ADVANCE BRICKS COMPANYversusASSESSING AUTHORITY, ROHTAK & ANR.

                     ADVANCE BRICKS COMPANY
A
                                        v.
            ASSESSING AUTHORITY, ROHTAK & ANR.

                          SEPTEMBER 22, 1987

B   [RANGANATH MISRA AND MURARI MUHON DUTT, JJ.)

          Haryana General Sales Tax Act, 1973: ss. 15 & 18---State
    Government Notification of 1973-'Sun dried bricks'-Whether
    'bricks'-Whetherexigible to sales tax.,

c       The Notification dated 5th May, 1973, issued by the State
  Government under s. 18 of the Haryana General Sales Tax Act
  authorised levy of tax under s. 15 of the Act at the fll'St point in
  respect of the named goods, of which brick was one. The appellant, a
  registered dealer claimed deduction of a certain sum out of the gross
D turnover in respect of assessment of sales-tax for the accounting
  period 1981-82, on the ground that be bad purchased sun-dried
  bricks on payment of sales tax under the Act and that amount re-
  presented the sales price of such tax paid bricks, and that a second
  set of tax in the bands of the dealer was not exigible. The claim was
E rejected by the authorities.

          The appellant filed writ petition before the High Court, which
    rejected bis claim on the ground that raw bricks did not come within
    the purview of the notification.

F        Allowing the appeal in part,

          HELD: The notification dated May 5, 1973 issued by the State ,
    Government under s. 18 of the Haryana General Sales Tax Act, 1973
    applied to the sun-dried bricks. [274E]
G
        'Brick' is a generic term in which both the sun-dried and oven-
  baked varities of brick are included. Sun-dried bricks are, however,
  required to undergo a further treatment, namely, the burning ~ro­
  cess to become bricks proper. They are thus an intermediate stage of
  bricks as understood in comllton parlance and are goods in the ordi-
H nary sense of the term being a commercial commodity. [276G-H; CJ
                                    272
            ADVANCE BRICKS CO. v. ASSESSING AUTHORITY              273

       Lilavati Bai v. The State of Bombay, [1957] SCR 721; Gu/raj A
 Singh v. Mota Singh, [19M] 7 SCR 205; Dy. Commissioner, Sales
 Tax, v. PIO Food Packed, [1980] 3 SCR 1271 and Indian Carbon
 Ltd. v. Superintendent of Taxes, Gauhati, [1972] 1 SCR 316, refer-
 red to.

       When sun-dried brick is purchased on payment of s:iies-tax and B
 purchasing dealer burns the same and sells the same for a higher
 price, sales tax should be Ieviable on the sale price of such bricks.
 The amount of sales-tax p)lid when sun-dried bricks were purchased,
 on production of appropriate declaration can be deducted from the
 total amount of tax. This would not prejudice the revenue of the
 State nor would it bring about any additional liability unwarranted C
 by law so far as the dealer is concerned. [277C·E]

        In the instant case the bricks which had been purchased as sun-
  dried bricks were burnt by the appellant. He had thus further
  treated the sun-dried bricks and produced goods of added value. It D
  would not be proper to extend the benefit of total exemption for the
  turnover of sale of bricks from tax, but it would be appropriate to
  allow set off of the tax paid at the time of the purchase of the sun-
  dried bricks, out of the tax exigible on the taxable turnover of burnt
  bricks. (277F-G]                                                       E

       If it is found that the appellant had paid sales tax on the sun-
  dried bricks, the amount of tax then paid should be given credit and
  the balance should be recovered from him. The Taxing Officer to
  hear parties and come to his conclusion afresh. [277H; 274G]
                                                                          F
       The interest of the State would be properly protected if the
' impugned notification is changed and so far as brick is concerned
  necessary modification is made. Until that is done, the State should
  adopt the modality indicated. [277G·H]
                                                                          G
       CIVIL APPELLATE             JURISDICTION:        Civil   Appeal
  No. 2375(NT) of 1987.

       From the Judgment and Order dated 4.9.1984 of the Punjab
  and Haryana High Court in Civil Writ Petition No. 2479 of 1984.
                                                                          H
    274                   SUPREME COURT REPORTS          (1988] I S.C.R.

          Anil B. Diwan and M.R. Ramachandranfor the Appellant.             .~·
A
          S.C. Mahanta, V.K. Mehta, C.V.S. Rao and Mahabir Singh
    for the Respondents.

          The fqllowing Order of the Court was delivered:
B
                                    ORDER

          Special leave granted.

        The appellant is a registered dealer under the Haryana
C General Sales Tax Act, 1973 ('Act' for short) and is also a licencee
  under the Haryana Control of Brick Supply Order, 1972 ('Order'
  for short). In respect of assessment of sales-tax for the accounting
  period 1981-82, it claimed deduction of a sum of Rs.1,49,600.92 out
  of the gross turnover on the ground that it had purchased sun-dried
D bricks from one Sardool Singh, a registered dealer on payment of
  sales-tax under the Act and that amount represented the sale price
  of such tax-paid bricks. The claim was rejected by the authorities
  under the Act. In the writ petition before the High Court the claim
  was rejected on the ground that raw bricks (i.e. unburnt bricks) did
B not come within the purview of the notification of 5th May, 1973,
  issued by the State Government in exercisf: of power vested under
  Section 18 of the Act prescribing levy of tax at the first point in
  reslJect of the named goods of which brick was one.

          Two questions have been placed for our consideration: (i)
F   whether as a fact the appellant has paid sales-tax on the purchase of
    sun-baked bricks from the seller as claimed and the appropriate
    declaration has been produced in the assessment proceedings; and
    (ii) whether bricks used in the notification of 1973 covered sun-
    dried bricks.
G
        So far as the first question is concerned it is one of fact and
  both parties have agreed that we may direct the Taxing Officer to
  hear parties and come to his conclusion afresh. That situation would      )-
  arise if we accept the contention of the assessee on the other score.
  We shall, therefore, proceed to examine the correctness of the
H other contention.
                  ADVANCE BRICKS CO. v. ASSESSING AUTHORITY            275

               The term 'Brick' has not been defined in the Act. The High A
         Court has adopted the definition given in the Order, where it has
         been defined as 'piece of burnt clay having geometrical shape fixed
         in a kiln'. It is not disputed that the Order has nothing to do with
         the Act. In the absence of a statutory definition of the term 'Brick',
         the common parlance meaning of the word as found in dictionaries
         has to be accepted. (See Lilawati Bai's case 1957 SCR 721 and B
         Gajraj Singh's case [1964] 7 SCR 205. Counsel for the appellant also
         relied upon the decisions of this Court in the cases of Dy. Commis-
         sioner, Sales Tax. v. PIO Food Packed, [1980] 3 SCR 1271 and
         Indian Carbon Ltd. v. Superintendent of Taxes, Gauhati, [1972] 1
         SCR 316 in support of his submissions. According to Collins English
         Dictionary 'brick' means 'a rectangular block of clay mixed with C
         sand and fired in a kiln or baked by the sun.. used in building
         construction'. New Webster's Dictionary carries the meaning of the
         word as: 'a block of clay usually rectangular, hardened by the sun or
         by burning in a kiln and used for building, paving etc.' According to
          the Oxford English Dictionary 'brick' means 'a substance formed of D
         clay, kneaded, moulded, and hardened by baking with fire, or in
         warm countries and ancient times by drying in the sun'. Encyclo-
          paedia Britannica indicates that 'after the bricks are formed, they
         must be dried to remove as much free water as possible. Drying,
. .J..
         apart from sun-drying, is done in drier kiln with controlled, draft E
         and humidity'.

             We have on record the Schedule of Rates of the Haryana
       Public Works Department of the contemporaneous time which
       shows that while the rate per thousand of sun-dried bricks was
    1
       Rs.15, oven-burnt bricks of that quantity of the first class cost Rs.75 F
 ··""""Jive times more. The sun-dried bricks, though a form of brick are
       not indeed the same as burnt bricks. As seen above though they
       have many things common with baked bricks, they are not a comp-
       lete substitute thereof. A customer in the market would not ordi-
       narily be prepared to accept the sub-dried bricks to meet his G
       requirement of bricks for house construction. As was rightly
       pointed out by appellant's counsel sun-dried brick is goods of an
       intermediate stage.

               We are satisfied that the High Court went in wrong placing
         full reliance on the definition of the term 'Brick' in the Order and. H

~··
    276                  SUPREME COURT REPORTS           [ 1988] 1 S. C.R.

A therefore, the proper perspective of the issue for determination has
   been lost sight of. For brick making, clean~:d clay and sand mixed in
   desired proportion are put into sized frames and after the extra sub-
   stance is removed, the raw brick is taken out of the frame and is laid
   on the field to dry up and become hard. If it intended to make hard
   bricks, the same are stacked into a kiln and adequately heated up by
13
   fire. There are various methods of burning the bricks. If not b!!fllt,
   the sun-dried bricks are not hard enough to take good load. Sun-
   dried bricks are thus an intermediate stage of bricks as understood
   in common parlance and are goods in the ordinary sense of the term
   being a commercial commodity.

c       Section 18 of the Act authorises the State Government by
  notification to direct that in respect of named goods, tax under
  Section 15 of the Act may· be levied at the first stage of sale thereof
  and on the issue of such a notification, tax on such goods shall be
  levied accordingly. 'Brick' under the notification is taxed at the first
D point of sale. The dealer claimed deduction on the basis of the
  notification by maintaining that he had purchased the bricks from
  the manufacturer and at that point had paid the tax. Thus a second
  set of tax in the hands of the dealer was not exigible. The reasoning
  given by the taxing authorities as also the High Court cannot be
E sustained. As the counsel for the appellant pointed that 'brick' is a
  generic term; as per the meaning of the term in common parlance
  and dictionaries sun-dried bricks are bricks of a class and both var-
  ieties of bricks can to a considerable extent be used for the same
  purpose as substitute of one another. As the term 'Brick' covers
  both sun-dried and oven-baked bricks, and there is no definition in \
f the Act, the contention of the appellant that sun-dried bricks are a )..
  class of 'brick' to which the notification under Section 18 applies
  cannot be thrown out as wrong.

        We have already pointed out that though both the varieties of
G brick are included in the generic term 'brick', the use to which these
  are put is not the same. We have also pointed out that there is a
  considerable difference in the price. Sun-dried bricks are required
  to undergo a further treatment, namely, the burning process to
  become bricks proper, when burnt, bricks are: sold at a substantially
  higher price to meet different demands in the market. The appellant
H after purchasing sun-dried bricks has burnt them and sold the same
                                                                             ,
                     ADVANCE BRICKS CO. v. ASSESSING AUTHORITY             277

           for higher consideration.
'""'
 I

                 Learned counsel for the State rightly contended that if sun-
                                                                                 A


           dried brick is accepted as 'brick' within the meaning of the notifica-
           tion, on the basis of the provision for taxing at the first point in
           regard to sale of bricks, by paying tax on the low consideration of
           sun-dried bricks, the dealer would escape liability of sales-tax on B
           the tum-over of baked bricks. Undoubtedly this would be the posi-
           tion. We accordingly suggested to counsel for the State that this
           situation should be appropriately met and the interest of the State
           would be properly protected if the notification in questions changed
           and so far as brick is concerned, necessary modification is made.
           Where sun-burnt brick is purchased on payment of sales-tax and the C
           purchasing dealer (whose assessment is in issue) bums the same and
           sells the same for a higher price, sales-tax should be leviable on the
           sale price of such bricks. The amount of sales-tax paid when sun-
           dried bricks were purchased on production of appropriate declara-
           tion can be deducted from the total amount of tax. This would not D
           prejudice the revenue of the State nor would it bring about any
            additional liability unwarranted by law so far as the dealer is
           concerned. The impugned notification would not serve the purpose
           indicated and would require amendment. It is up to the State to
           take the requisite steps.                                              E

                Now what remains for consideration is: whether the appellant
•          would succeed in the claim for deductions. It is not disputed by
           appellant's counsel that the sale price of bricks which had been
           purchased as sun-dried bricks and sold for the price of
       (   Rs.1,49,600.92 were burnt by the appellant. On the finding that the F


     '"    appellant had further treated the sun-dried bricks and produced
           goods of added value, we do not think it would be proper to extend
           the benefit of total exemption for the tum-over of sale of bricks
           from tax. The notification of the State Government is somewhat
           misleading; it would thus be appropriate to allow set-off of the tax G
           paid at the time of the purchase of the sun-dried bricks out of the
           tax exigible on the taxable tum-over of burnt bricks. While setting
           aside the judgment of the High Court we would direct that until
       '   appropriate amendment to the notification is made, the State
           should adopt the modality indicated above-. In the instant case' if it is
           found that appellant had paid sales-tax to Sardool Singh, the H
    278                 SUPREME COURT REPORTS          [1988] 1 S.C.R.

A   amount of tax then paid should be given credit and the balance       ~
    should be recovered.

          The appeal is allowed to the extent indicated above. Parties
    shall bear their respective costs.
B
    P.S.S.                                            Appeal allowed.