an accessory and not a part of the typewriter
(unlike spool) though it may not be possible
to use the latter without the former. Just
as aviation petrol is not a part of the aero-
plane nor diesel is a part of a bus in the
same way, ribbon is not a part of the type-
writer though it may 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 commer-
cial sense. Typewriters are being sold in
the market without the typewriter ribbons and
therefore typewriter ribbon is not an essen-
tial part of a typewriter so as to attract tax
as per entry 18 of the Second Schedule to the
Mysore Sales Tax Act, 1957."
For the foregoing reasons, we do not find
any force in this appeal which is dismissed
but in the circumstances of the case without
any order as to costs.
M.R. Appeal
dismissed
(1) 26 S.T.C. 87.
842