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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2240 OF 2006

STATE OF JHARKHAND & ORS. ..APPELLANTS

VERSUS

M/S.LA OPALA R.G. LTD. ..RESPONDENT

O R D E R

1. This appeal is directed against the

judgment and order passed by the High Court of

Jharkhand at Ranchi in W.P. [T] No.4572 of

2004, dated 22.06.2005. By the impugned

judgment and order, the High Court has set

aside the letter issued by the Assistant

Commissioner of Commercial Taxes, Deogarh

Circle, dated 13.05.2004, whereby the

Assessing Authority has rejected the stand of

the respondent-dealer that it is eligible to

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pay reduced rate of tax under the notification

S.O. No.25 (for short, “the notification”)

issued by the Government of Jharkhand, dated

25.06.2001 and directed the respondent-dealer

to deposit taxes in relation to inter-State

sales at the rate of 4%.

2. The possible construction that could be

placed on the aforesaid notification is the

subject matter of this appeal.

3. The conspectus of facts is: the

respondent-dealer is a Public Limited Company

incorporated under the provisions of the

Companies Act, 1956 engaged in the manufacture

of glass and glassware made of Opal glass. The

industrial unit of the respondent-dealer is

situated at Madhupur in Deoghar district,

Jharkhand.

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4. The respondent-dealer is a dealer

registered under the provisions of the Bihar

Finance Act, 1981 and the Central Sales Tax

Act, 1956 (“the Act”, for short).

5. The State Government, in exercise of its

powers under clause (b) of sub-section 5 of

Section 8 of the Act has issued the

notification. Since the construction of the

notification is in issue, we deem it

appropriate to extract the notification. It

reads as under:

“S.O.25, dated the 25

th

June, 2001 –

In exercise of the powers conferred

by clause (b) of sub-section (5) of

Section 8f of the Central Sales Tax

Act, 1956 (Act 74 of 1958) the

Governor of Jharkhand is pleased to

direct that tax payable under sub-

section (1) or (2) of Section 8 of

the said Act in respect of Sale of

all types of glass and glass sheets

in the course of interstate sale or

commerce from any place of business

in the State of Jharkhand shall be

calculated at the rate of three per

centum and no statutory form in this

regard shall be required.

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2.This notification shall come into

force with effect from 16

th

June,

2001.”

6. Immediately after issuance of the

notification, the respondent-dealer by letter

dated 27.05.2002 had informed the authorities

under the Act, that, since the respondent-

dealer would be covered by the notification,

the rate of tax payable on glassware in inter-

state sales would be at the reduced rate of

3%. Unfortunately, the authorities did not

respond to the request so made by the dealer.

7. Later, the authorities issued a letter

dated 09.01.2004 to the respondent

manufacturer, inter alia, directing him to

deposit the tax in relation to its

transactions in respect of the inter-state

sales to registered and unregistered dealers

at the rate of 4% and 12%, respectively. The

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respondent was also directed to show-cause as

to why a penalty under Sections 16 and 16(9)

of the Bihar Finance Act, 1981 and the Act

should not be imposed and the respondent not

be directed to correct the returns and deposit

tax at the rate of 4%, if the sales is

effected to registered dealers and at the rate

of 12% if the inter-state sale is effected to

un-registered dealers.

8. The respondent-dealer had filed its

reply, dated 16.01.2004, wherein it took the

stand that it was liable to charge and deposit

tax at the rate of 3 per cent on sale in the

course of inter-state trade in respect of its

products; that the returns had been correctly

filed and that the tax was validly deposited

at the rate of 3 per cent.

9. After the issuance of the aforesaid

letter/notice, the authorities by their letter

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dated 13.05.2004, rejected its stand and

informed that the respondent would be liable

to pay tax at the rate of 4 per cent on its

inter-state sales if made to a registered

dealer and at the rate of 12 per cent if made

to an unregistered dealer.

10. Further, the respondent-assessee was

informed by the authorities that the product

manufactured by him is glassware and,

therefore, not covered under the notification

by letter dated 13.07.2004.

11. The respondent-dealer, being aggrieved

by the communications dated 09.01.2004,

13.05.2004 and 13.07.2004 had filed a Writ

Petition before the High Court, inter alia,

requesting the Court to issue a writ in the

nature of certiorari to quash the aforesaid

letters and direct the authorities under the

Act to extend the benefit of the notification,

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which has come into force with effect from

16.06.2001.

12. The High Court, after a detailed

consideration of the issue before them, has

come to the conclusion that the glassware

manufactured by the respondent-dealer is a

type of glass and therefore, it is entitled to

the benefit of reduced rate of tax under the

notification and, accordingly, has quashed the

said letters.

13. Being aggrieved by the said order of the

Division Bench of the High Court, the State is

before us in this appeal.

14. We have heard Shri Jayesh Gaurav,

learned counsel for the appellant-State and

Shri S.D. Sanjay, learned senior counsel for

the respondent-dealer. We have carefully

perused the documents on record and the

judgment and order impugned herein.

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15. Shri Gaurav would submit that the

expression “types of glass” as used in the

notification would not include the product in

question as it is merely a “form of glass”. He

would provide us with some information in

respect of types of glasses being classified

into nine types: 1)Soda glass or soda-lime

glass, 2)Coloured glass, 3)Plate glass,

4)Safety glass, 5)Laminated glass, 6)Optical

glass, 7)Pyrex glass, 8)Photo-chromatic glass,

and 9)Lead crystal glass. He would therefore

contend that the product, “glassware” not

being any of the aforesaid types of glass but

another form of glass would not be entitled to

benefit of the notification and that the High

Court has erred in its conclusion.

16. Per contra, Shri S.D. Sanjay, learned

senior counsel would justify the judgment and

order passed by the High Court and submit that

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the products of the respondent-dealer are

covered by the notification as “glassware” is

the product in which different components are

fused together to give glass its final form in

accordance with the moulds in which they are

manufactured, such as crockery, vases, etc.

and therefore, would fall in the category of

“types of glass”. He would further submit that

in taxing statutes, a notification in the

nature of granting tax incentives for the

promotion of economic growth and development

ought to be liberally construed and given a

purposive interpretation.

17. As we have indicated earlier, the short

point that falls for our consideration and

decision in the case is the possible

construction that could be placed on the

expression “types of glass and glass-sheets”

as contained in the notification issued by the

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State Government in exercise of its powers

under Section 8(5)(b) of the Act.

18. It is relevant to notice the contents of

the notification issued by the State

Government. A dissection of the notification

would indicate the following, namely :

a) the Governor of Jharkhand in exercise of

his powers under clause (b) of sub-section (5)

of Section 8 of the Act has issued the

notification;

b) the notification speaks of reduction of

the rate of tax under the Act;

c) the reduced rate of tax is from 4% to

3%;

d) the notification further provides that no

statutory forms are required for the sale of

the types of glass or glass sheets which are

made to the registered dealers under the Act;

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e) if the sales of “all types of glass and

glass-sheets” are made to unregistered dealers

then the rate of tax would be at 12 per cent.

19. We do not concur with the proposition

put forth by Shri S.D. Sanjay, learned senior

counsel that a notification which grants tax

incentives should to be liberally construed in

support of his submission. It is settled rule

of construction of a notification that at the

outset a strict approach ought to be adopted

in administering whether a dealer/

manufacturer is covered by it at all and if

the dealer/manufacturer falls within the

notification, then the provisions of the

notification be liberally construed.

20. Literally speaking, an exemption is

freedom from any liability, payment of tax or

duty. It may assume different applications in

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a growing economy such as provisioning for tax

holiday to new units, concessional rate of tax

to goods or persons for a limited period under

specific conditions and therefore, in Union of

India v. Wood Papers Ltd., (1990) 4 SCC 256

this Court has observed that construction of

an exemption notification or an exemption

clause in contrast with the charging provision

has to be tested on different touchstone and

held that the eligibility clause in relation

to an exemption notification is given strict

meaning and the notification has to be

interpreted in terms of its language, however,

once an assessee satisfies the eligibility

clause, the exemption clause therein may be

construed literally. This Court has explained

the rationale of adopting the said approach as

under:

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“4. … In fact an exemption provision

is like an exception and on normal

principle of construction or

interpretation of statutes it is

construed strictly either because of

legislative intention or on economic

justification of inequitable burden

or progressive approach of fiscal

provisions intended to augment State

revenue. But once exception or

exemption becomes applicable no rule

or principle requires it to be

construed strictly. Truly speaking

liberal and strict construction of an

exemption provision are to be invoked

at different stages of interpreting

it. When the question is whether a

subject falls in the notification or

in the exemption clause then it being

in nature of exception is to be

construed strictly and against the

subject but once ambiguity or doubt

about applicability is lifted and the

subject falls in the notification

then full play should be given to it

and it calls for a wider and liberal

construction…”

21. This Court in Gammon (I) Ltd. v. Commr.

of Customs, (2011) 12 SCC 499 while rejecting

the plea of the appellant that the exemption

notification should receive a liberal

construction to further the object underlying

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it relied upon the decision of a Three-Judge

Bench of this Court in Novopan India Ltd. ,

which stated the aforesaid principle and the

object behind adopting literal interpretation

in determining eligibility for claiming

exemption or exception from tax as follows :

“16. …The principle that in case of

ambiguity, a taxing statute should be

construed in favour of the assessee—

assuming that the said principle is

good and sound—does not apply to the

construction of an exception or an

exempting provision; they have to be

construed strictly. A person invoking

an exception or an exemption

provision to relieve him of the tax

liability must establish clearly that

he is covered by the said provision.

In case of doubt or ambiguity,

benefit of it must go to the State.

This is for the reason explained in

Mangalore Chemicals and other

decisions viz. each such

exception/exemption increases the tax

burden on other members of the

community correspondingly. Once, of

course, the provision is found

applicable to him, full effect must

be given to it. As observed by a

Constitution Bench of this Court in

Hansraj Gordhandas v. CCE and Customs

that such a notification has to be

interpreted in the light of the words

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employed by it and not on any other

basis. This was so held in the

context of the principle that in a

taxing statute, there is no room for

any intendment, that regard must be

had to the clear meaning of the words

and that the matter should be

governed wholly by the language of

the notification i.e. by the plain

terms of the exemption.”

(emphasis supplied)

22. In CCE v. Mahaan Dairies this Court has

observed that:

“8. It is settled law that in order

to claim benefit of a notification, a

party must strictly comply with the

terms of the notification. If on

wording of the notification the

benefit is not available then by

stretching the words of the

notification or by adding words to

the notification benefit cannot be

conferred.”

23. CCE v. Bhalla Enterprises laid down a

proposition that notification has to be

construed on the basis of the language used. A

similar view has been expressed by a Division

Bench of this Court in Tata Iron & Steel Co.

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Ltd. v. State of Jharkhand, Kartar Rolling

Mills v. CCE, Eagle Flask Industries Ltd. v.

CCE, Govt. of India v. Indian Tobacco Assn.,

(2005) 7 SCC 396 , Collector of Customs

(Preventive) v. Malwa Industries Ltd., (2009)

12 SCC 735 and CCE v. Rukmani Pakkwell

Traders.

24. Having said that, we would now examine

whether the notification would at all be

applicable to the sale of product in question.

25. In the instant case, the State

Government has issued a notification and has

used the expression “types of glass” and not

the expression “forms of glass”. Therefore,

what requires to be examined is whether the

two terms would be identical in their

connotation and import.

26. It is a settled law that in taxing

statutes the terms and expressions must be

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seen in their common and popular parlance and

not be attributed their scientific or

technical meanings. In common parlance, the

two words “type” and “form” are not of the

same import. According to the Oxford

Dictionary, whereas the meaning of the

expression “types” is “kind, class, breed,

group, family, genus”; the meaning of the word

“form” is “visible shape or configuration of

something” or the “style, design, and

arrangement in an artistic work as distinct

from its content”. Similarly, Macmillian

Dictionary defines “type” as “ a group of

people or things with similar qualities or

features that make them different from other

groups” and “form” as “the particular way in

which something appears or exists or a shape

of someone or something.” Therefore, “types”

are based on the broad nature of the item

intended to be classified and in terms of

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“forms”, the distinguishable feature is the

particular way in which the items exist. An

example could be the item “wax”. The types of

wax would include animal, vegetable,

petroleum, mineral or synthetic wax whereas

the form of wax could be candles, lubricant

wax, sealing wax, etc.

27. Admittedly, glassware is a form of glass

and it is contended by the assessee that forms

of glass are also covered by the said

notification. The term glassware would

generally encompass ornaments, objects and

articles made from glass. The New Oxford

Dictionary, the Merriam-Webster Dictionary and

the Macmillian Dictionary refer to the said

general meaning while defining it. Glassware

would include crockery such as drinking

vessels (drinkware) and tableware and general

glass items such as vases, pots, etc.

Therefore, it cannot be accepted that the

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expression “types of glass” could have been

intended to refer to or include “forms of

glass”.

28. In the present case, the respondent-

dealer is a manufacturer of glassware. In our

considered view, the glassware so manufactured

by the respondent-dealer though made of glass

cannot be considered or called as a “type of

glass” in light of the aforesaid discussion

and since the notification only provides for

the reduction in the rate of tax of types of

glass and not for “forms of glass” which is

manufactured by the respondent as glassware,

the respondent would not be covered by the

notification. Keeping that aspect in mind, we

hold that the respondent-dealer, a

manufacturer of articles of glass, is not

entitled to derive the benefit of the

notification issued by the State Government,

dated 25.06.2001. In that view of the matter,

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we cannot sustain the impugned judgment and

order passed by the High Court.

29. In the result, we allow this appeal and

set aside the judgment and order passed by the

High Court.

30. Since the matter was pending for quite

some time, we direct the appellants not to

levy penalty while recovering the difference

of tax payable only for the assessment years

2002-2003 to 2005-2006.

No order as to costs.

Ordered accordingly.

.....................J.

(H.L. DATTU)

.....................J.

(S.A. BOBDE)

NEW DELHI;

MARCH 27, 2014.