Holding

The term "metal" in the Uttar Pradesh Sales Tax notifications refers only to the metal in its primary, marketable form; rolled products and extrusions are distinct commercial commodities and are not covered by that definition.

Summary

Hindustan Aluminium Corporation Ltd., a manufacturer of aluminium ingots, billets, rolled products and extrusions, challenged the assessment that taxed only ingots at the lower rate while treating the other products as unclassified items at a higher rate under the Uttar Pradesh Sales Tax Act. The High Court held that rolled products and extrusions were distinct commercial commodities and not covered by the term "metal" in the notifications. On appeal, the Supreme Court examined the scheme of the notifications and held that the word "metal" refers only to the primary, marketable form of the metal, and that fabricated forms such as rolled products and extrusions constitute new commodities. Consequently, the higher tax rate on those items was upheld. The Court dismissed the appeals with costs.

Issues considered

Whether aluminium rolled products and extrusions fall within the definition of "metal" under the Uttar Pradesh Sales Tax notifications.
Whether the term "all" in "all kinds of minerals, ores, metals and alloys" includes subsequently fabricated forms.
Interpretation of the word "including" in the notification and its effect on the scope of "metal".
Whether the scheme of the notifications distinguishes primary metal from fabricated forms for tax purposes.

Legislation cited

U.P. Sales Tax Act, 1948s. 3A(2), s. 3A(2-A)
U.P. Sales Tax (Amendment and Validation) Act, 1975s. 31(7)
U.P. Sales Tax Rules, 1948s. 41(3)

Subjects

sales taxstatutory interpretationmetal definitionprimary commodityrolled productsextrusionsU.P. Sales Tax Acttax classificationcommercial commodity

Judgment

129 A
HINDUSTAN ALUMINIUM CORPORATION LTD.
v.
STATE OF UTT AR PRADESH & ANR.
July 28, 1981 B

[V.D. TuLZAPURKAR AND R.S. PATHAK, JJ.[

U.P. Sales Tax Act 1948-Section 3A (2) and notifications issued thereunder-

- Scope of

Interpretation-Words of common parlance used in a Sales Tax Act-How
interpreted.
c
Pursuant to a circular issued by the Commissioner of Sales Tax that alumi-
nium ingots only should be taxed at the lower rate and that all other items like
rods 1 bars, rolled products, extrusion sections etc. should be taxed at higher rates
as unclassified items, the Sales Tax Officer taxed aluminium ingots manufactured
by the appellant at the lower rate; and treating the ren1aining products manufac- D
I, tured by them as unclassified items taxed them at the higher rate.

The High Court, dismissing the appellant's writ petition impugning the
assessment made by the Sales Tax Officer, held that while alun1inium ingots, wire
bars and billets would fall in the category of "metals and alloys", rolled products
prepared by rolJiog ingots and extrusions manufactured from billets were different
commercial commodities from the ingots and billets and that they fell outside E
the category of "metals and alloys". The method of assessment n1ade by the
Sales Tax Officer was, therefore, upheld.

In appeal to this Court it was contended that the High Court erred in
holding that the rolled products and extrusions were new commercial commodi-

- ties, distinct from the aluminium ingots and biJiets from which they were
prepared and that they represented the marketable form merely of ingots and
billets.
F

Dismissing the appeal,

HELD: The expression 'metal' has been generally employed in the rele-
vant notifications to refer to the metal in its primary sense i.e. in the form in
which it is marketable as a primary commodity. Subsequent forms evolved G
from the primary form and constituting distinct commodities marketable as
such must be regarded as new commercial commodities. In all the relevant
notifications, therefore, the framers followed the scheme that one clause dealt
with metal in its original saleable form and another separate clause dealt with
fabricated forms in which it was saleable as a new commodity. Aluminium ingots
and billets are saleable commodities as such in the n1arket. When· such a noti- H
fication refers to a metal it refers to the metal in the primary or original form in
which it is saleable and not to any subsequently fabricated form. [133 H; 134 F]
130 SUPREME COURT REPORTS (1982] 1 S.C.R.

A The word "all" occuring in "all kinds of minerals, ores, metals and alloys
including sheets ... " in the notification cannot be interpreted to include even
subsequently fabricated forms of the metal, for such an interpretation would be
inconsistent with the scheme of the notifications. While broadly a metal in its
primary form and a metal in its subsequently fabricated form may be said to.
belong to the same genus, the distinction made between the two constitutes a
dichotomy of direct significance to the controversy in the instant case. Ll35 B-C1
B
Having regard to the scheme followed in the framing of the notifications,
the expression "including" does not enlarge the meaning of the word "metal".
It must be understood in a conjunctive sense, as a substitute for Hand''. [134 H]

Devi Dass Gopal Krishnan and Others v. The Stale of Punjab and Others
[1967] 20 S.TC. 430 followed.
c
Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer, Kurnool
[1960] 11 S. T.C. 827 and State of Madhya Bharat (now State of Madhya Pradesh)
and Others. v. Hiralal [1966] 17 S.T.C. 313 distinguished.

State of Tamil Nadu v Pyare Lal Malhotra [1976] 37 S.T.C. 319 and 325,
& Maharaja Book Depot v. State of Gujarat [1979] 2 S.C.R. 138 referred to.
D
State of Gujarat v. Shah Ve/jibhai Motichand, Lunawada [1969] 23 S.T.C.
288 not approved.

A word describing a commodity in a sales tax statute should be interpreted
according to its popular sense, the sense in which people conversant with the
subject matter with which the statute is dealing would attribute to it. Words of
E everyday use must be construed not in their scientific or technical sense but as
understood in common parlance. But what is relevant in the circumstances of
the present case is the manner in which these and similar expressions have been
employed by those who framed the relevant notifications and with the inference
that can be drawn from the particular arrangement of the entries in the noti-
fications. The intent must be derived from a contextual scheme. [133 D-Fl
F Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 S.T.C. 433
followed.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2014 to
2016 of 1977

G Appeals by special leave from the judgment and order dated
the 17th November. 1976 of the Allahabad High Court in Civil
Misc. Writ Nos. 107, 108 & 357 of 1976.

S.S. Ray, Depankar Gupta, Raja Ram Agarwal, O.P. Khaitan,
H N.R. Khaitan, Bharat Ji Agarwal, Mrs. Nee/am Thakur and Ume!h
Khaitan for the Appellants.
HINDUSTAN ALUMINIUM v. u. P. STATE (Pathak, J.) 131

S. C. Manchanda, R. Ramchandran and O.P. Rana for the A
Respondent.
I
The Judgment of the Court was delivered by

PATHAK, J: These appeals by special leave raise the question
whether aluminium rolled products and extrusions can be described
as "metal" for the purposes of the notifications dated December I,
B
1973 and May 30, 1975 issued under the U.P. Sales Tax Act,
1948.

The appellant, the Hindustan Aluminium Corporation Limited,
carries on the business of manufacturing and dealing in aluminium
c
- metal and various aluminium products.

On December 1, 1973 the State of Uttar Pradesh notified under
section 3-A (2) of the U.P. Sales Tax Act, 1948 that the turnover in
respect of the following goods set forth in item No. 6 of the
attached schedule would be liable to tax at all points of sale
D
-r at 3!%-

"6. All kinds of minerals and ores and alloys except
copper, tin, zinc, nickel or alloy of these metals
only."

On May 30, 1975 the State of Uttar Pradesh published a E
notification, under section 3A (2-A) of the Act, in which item No. 1
of the schedule read as follows :

"l. All kinds of minerals, ores, metals and alloys except
those included in any other notification issued under
the Act." F
and a rate of 2% was prescribed. The notification dated
December l, 1973 was amended and item No. 6 was deleted.

On August 14, 1975 the U.P. Legislature enacted the U.P.
Sales Tax (Amendment and Validation) Act, 1975 section 31 (7) of G
which amended the aforesaid notification of May 30, 1975 retros-
pectively, so that it would be deemed always to have read as
follows:-

"l. All kinds of minerals, ores, metals, and alloys including
H
sheets and circles used in the manufacture of brass
132 SUPREME COURT REPORTS (1982] I S.C.R.

A wares and scraps containing only any of the metals,
copper, tin, zinc. or nickel except those included in any
other notification issued under the Act."

On July 11, 197 5 the appellant wrote to the Sales Tax Officer
contending that the aluminium ingots, billets, rolled products, extru·
B sions and other aluminium products manufactured and sold by it
upto May 31, 1975 fell within item No. 6 of the notification
dated December l, 1973 and thereafter their sale was covered by
item No. I of the notification dated May 30, 1975. However, the
Commissioner of Sales Tex, U.P. issued a circular on October 15,
1975 to all Sales Tax Officers advising that aluminium ingots only
c should be taxed as "metal", and in regard to other items such as
rods, bars, rolled products, extrusion sections tax at the rate of 7%
would be payable as on unclassified items.
-
D On December 30, 1975, the Sales Tax Officer made provi-
sional assessments under rule 41(3), U.P. Sales Tax Rules, 1948
for the quarters ending June 30, 1975 and September 30, 1975.
The Sales Tax Officer applied a rate of 3·1/2% under the Notifica-
tion of December I, 1973 to aluminium ingots only and treated the
remaining products as unclassified items attracting sales tax at 7%.
E Similarly under the Notification of May 30, 1975 a rate of 2% was
applied to the turnover of aluminium ingots while the remaining
products were charged to tax at 7% as unclassified items.

The appellant filed a writ petition in the Allahabad High
F Court against the provisional assessments. During the pendency of
the writ petition the Sales Tax Officer made a final assessment
order for the assessment year 1975-76 on August 3, 1976. The
writ petition was amended in the High Court and relief was now
sought against the final assessment order. On November 17, 1976
the High Court passed judgment on the writ petition holding that
G wbile aluminium ingots, wire bars and billets would fall in the cate·
gory "metals and alloys", rolled products prepared by rolling ingots
and extrusions manufactured from billets must be regarded as
different commercial commodities from the ingots and billets and
therefore outside the category of "metals and alloys". The rolled
products included plates, coils, sheets, circles and strips. The
H extrusions were manufactured in the shape of bars, rods, structurals,
tubes, angles, channels and different types of sections. In regard
to properzi redraw rods, the High Court considered that a further
HINDUSTAN ALUMINIUM v. u.P. STATE (Pathak, J.) 133

enquiry was necessary and therefore directed the Sales Tax Officer A
to re-examine the matter.

The present appeals are directed against the part of the High
Court judgment refusing relief in regard to rolled products and
extrusions. It is vehemently contended that the High Court has
erred in holding that the rolled products and extrusions are new B
commercial commodities distinct from the aluminiun1 ingots and
billets from which they are prepared. It is urged that they repre-
sent the marketable form merely of ingots and billets. We have
been referred to a number of documents and publications as well as

-
the Aluminium (Control) Order, 1970, and the submission is that
when reference is made to aluminium as a metal it includes rolled c
products and extrusion products.

We are not satisfied that the appellant is right. There is no
doubt that, as laid down by this Court in Porritts & Spencer (Asia)
Ltd. v. State 4 Haryana,(1) a word describing a commodity in a
sales tax statute should be interpreted according to its popular D
sense, the sense being that in which people conversant with the
subject matter with which the statute is dealing would attribute to
it. Words of everyday use must be construed not in their sci en·
titic or technical sense but as understood in common parlance.
That principle has been repeatedly reaffirmed in the decisions of
this Court. It holds good where a contest exists between the scien· E
tific and technological connotation of the word on the one hand and
its understanding in common parlance on the other. We are here
concerned, however, with a very dilfererent situation. We are
concerned, with the manner in which these and similar expressions

- have been employed by those who framed the relevant notifications,
and with the inferenee that can b' drawn from the particular arrange-
ment of the entries in the notifications. We must derive the intent
F

from a contextual scheme.

Section 3A of the U.P. Sales Tax Act empowers the State
Government to prescribe, by notification, the rate, and the point G
at which the tax may be imposed on the sale of a commodity. A
consideration of the notifications issued from time to time will show
that the expression "metal" has been generally employed to refer to
the metal in its primary sense. The referene is to the metal in the
form in which it is marketable as a primary commodity. Subsequent H
(l) [1978] 42 STC 433.
134 SUPREME COURT REPORTS [1982) l S.C.R

A forms evolved from the primary form and constituting distinct com-
modities marketable as such must be regarded as new commercial
commodities. The notification No ST-2631/X-902 (64)-50 of
November 21, 1952, for example, sets forth two clauses:

(a) Copper, tin, nickel, or zinc or any alloy, containing
8 any of thes~ metals only, and

(b) Scrap, meant for melting, and sheets including circles
meant for making brass-ware, and containing only any
or all of the said metals, viz., copper, tin, nickel and
zinc.
c
It is clear that while clause (a) makes specific reference to certain
metals, clause (b) separately sets forth the products which emerge
as a result of processing the original metal. Clause (b) speaks of
-
sheets, including circles meant for making brass-ware, and con-
taining only any or all of the metals specified in clause (a). A
D sheet of copper only or tin only or nickel only or zinc only is
regarded as belonging to a distinct entry in the notification from
copper, tin, nickel or zinc in its unfabricated from. This schematic
arrangement has been followed in notification No. ST-3500/X dated
May IO, 1956, notification No. 1366/X-990-1956, dated April I, 1960
and notification No. St-9377/X-906 (AB-4)-1971 dated October 6,
E 1971. In all those notifications the framers of the notifications follo-
wed the scheme that one clause dealt with the metal in its original
saleable form and another separate clause dealt with fabricated forms
in which it was saleable as a new commodity. It is admitted before
us on behalf of the appellant that aluminium ingots and billets are
saleable commodities as such in the market. In the circumstances
F the inference is irresistible that when such a notification refers to a
metal, it refers to the metal in the primary or original form in which
it is saleable and not to any subsequently fabricated form. It is
true that in the notification dated May 30, 1975, as amended retros-
pectively on August 14, 1975, the entry reads :
G "All kinds of minerals, ores, metals and alloys includ-
ing sheets and circles used in the manufacture of brass
wares and scraps containing only any of the metals, copper,
tin, zinc, or nickel except those included in any other
no(ification issued under the Act."
H
But here, the expression "including" does not enlarge the meaning
of the word "metal" and must be understood in a conjunctive sense,
HINDUSTAN ALUMINIUM v. U.P. STATE (Pathak, J.) 135

as a substitute for "and". This is the reasonable and proper con- !\
struction having regard to the scheme followed in the framing of
notifications.
It is urged that item No. 6 in the notification of 1973 and
Item No. I in the notification of 1975 speak of "all kinds of
minerals, ores, metals and alloys" and, it is said, the word "all" B
should be given its fullest amplitude so as to include even sub-
sequently fabricated forms of the metal. It seems to m that the
construction suggested is inconsistent with the scheme to which w
have referred. While broadly a metal in its primary form and a
metal in its subsequently fabricated form may be said to belong to
the same genus, the distinction made between the two constitutes a
dichotomy of direct significance to the controversy before us.
c
The question whether rolled steel sections are a different
commodity from scrap iron ingots was considered by this Court in
Devi Das Gopal Krishnan and Others v. The State of Punjab and
Others('), and this Court had no hesitation in holding that when
D
scrap iron ingots are converted into rolled steel sections they go
through a process of manufacture which brings into existence a new
marketable commodity. We are of the opinion that the same con-
clusion must follow when aluminium ingots and billets are converted
into aluminium rolled products and extrusion products.
Learned counsel for the appellant places reliance on Tunga- E
bhadra Industries Ltd., Kurnoo/ v. Commercial Tax Officer, Kurnoo/( 1)
where this Court took the view that hydrogenated "groundnut oil"
commonly called Vanaspati was "ground nut oil" within the
meaning of rule 18(2) of the Madras General Sales Tax
- (Turnover and Assessment) Rules, 1939. In that case, the Court
was of opinion that the process of hydrogenation did not alter the F
essential identity of the oil, and reference was made to the broad
compass of the expression "groundnut oil", besides the circumstance
that the use to which the original groundnut oil could be put would
also be the use to which the hydrogenated oil could be applied. It
seems to us that the case is distinguishable. We then turn to State of
Madhya Bharat (now the State of Madhya Pradesh) and Others v. G
Hira/alf), the next case placed before us. This Court held that
scrap iron, when put through a process of re-rolling to produce
attractive and acceptable forms of iron and steel in the shape of
(1) [1967] 20 STC 430. H
(2) [1960] 11 STC 827.
(3) [\966] 17 STC 313.
136 SUPREME COURT REPORTS [1982] I S.C.R.

A bars, flats and plates, must be regarded as continuing to be "iron
and steel" for the purpose of the notification issued under the
Madhya Bharat Sales Tax Act. The case, however, has been distin-
guished by this Court in State of Tamil Nadu v. Pyare Lal Malhotra(')
on the ground that the nature of the raw material from which the
goods were made was the decisive criterion for deciding the earlier
B case. It observed -

"The language of the notification involved there made -.
it clear that the exemption was for the metal used. In the
cases before us now, the object of single point taxation is
the commercial commodities and not the substance out of
c which it is made. Each commercial commodity here
becomes a separate object of taxation in a series of sales of
that commercial commodity so long as it retains its identity
as that commodity."

And the Court then referred with approval to Devi Dass Gopal
D Krishnan (supra).

Our attention has heen invited to State of Gujarat v. Shah
Ve/jibhai Motichand, Lunawada(') where the Gujarat High Court held
that corrugated iron sheets were merely "iron" in another shape and
E form and could not be regarded as articles or products manufactured
or fabricated out of iron. We have perused the three judgments
delivered in that case but it seems to us that the majority opinion is T

of doubtful validity, specially having regard to the observations of
this Court made in Pyare Lal Malthora (supra).

F We are also referred to Maharaja Book Depot v. State of
Gujarat('). This Court held that an exercise book is "paper" as
defined ins. 2(a) (vii) of the Essential Commodities Act, 1955 and
Item 13 in Schedule I to the Gujarat Essential Articles Dealers
(Regulation) Order 1971. The Court accepted that construction on
the ground that it would be in consonance with and would carry
G out effectively the object or purpose of the Act and the Regulation
Order. It is desirable to recall that the Essential Commodities Act
was enacted to control the distribution and price of essential com-
modities. A sufficiently comprehensive interpretation was called for

H (1) [1976] 37 STC 319 and 325.
(2) [1969] 23 STC 288.
(3) [1979] 2 SCR 138.
•

' HINDUSTAN ALUMINIUM v. U.P. STATE (Pathak, J.) 137

in order that all products essential to the community which would •A
I reasonably fall within the scope of the definition could be covered.

Learned counsel for the appellant relies on the wide definition
of the word "aluminium" in the Aluminium (Control) Order, 1970,
but we must remember that the word has been given the broad
definition set out there only for the purposes of that Control Order. B
It cannot be pressed into service for resolving the controversy
before us.

Learned counsel for the appellant also relies on the Glossary

-
of Terms for Aluminium and Aluminium Alloys prepared by the
• Indian Standards Institution('), the Glossary of Terms prepared by c
the British Standards Institution('), Engineering Metallurgy('), Non-
Ferrous Metals and their Alloys('), Metal Industry: Hand Book and
Directory, 1962 and allied literature. In considering the material,
it is necessary to cantion ourselves that the literature is concerned
with conceptions particular to the aluminium industry, while we are
here concerned with the application of a sales tax statute. D
Finally, it is urged that two interpretations are possible of the
relevant entries in the notifications of 1973 and 1975 and therefore
the interpretation favourable to the dealer should be adopted. We
are of the definite opinion that the only interpretation possible is that
aluminium rolled products and extrusions are regarded as distinct
commercial items from aluminium ingots and billets in the notifica- • E
tions issued under the U.P. Sales Tax Act.

In the result, the appeals fail and are dismissed with costs.

- P.B.R. Appeals dismissed

(1) Part I: Unwrought and Wrought Metals, I.S.: 5047 (Part J)-1969.
(2) British Standard 3660: 1963.
(3) Stoughton, Butts and Bounds, 1953.
(4) F.J. Long.