Supreme Court of India
ASSESSING AUTHORITY-CUM-EXCISE & TAXATION OFFICER, GURUGAON & ANR.versusM/S. EAST INDIA COTTON MFG. CO. LTD. FARIDABAD
- Citation
- 1981 INSC 123
- Decided
- 23 July 1981
- Disposal
- Dismissed
- Bench
- P N BHAGWATI
Holding
Section 8(3)(b) applies to goods used in manufacture of items intended for sale by any party, not solely by the registered dealer, so the assessee’s job‑work for third parties is covered by the provision.
Summary
The assessee, a registered textile manufacturer, purchased dyeing colours and chemicals under a Certificate of Registration and declared them for use in the manufacture of goods for sale, thereby enjoying a reduced 3% sales tax rate. The tax officer issued notices alleging misuse of the certificate because the assessee also performed sizing, bleaching and dyeing for third parties on a job‑work basis. The central issue was the interpretation of Section 8(3)(b) of the Central Sales Tax Act, 1956 – whether the phrase "for use ... in the manufacture of goods for sale" obliges the goods to be sold by the registered dealer himself. The Supreme Court held that the statutory language does not limit the sale to the dealer; it covers manufacturing for third parties provided the finished goods are intended for sale by those parties. Consequently, the Division Bench’s decision quashing the notices was affirmed and the appeal dismissed with costs.
Issues considered
- Does Section 8(3)(b) of the Central Sales Tax Act, 1956 require that goods purchased by a registered dealer be used in manufacture of goods intended for sale by the dealer himself?
- Whether the assessee’s use of purchased dyeing colours for job‑work for third parties amounts to a contravention of Sections 10 and 10A of the Act.
Legislation cited
- Central Sales Tax Act, 1956s. 10, s. 10A, s. 8(1), s. 8(2), s. 8(3)(b)
- Central Sales Tax (Registration and Turnover) Rules, 1957s. Rule 12, s. Rule 13
- Punjab General Sales Tax Act, 1948
Subjects
Central Sales TaxSection 8(3)(b)Statutory interpretationJob workTax exemptionPenaltyForm CRegistered dealer
Judgment
55 A
ASSESSING AUTHORITY-CUM-EXCISE & TAXATION
OFFICER, GURGAON & ANR.
v.
B
M/S. EAST !NOIA COTTON MFG. CO. LTD.
FARIDABAD.
July 23, 1981
- [ P.N. BHAGWATI, A.P. SEN AND E.S. VENKATARAMIAH, JJ.]
Central Sales Tax Act 1956, (74 of 1956) Ss. 8(1), (2), (3)(b), IO, 10-A, &
c
Central Sales Tax (Registration and Turnover) Rules 1957, Rules 12, 13-Registe-
tered Dea/er-Certificates of Registration-Manufacture and sale of textiles-Pur-
chase of dyeing colours and other chemicals after issuing 'C' Forms--User of such
goods.for third parties on job contract basis-Whether such use amounts to manu-
facture.
D
Interpretation of Statutes-Taxing Statute-Statute to be construed according
to plain language-Judicial paraphrase impermissible to Court.
Words & Phrases-" For use by him in the manufacture or processing of goods
for sale"-Meaning of-Central Sales Tax Act, 1956, S. 8(3) (b).
The Central Sales Tax Act 1956 and the Central Sales Tax (Registration, E
and Turnover) Rules 1957, provide that when a manufacturer who holds a Certi-
ficate of Registration under the Act buys goods for use by him in the manufac-
ture of goods for sale he would be charged tax at the lower rate of 3% on his
furnishing a declaration in Form C to the Seller.
- The assessee carried on business of manufacturing and processing textiles.
It was registered under the Punjab General Sales Tax Act, 1948 and held a
Certificate of Registration under section 7 of the Central Sales Tax Act, 1956.
F
The business mentioned in the Certificate of Registration was textile manufactur-
ing, sale. purchase, \Vholesale distribution, sales and purchase of yarn waste and
textile machinery; and also specified for the pnrpose of sub-section( I) of section 8,
dyeing colours and other chemicals for use in manufacture. The assessee purcha-
sed these goods in the course of inter-state trade and commerce on the basis of
its Certificate of _Registration and furnished to the. selling dealers declarations in G
Form C stating that these goods were purchased for use by the assessee in the
manufacturing of goods for sale. On the strength of these declarations the
selling dea1ers were taxed in respect of the sales effected by them to the assessee
at the rate of 3 per cent under section 8(1) (b) of the Act.
The Excise and Taxation Officer-appellant issued a notice calling upon the ff
assessee to show cause why action should not be taken under section 10 of the
56 SUREME COURT REPORTS [1982] I S.C.R.
A Central Act on the ground that the assessee had been misusing the Certificates
of Registration by doing sizing, bleaching and dyeing for third parties on job basis.
The assessee contended in reply that neither the terin and conditions of the Cer-
tificate of Registration nor the provisions of section 8 (3) (b} of the Central Act
required that the goods purchased by the assessee must be used by it in manufac-
ture or processing of its own goods intended for sale by itself and that it would
be sufficient compliance with tl::e requirement of section 8 (3) (b) read with the
B Certificate of Registration even if the goods purchased were used by the assessee
in manufacture or processing of goods for a third party under a job contract so
long as the manufactured or proct!ssed goods were intended for sale by such third
party. This contention was not accepted by the appellant who imposed the
penalty under section lOA of the Act.
c
The assessce's writ petition to the High Court was dismissed holding that
the goods purchased by the assessee against its Certificate of Registration could
be used by it only in manufacture of textiles intended for sale by itself and if the
-
goods purChased were used in manufacture of textiles for a third party on the
basis of a job contract, it would an1ount to user of the goods purchased for a
purpose different from that specified in section 8 (3) (b) and the assessee would
be liable to be proceeded against under section 10 and lOA. I
D The asscssee's appeal before the Division Bench of the High Court was
allowed which held that all that section 8(3) (b) provided was that the goods
purchased must be used by assessre in manufacture of goods for sale and did not
require that the sale must be by the assessee himself. The prescription of section
8 (3) (b) was that the goods manufactured must be for sale, without any quali-
fying expression that the sale must be by the assessee manufacturing the goods
and therefore even if the goods were manufactured for a third party, so long as
E they were intended for sale by such third party, the case would be covered by the
terms of the section. •
Dismissing the appeal,
F
HELD : t (i) The Division Bench of the High Court was right in holding
that even if the assessee carried out the work of sizing, bleaching and dyeing of
textiles for a third party on job contract basis, its case would be covered by the
terms of the second sub-clause of section 8 (3) (b), provided that the textiles so
-
sized, bleached and dyed by the assessee were intended for sale by such third
party. [67 CJ
(ii) If it is proved in any proceeding initiated under section lO(d) or sec-
tion lOA that the textiles siz~d, bleached or dyed by the assessee for sale by
G such third party on job contract basis were nol intended for sale by such third
party as would be evident if such textiles were in fact not sold by the third party
but were used for its own purposes, the assessee would incur the penalty prescri-
bed in those sections. [67 D]
Com1nissioner of Sales Tax v, S.R. Sharma, 31 S.T.C, 480: Navsari Cotton
H Mills Ltd. v. State of Gujarat 37 S.T.C. 104 & 0. Parmasivan v. State of Kera/a
1971 Tax L.R. 1241 overruled.
"tI
ASSESSING AUTHORITY v. EAST INDIA co. (Bhagwati, J.) 57
2. It is a well-settled rule of interpretation that a statute must be construed A
according to its plain language and neither should anything be added nor sub-
tracted unless there are adequate grounds to justify the inference that the legisla-
ture clearly so intended. [64E]
Tho1npson v. Gold and Co. [1910] A.C. 409: Vickers, Sons and Maxim Ltd.
v. Evans [1910] A.C. 444 referred to.
B
3 (i) The legislature as also the rule making authority used the expression
"for use ...... in' the manufacture ...... of goods for sale" without indicating that the
sale must be by any particular individual. The legislature has designedly abs-
tained from using any words of limitation indicating that the sale should be by
the registered dealer manufacturing the goods. Where the legislature wanted to
restrict the sale to one by the re~istered dealer himself, the legislature used the
qualifying words "by him" after the words "for resale" in the first sub-clause
of section 8 (3) (b) indicating that the resale contemplated by that c
provision is resale by the registered dealer purchasing the goods
and by no one else. While enacting the second sub-clause of _section
8 (3) (b) the legislature did not qualify the words "for sale" by adding the words
"by him". This deliberate omission of the words "by him" after the words "for
sale" indicates that the legislature did not intend that the sale of the manufactu-
'• red goods should be restricted to the registered dealer inanufacturing the
goods. [64 H-65 CJ D
(ii) The Court must construe the language of section 8 (3) (b) according
to its plain words and it cannot write in the section words which are not there.
To read the words "by him" after the words "for sale" in section 8 (3) (b) would
not be construction but judicial paraphrase which is impermissible to the
Court. [65 E] E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 756 (NT) of
1973.
From the judgment and order dated the 28th March,
F
- 1972 of the Punjab & Haryana High Court m L.P.A. No. 581 of
1970
R.N. Sachdev and Miss A. Subhashini, for the Appellant.
A.K. Sen, K.K. Jain, S.K. Gupta, Bishambar Lal and P. Dayal,
for the Respondents. G
The Judgment of the Court was delivered by
BHAGWATI, J. This appeal by special leave raises a short but
interesting question of constrution of section 8 (3) (b) of the Cen·
tral Sales Tax Act, 1956. The determination of this question has H
given rise to divergence of opinion amongst different High Courts
.~.·
but if we have regard to the well recognised canons of construe-
58 SUPREME COURT REPORTS [1982] I S.C.R,
A tion of taxing stautes and also focus our aitention on the object
and intendment of the section, we do not think it presents much
difficulty of solution. The facts giving rise to the appeal are few
and may be briefly stated as follows.
The assessee is a limited company registered under the Com-
8 panies Act, 1956 and having its registered office at Calcutta. The
assessee owns a factory in Faridabad where it carries on business
of manufacturing and processing textiles. The assessee is registered
under the Punjab General Sales Tax Act, 1948 as in force in the
State of Haryana and at material times it also held a Certificate of
c Registration under section 7 of the Central Sales Tax Act, 1956
(hereinafter referred to as the Centeal Act). The business men-
tioned in the Certificate of Registration was Textile manufacturing,
-
sale, purchase, wholesale distribution; sales and purchase of yarn
and waste and textile machinery and the Certificate of Registra-
tion also specified inter a/ia the following classes of goods for the
purpose of sub-section (!) of section 8, namely, "dyeing colours,
D and other chemicals for use in manufacture." The asses see pur-
chased these goods in the course of inter-state trade and commerce
on the basis of its Certificate of Registration and furnished to the
selling dealers declarations in Form C stating that these goods were
purchased for use by the assessee in the manufacturing of goods for
sale. On the strength of these declarations the selling dealers were
E taxed in respect of the sales effected by them to the assessee at the
rate of 3 per cent under section 8 (I) (b) of the Central Act. The
goods purchased by the assessee were used partly for sizing, blea-
ching and dyeing of textiles belonging to the assessee and partly
for sizing, bleaching and dyeing of textiles belonging to third parties
F
on job basis.
On 17th September 1966, the Excise and Taxation Officer,
-
Gurgaon issued a notice calling upon the assessee to show cause
why action should not be taken against it under section IO of the
Central Act on the ground that the assessee had been misusing the
G certificate of registration by doing sizing, bleaching and dyeing
for third parties on job basis. This was followed by
another notice dated 13th July 1967 in the same terms by the Excise
and Taxation Officer in regard to the assessment years 1962-63 to
1966-67. The assessee replied to the notices by its letter
H dated 21st July 1967 asking for details and circumstances in which,
according to the Excise and Taxation Officer, the assessee had
misused the certificate of registration so that the assessee could
ASSESSING AUTHORITY v. EAST INDIA co. (Bhagwati, J.) 59
satisfy the Excise and Taxation Officer that no such misuse had, A
in fact, taken place. In response to this query made by the assessee,
the Excise and Taxation Officer formulated the case against the
assessee in the following words.
"The company purchased goods from outside the
State of Punjab (now Haryana) on submission of 'C' B
Forms for the purpose of use in manufacture of goods
for sale. But instead of doing so, the company used
those purchases partly in manufacturing its own goods
for sale and partly for doing job work for other
parties. The Company could not use the material
concessionally purchased, for the job work as that C
does not constitute 'sale'."
The asses see contended in reply that neither the terms and conditions
of the certificate of registration nor the provisions of section 8 (3) (b)
I
. of the Central Act required that the goods purchased by the
D
assessee must be used by it in manufacture or processing of its own
goods intended for sale by itself and that it would be sufficient
compliance with the requirement of section 8 (3) (b) read with the
Certificate of Registration even if the goods purchased were used by
assessee in manufacture or processing of goods for a third party
under a job contract, so long as the manufactured or processed
goods were intended for sale by such third party. This contention E
was however not accepted by the Excise and Taxation Officer and
he consequently issued notices to the assessee for the assessment
year 1962-63 to 1966-67 proposing to impose penalty under sec-
tion JOA of the Central Act on the ground that the assessee had
"contravened the provisions of section 10 of the Act ibid by pnr·
chasing goods for the purpose specified in clause (b) of sub-
F
section (3) of section 8" but had failed "without reasonable excuse
to make use of the goods for any such purpose." The assessee
thereupon filed a writ petition in the High Court of Punjab and
Haryana for quashing and setting aside the various notices issued
by the Excise and Taxation Officer seeking to proceed against the
G
assessee under section~ IO and JOA of the Central Act.
The writ petition came up for hearing before a single Judge
of the High Court who rejected it on the ground that on a true
interpretation of section 8 (3) (b), the goods purchased by the
assessee against its certsficate of registration could be used by it H
only in manufacture of textiles intended for sale by itself and if
.,
60 SUPREME COURT REPORTS (1982) ] S.C.R.
A the goods purchased were used in manufacture of textiles for a third
party on the basis of a job contract, it would amount to user of
the goods purchased for a purpose different from that specified in
section 8 (3) (b) and the assessee would be liable to be proceeded
against under section 10 and JOA and in the circumstances the
notices issued against the assessee must be held to be valid. The
B assessee preferred an appeal before a Division Bench of the High
Court and before the Division Bench, two conte,1tions were advanced
on behalf of the Revenue in support of the1decision of the learned
single Judge. The first contention was that the sizing, bleaching
and dyeing of textiles did not amount to manufacture of textiles
c and the goods· purchased by the assessee could not therefore be
said to have been used by it in manufacture of textiles as specified
in the Certificate of Registration and hence the assessee had failed
-
to make use of the goods purchased for the purpose specified in
sec. 8 (3) (b) read with the Certificate of Registration. This con-
tention was negatived by the Division Bench which held that though
sizing bleaching and dyeing of grey cloth did amount to processing, /
D it bad the effect of converting grey cloth into a commercially diffe-
rent marketable commodity and it therefore amounted also to manu-
facture of a commercially new product and the user of the goods
purchased in sizing, bleaching and dyeing grey cloth was conse-
quently within the terms of section 8 (3) (b) read with the Certifi-
cate of Registration. This view taken by the Division Bench was
E not challenged on behalf of the Revenue in the appeal before us
and hence we need not say anything more about it. The second
contention urged before the Division Bench ·'was-and that was the
only contention pressed upon us on behalf of the Revenue-that the
·~
intepretation placed on section 8 (3) (b) by the learned single Judge
was correct and in order to come within the terms of that section,
the assessee was required to use the goods purchased in manufac-
ture of its own goods intended for sale by itself and if the assessee
used the goods purchased in manufacture of goods for a third party,
-
the user would be for a purpose different from that specified in
section 8 (3) (b), even though the manufactured goods were inten-
ded for sale by such third party. The Division Bench did not
G
accept this con.tention of the Revenue and !fVer-turning the view
taken by the learned single Judge, the Division Bench held that all
that section 8 (3) (bl provided was that the goods purchased must
be used by the assessee in manufacture of goods for sale and did
not require that the sale must be by the assessee himself. The pres-
H cription of section 8 (3) (b) was that the goods manufactured must be
ASSESSING AUTHORITY v. EAST INDIA co. (Bhagwati, J.) 61
for sale, without any qualifying expression that the sale must be A
by the assessee manufacturing the goods and therefore even if the
goods were ma011factured for a third party, so long as they were
intended for sale by such third party, the case would be covered by
the terms of the section. The Division Bench accordingly allowed
the writ petition and quashed and set aside the notices issued against
the assessee. The Revenue thereupon preferred the present appeal B
after obtaining certificate of fitness from the High Court.
It will be seen from the above statement of facts that the real
controversy between the parties in the present appeal centres round
the true interpretation of section 8 (3) (o). We will presently set
out that section but before we do so, it is necessary to refer to some C
other provisions of the Central Act as well, for it is a well-settled
rule of interpretation that no one section should be construed in
isolation but that the statute should be read as a whole with each
part throwing light on the meaning of the other. Section 6 is the
charging section and it levies Sales Tax on every dealer "on all sales
effected by him in the course of inter state trade or commerce during D
any year." Section 8, as its marginal note indicates, provides the
rates at which Sales Tax shall be chargeable on inter-state sales
effected by a dealer. That section and we are setting out here the
section as it stood at the material time provides inter ulia as
follows :
E
·•g (!) Every dealer, who in the course of Inter-State trade or
commerce-
(a) sells to the Government any goJds; or
(b) sell-to a registered dealer other than the Govern-
ment goods of the description referred to in sub- F
section (3),
shall be liable to pay tax under this Act, which shall
be three per cent of his turnover.
(2) The tax payble by any dealer on his turnover in so far G
as the turnover or any part thereof relates to the sale
of goods in the course of inter· state trade or commerce
not falling within sub-section
, (l).
(a) In the case of declared goods, shall be calculated fl
at the rate applicable to the sale or purchase of
such goods inside the appropriate State; and
62 SUPREME COURT REPORTS (1982] 1 S.C.R.
A (b) in the case of goods, other than declared goods
shall be calculated at the rate of ten per cent or
at the rate applicable to the sale or purchase of
such goods inside the appropriate State which-
ever is higher;
B and for the purpose of making any such calculation
any such c'ealer, shall be deemed to be a dealer liable
to pay tax under the sales tax law of the appropriate
State, notwithstanding that he, in fact, may not be so
liable under that law.
c (2·A)
(3) The goods referred to in clause (b) of sub-section (1)-
(a)
(b) are goods of class or classes specified in the certi-
D ficate of the registration of the registered dealer
purchasing the goods as being intended for resale
by him or subject to any rules made by the Central
Government in this behalf for use by him in the
manufocture or processing of goods for snle or in
mining or in the generation or distribution of
E electricity or any other form of power;
(4) The provisions of sub-section (1) shall not apply to any
sale in the course of inter-State trade or commerce
unless the dealer selling the goods furnishes to the
prescribed authority in the prescribed manner-
F
(a) a declaration duly filled and signed by the
registered dealer to whom the goods are sold con-
taining the prescribed particulars in a preseribed
form obtained from the prescribed authority;
G or
(b) if the goods are sold to the Government not being
a registered dealer, a certificate in the prescribed
form duly filled and signed by a duly authorised
H officer of the Government. T
ASSESSING AUTHORITY v. EAST INDIA co. (Bhagwati, J.) 63
(5) A
This section provides for three different rates of tax, one in sub-
section (1) clauses (a) and (b), another in sub-section (2) clause
(a) and the third in sub-section (2) clause (b). The rate of tax pro-
vided in sub-section (1) clauses (a) and (b) is lower than that pro·
vided in clause (a) or clause (b) of sub-section (2). We are con-
cerned here with clause (b) of sub-section (1) since it is under that B
provision that the sales of dyeing colours and chemicals made to
the assessee were charged to tax by the Sales Tax Authorities under
the Central Act. Sub-section (1) clause (b) applies to sales to a
registered dealer other than the Government of "g0ods of the
- description referred to in sub-secLion (3)". Sub-section (3) specifies
the goods referred to in sub.section (1) clause (b) and clause (b) of
sub-section (3) describes these goods as being "goods of the
c
class or classes specified in the Certificate of Registration of
the registered dealer purchasing the goods as being intended ..... .
for use by him in the manufacture ...... of goods for sale ..... .' .
'• Now the class of goods specified in the Certificate of Registration of
the assessee in the present case was "dyeing colours and other D
chemicals intended for use in the manufacture of textiles for sale"
and therefore on the assessee purchasing dyeing c0lour a~d other
chemicals against its Certificate of Registration for use by it in
manufacture of textiles for sale, the selling dea ers were liable to pay
tax on the sales at the lower rate of three per cent under clause (b)
of sub-section (I), provided the assessee furnished declaration Form E
<
- C to the selling dealers and the selling dealers submitted the same to
the Prescribed Authority as required by sub-section (4) clause (a) and
plainly and unquestionably the benefit of this lower rate of tax
would enure to the assessee, since it is common knowledge that the
incidence of Sales Tax is always passed on by the selling dealer to
the purchaser. Rule 12 of the Central Sales Tax (Registration and F
Turnover) Rules 1957 made by the Central Government in exercise
of the power conferred under section 13 sub-section (I) provides that
the declaration referred to in sub-section (4) clause (a) s:1all be in
Form C and accordingly, declarations in Form C duly filled in and
signed were supplied by the assessee to the selling dealers against the
purchases of dyeing colours and chemicals and these declaration
G
contained a certificate by the assessee that the goods purchased were
for use in manufacture of goods for sale. Rule 13 also provides
"that the goods referred to in clause (b) of sub-section (3) which a
registered dealer may purchase shall be goods intended for use by
him as raw materials, processing materials ......... stores ......... in the
H
manufacture ............ of goods for sale." The assessee was therefore
..
64 SUPREME COURT REPORTS [1982) ] S.C.R.
A clearly bound to use the dyeing colours and other chemical purchased
by it against its Certificate of Registration and the declarations in
Form C in manufacture of textiles for sale. If the a5'essee failed
without reasonable came to do so and used the dyeing colours and
other chemicals purchased by it for a different purpose, then under
section I 0 clause (d) the assessee would be liable to punishment
B with imprisonment or fine or both and under section JO A sub-
section (I), the assessee would also incur liability to penalty in a
sum not exceeding one-and-a half times, the tax which have been
levied under sub-section (2) in respect of the sale to him of the
goods, if the sale had been a sale falling within that sub-section.
c The question which therefore arises for consideration is as to ....
what is the scope and meaning of the expression "for use ......... in
the manufacture ........ of goods for sale'" occurring in section 8 (3)
(b) and in the declaration in Form C and Rule 13. Does it mean
that the goods manufactured by a registered dealer by using the
goods purchased against his Certificate of Registration and the dec-
D laration in Form C must be intended for sale by him or does it also
include a case where goods are manufactured by a registered dealer
for the third party under a job contract and the manufactured
goods are intended for sale by\such third party ? Now it is a well
settled rule of interpretation that a statute must be construed
according to its plain language and neither should anything be
E added nor substracted unless there are adequate grounds to justify
the inference that the legislature clearly so intended. lt was said more
than seven decades ago by Lord Mersey in Thompson v. Goold
and Company [1910] A.C. 409;
-
•
"It is a strong t1'ing to read into an Act of Parliament
F words which are not there and in the absence of clear
necessity, it is a \Vrong thing to do."
Lord Loreborn L.C. also observed in Vickers, Sons and Maxim
Limited v. Evans [1910] A.C. 444;
G "We are not entitled to read words into an Act of
Parliament unless clear reason for it is to be found
within the four corners of the Act itself."
Now here we find that the expression used by the legislature as also
H the rule making authority is simpliciter "for use'-in the manufac-
ture-of goods for sale" without any addition of words indicating
ASSESSING AUTHORITY v. EAST INDIA co. (Bhagwati, J.) 65
that the sale must be hy any particular individual. The legislature A
has designedly abstained from using any words of limitation indi-
cating that the sale should be by the registered dealer manufacturing
goods. It is significant to note that where the legislature wanted to
restrict the sale to one by the registered dealer himself, the legisla-
ture used the qualifying words "by him" after the words "for resale"
in the first sub-clause of section 8 (3) (b) indicating clearly that the B
resale contemplated by that provision is resale by the registered
dealer purchasing the goods and by no one else, but while enacting·
the second sub-clause of section 8 (3) (b) the legislature did not
qualify the words "for sale" by adding the words "by him". This
deliberate omission of the words "by him" after the words "for
sale" clearly indicates that the legislature did not intend that the
sale of the manufactured goods should be restricted to the registered
c
dealer manufacturing the goods. If the legislature intended that the
sale of the manufactured goods should be by the registered dealer
manufacturing the goods and by no one else, there is no reason
\ why the words "by him should have been omitted after the words
• "for sale" when the legislature considered it necessary to introduce D
those words after the words "for resale'· in the first sub-clause of
section 8 (3) (b). The omission of the words "by him" is clearly deli-
berate and intentional and it cannot be explained away on any rea-
sonable hypothesis except that the legislature did not intend that the
sale should be limited to that by the registered dealer manufacturing
the goods. The Court must construe the language of section 8 (3) (b) E
according to its plain words and it cannot write in the section
words which are not there. To read the words "by him" after the
words "for sale" in section 8 (3) (b) would not be construction but
judicial paraphrase which is impermissible to the Court. It is also
important to note that the word 'use' is followed by the words "by
him" clearly indicating that the use of the goods purchased in the F
manufacture of goods for sale must be by the registered dealer him-
self but these words are significantly absent after the words "for
sale", On a plain grammatical construction, these words govern
and qualify only "use" and cannot be projected into the words "for
sale". The goods purchased by the registered dealer must be used
by him in the manufacture of goods which are intended for sale but G
such sale need not be by the registered dealer himself: it may be by
any one.
Now ordinarily when the language of a statutory provision is
plain and unambiguous, there is no need to resort to the object H
T and purpose of the enactment because in such a case, the language
66 SUPREME COURT REPORTS [1982] I S.C.R.
A best declars the intention of the law-giver. But, even if we look at
the object and intendment of section 8 (I) (b), read with section 8(3)
(b), we reach the same conclusion. The object of providing a
lower rate of tax under 8 (I) (b) for sales of goods described in
section 8 (3) (b) clearly is that when goods are purchased by a
registered dealer for being used by him in the manufacture or pro-
B cessing of goods which are intended for sale, the goods which are
ultimately sold should not become unduly expensive to the consumer
by addition of a high rate of sales tax on the purchase of goods
which are used in the manufacture or processing of the goods ultima·
tely sold. Now if this be the object of section 8 (I) (b) read with sec-
c tion 8 (3) (b) it should be immaterial whether the sale of the manu-
factured or processed goods is by the registered dealer manufacturing
or processing goods or by another person for whom the goods are
-
manufactured or processed by the registered dealer. The intend-
ment of the statutory provision being. that the cost of the manufac·
lured or processed goods to the consumer should not be unduly
enhanced by reason of higher rate of tax on the goods used in the
D manufacture or processing of the goods sold, it is obvious that if
this intendment is to be fully effectuated, the benefit of the statutory
provision should be available irrespective of whether the manufac-
tured or processed goods are sold to the consumer by the registered
dealer or by some one else who has got the same manufactured by
the registered dealer. It was for this reason that the legislature deli-
E berately omitted to add the words "by him" after the words "for
sale" so as to make it clear that this sub clause of section 8 (3) (b)
would apply even if the goods manufactured or processed by the
registered dealer were intended for sale by some one else. The words
F
"for sale" following upon the word 'goods' clearly indicate that the
goods manufactured or processed by the registered dealer must be
goods for sale or in other words, they must be goods intended for
sale and it is immaterial whether they are intended for sale by the
registered dealer himself or by anyone else. This sub clause of sec-
--
'
tion 8 (3) (b) would therefore clearly cover a case where a registered
dealer manufactures or processes goods for a third party on a job
contract and uses in the manufacture or processing of such goods,
G
materials purchased by him against his Certificate of Registration
and the declarations in Form C, so long as the manufactured or
processed goods are intended for sale by such third party. It is of
course, true that if proceedings are taken against the registered
H dealer under section 10 clause (d) or section JOA, the question would
arise whether the goods manufactured or processed by the registered
ASSESSING AUTHORITY v. EAST INDIA co. (Bhagwati, J.) 67
dealer for a third party were intended for sale by such third party
A
and that would have to be decided by the Court or the competent
Authority according to the appropriate and relevant rules of evi-
dence, but merely because some diffiulty may arise in the determi-
nation of this question by reason of the third party coming into the
picture that would be no ground for refusing to place on the langu-
B
age of section 8 (3) (b) the only construction which it can reasonably
bear.
We are therefore of the view that the Division Bench of the
High Court was right in holding that even if the assessee carried out
the work of sizing, bleaching and dyeing of textiles for a third party c
on job contract basis, its case would be covered by the terms of the
second sub-clause of section 8 (3) (b), provided that the textiles so
sized, bleached and dyed by the assessee were intended for sale by
such third party. If it is proved in any proceedings initiated under
'• section JO (d) or section JOA that the textiles sized, bleached or dyed
by the assessee for a third party on job contract basis were not D
intended for sale by such third party, as would be evident if such
textiles were in fact not sold by the third party but were used for its
own purposes, the assessee would incur the penalty prescribed in
those sections.
E
We find that there are three decisions of three different High
•, Court which have taken a view different from the one taken
by us. One is the decision of the Madhya Pradesh High Court in
Commissiona of Sales Tax v. S. R. Sharma 31 Sales Tax Cases,
480, the other is the decision of the Gujarat High Court in Navsari
Cotton Mills Limited v. State of Gujarat 37 Sales Tax Cases 104 F
and the third is the decision of the Kerala High Court in
O. Parmasivan v. State of Kera/a 1971 Taxation Law Reports
1241. These three decisions proceed on an erroneous interpretation
of section 8 (3) (b) and must be deemed to be over ruled by the pre-
sent decision.
G
We accordingly quash and set aside the notices which have
been issued against the assessee on the basis that merely by using
dyeing colours and other· chemicals purchased by it in sizing blea-
ching and dyeing textiles for third parties on job contract basis, the
assessee contravened the provisions of section IO caluse (d) and H
68 -- SUPREME COURT REPORTS (1982) 1 S.C.R.
A rendered itself liable to penalty udder section 1OA. The
appeal will in the circumstances ·stand dismissed with costs
throughout.
' -
N.V.K. Appeal di,missed.
B
.
-
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