Holding

Horn and hoof are not bone in common parlance and cannot be treated as crushed bone; the High Court’s interpretation was erroneous.

Summary

Mis. Noorie Manure Mill, a dealer in crushed bones, horn and hoof, appealed against a tax demand under the U.P. Trade Tax Act. The issue was whether animal horns and hooves could be treated as "crushed bone" or as fertilizer within the meaning of several exemption notifications issued by the State of U.P. The Allahabad High Court held that horns and hooves are considered bone in common parlance and thus exempt, but the Supreme Court found this reasoning erroneous, stating that horn and hoof are not part of bone even in common usage. The Court also rejected the Tribunal’s finding that crushed horn and hoof are used only as manure, noting the lack of expert evidence and the existence of other uses such as horn combs. Consequently, the Supreme Court set aside the High Court and Tribunal orders, waived the 25% pre‑deposit direction, and remitted the matter back to the Tribunal for fresh consideration.

Issues considered

Whether "horn" and "hoof" fall within the definition of "bone" or "crushed bone" for the purpose of the U.P. Trade Tax exemption notifications.
Whether crushed horn and hoof are to be treated as fertilizer (tax‑exempt) or as taxable crushed bone.
Whether the Tribunal’s finding that crushed horn and hoof are used only as manure is sustainable without expert evidence.
How to interpret exemption notifications in the absence of statutory definitions.

Legislation cited

U.P. Trade Tax Act

Subjects

Trade taxExemption notificationBoneHornHoofCrushed boneFertilizerCommon parlanceInterpretationTribunalRemand

Judgment

MIS. NOORIE MANURE MILL, SAMBHAL A
v.
COMMISSIONER, TRADE TAX, U.P.

MAY 15,2007

[S.B. SINHA AND MARKANDEY KATJU, JJ.] B

UP. Trade Tax Act; Exemption Notifications dated 7.9.1981, 30.9.1982,
\ 31.1.1985 and 12.9.1986 issued thereunder:

Horn and hoof-Exigibility to trade tax vis-a-vis exemption c
Notifications-Held: In the absence of any definition of these terms in the
statute, the meaning thereof as understood in common parlance for the
purpose of imposition of tax should be assigned-Animal horn and hoof can
not be a part of animal bone even in common parlance-High Court
committed a serious error in opining that crushed bone would include
D
crushed horn and hoof-The matter is remitted back to tribunal for
consideration afresh.

The question which arose for determination in this appeal was as to
whether animal horns and hooves could be used as crushed bone or fertilizer
within the meaning ofvarious exemption Notifications issued by the State of E
U.P. under the U.P. Trade Tax.

Appellant contended that crushed horn and hoof being neither bone nor
crushed bone, despite its mention in one of the exemption notifications, it does;
not lose its character to be sold as fertilizer and the High Court, therefore,
was not correct in its view. F
Allowing the appeal, the Court

HELD: The High Court committed a serious error in opining that
crushed bone would also include crushed horn and hoof. It went on to hold
that horns and hooves are considered as bone in common parlance and its G
inclusion in the Notification 'appeared to be a clarificatory one'. In absence
of any definition of the term in the statute, the meaning thereof as understood
. in common parlance for the purpose of imposition of tax should be assigned.
Animal horn and hoof cannot be a part of animal bone even in common parlance.
893 H
894 SUPREME COURT REPORTS [2007] 6 S.C.R.

A Finding of the Tribunal that crushed horn and hoof are used only as manure
cannot be agreed. No expert evidence has been obtained in that behalf. Even
otherwise, in view of the Notification dated 12.9.1986, the said conclusion does
not appear to be correct as combs and other articles are made out of horn.
Hence, in the interest of justice, the matter is remitted back to the Tribunal
for consideration afresh on merits. However, it will be open to the parties to
B adduce additional evidence before it. The direction of the Tribunal to deposit
25% of the disputed amount of tax is also set aside. [Paras 10, 11 and 12)
[897-B, C, D; El

Commissioner of Sales Tax v. Mis. Bharat Bones Mill, (2007) 3 Scale J
C 383, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2522 of2007.

From the Final Judgment and Order dated 07.02.2006 of the High Court
of Judicature at Allahabad in Trade Tax Revision No. 439 of 1999.
D WITH
C.A. Nos. 2523 & 2524 of2007.

Dhruv Agarwal and Praveen Kumar for the Appellant.

Kavin Gulati, Rajeev K. Dube and Kamlendra Mishra for the Respondent.
E
The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.

2. 'Hom' and 'hoof in common parlance do not come within the
F definition of 'bone'. Horns and hooves whether can be used as fertilizer or
crushed bone within the meaning of various notifications issued by the State
of U.P. under the U.P. Trade Tax Act is the question involved in this case.

3. Appellants herein are dealers in crushed bones as also crushed horn
and hoof. It is registered under the Central Sales Tax Act as also the U.P.
G Trade Tax Act.
4. Horn and hoof, on the one hand, and bone or crushed bones, on the
other, used to be treated differently by the State. In a notification issued by
the State on or about 7.9.1981, 'bones' were subjected to sales tax at the rate
H of 6%; the taxing event being sale to the consumer. By a notification dated
NOORIE MANURE MIU., SAMBHAL v. COMMNR, TRADE TAX, U.P. [S.B. SINHA, J.] 895

r
I
30.9.1982, it was declared that no tax was to be paid on sale or purchase of A
bones but the same did not include crushed bones. The said notification
dated 7.9.1981 was amended to include 'crushed bone' against entry No. 8
which, as noticed hereinbefore, mentioned 'bone'. By a notification dated
31.1.1985, however, bone including horn and hoof but not including crushed
bones were exempted from payment of tax. We may, however, notice that yet
again by a notification dated 12.9.1986, the following item was substituted in B
place of the original item No. 32 which reads as under:-

SI. No. Description of Goods Rate of Tax

2 3 c
32 Hom combs and all other articles made from horn

5. Indisputably, fenilizer is exempted from payment of trade tax. The
question as to whether crushed bones when sold to the farmers for use as
fertilizer despite the aforementioned notifications would be exigible to trade D
tax or not came up for consideration before this Court in Commissioner, Sales
Tax v. Mis. Bharat Bone Mill, [2007] 3 SCALE 383. Therein the effect of the
aforementioned exemption notifications had not been gone into as this Court's
attention had not been drawn thereto. This Court opined:-

"11. Moreover, it is well-known that the question as to whether a E·
commodity would be exigible to sales tax or not must be considered
having regard to its identity in common law parlance. If, applying the
said test, it is to be borne in mind that if one commodity is not
ordinarily known as another commodity; normally, the provisions of
taxing statute in respect of former commodity which comes within the F
purview of the taxing statute would be allowed to operate. In any
event, such a question must be determined having regard to the expert
opinion in the field. We have noticed hereinabove the different between
'bone meal' and 'crushed bone'. Different utilities of the said items
has also been noticed by the Allahabad High Court itself. The High
Court or for that matter, the Tribunal did not have the advantage of G
opinion of the expert to the effect as to whether crushed bones can
be used only for the purpose of fertilizer or whether crushed bones
are sold to the farmers for use thereof only as fertilizer."

The said question was left open for subsequent cases.
H
896 SUPREME COURT REPORTS

A
[2007] 6 S.C.R.

6. In one of the cases, namely, Commissioner, Trade Tax, U.P. Lucknow
v. Mis Noori Manthor Mill, Muradabad Road Sabal, the Tribunal has arrived
-
at the finding of fact

"..... Because on the crushed bones there is a tax liability at the rate
of 6 percent but against the crushed bones, no description of horns
B and bones has been made that is to say that the purpose of the
government is to charge tax on the crushed bones and not to charge
tax on the crushed bones and horns. This was also pleaded by the
learned counsel that the crushed horns and Hooves are used as
manufacture (sic). And it cannot be put to any other use. The
department has not led any such evidence which may conclude that
c the crushed horns and hubes (sic) are used for any other purpose
than the manure and that the manure is a tax free commodity ....."

7. In the appeals which were preferred thereagainst, the High Court,
however by reason of the impugned judgment dated 7.2.2006 held as under:-
D " ... Bones including Horn and Hoof is exempted but crushed bones
has been excluded and made taxable. When horns and hoofs are
included in the bones then in the exclusion part also crushed bone
include crushed Horn and Hoof. In common parlance also, Horns and
Hoofs are considered as Bones. Thus inclusion of Homs and Hoofs
E in Bones in the notification appears to be clarificatory only. Since
crushed bone is excluded from the entry "Bone including Hom and
Hoof', in my view the crushed horns and hoofs being crushed bones
are also deemed to be excluded. Tribunal has also committed an error
in treating crushed Homs and Hoofs as fertilizer. In the case of
Mis. Hindustan Bone Mills Pvt. Ltd. v. Commissioner of Trade Tax
F reported in (2005) UPTC 885 this Court held that crushed bone is not
a fertilizer. In this view of the matter, the order of the Tribunal is liable
to be set aside and the appeal filed by the Commissioner of Trade Tax
before the Tribunal is liable to be allowed."

8. Following the said judgment, the High Court refused to interfere with
G the direction of the Tribunal for pre-deposit of 25% of the disputed amount
of tax in the cases involving the other two appeals before us.

9. Mr. Dhruv Agarwal, learned counsel appearing on behalf of the
appellant would submit that crushed horn and hoof being neither bone nor
H crushed bone, despite its mention in one of the exemption notifications, it
NOORIE MANURE MILL, SAMBHAL v. COMMNR, TRADE TAX, U.P. [S.B. SINHA, J.] 897

does not lose its character to be sold as fertilizer and the High Court, A
therefore, was not correct in its view.

I0. The High Court, in our opinion, committed a serious error in opining
that crushed bone-would also include crushed horn and hoof. It went on to
hold that horns and hooves are considered as bone in common parlance and
its inclusion in the notification 'appeared to be a clarificatory one'. In absence B
of any definition of the term in the statute, the meaning thereof as understood
in common parlance for the purpose of imposition of tax should be assigned.
-\ Animal horn and hoof cannot be a part of animal bone even in common
parlance. The High Court, therefore, in our opinion clearly fell in error in
arriving at the aforementioned conclusion. C
11. We, however, cannot also agree with the finding of the Tribunal that
crushed horn and hoof are used only as manure. No expert evidence has been
obtained in that behalf. Even otherwise, in view of the notification dated
12.9.1986, the said conclusion does not appear to be correct as combs and
other articles are made out of horn. D
12. We, therefore, are of the opinion that the interest of justice would
be met ifthe impugned judgments are set aside and the matter is remitted back
to the Tribunal for consideration of the matter afresh on merits. It will be open
to the parties to adduce additional evidence before it. The direction of the
Tribunal to deposit 25% of the disputed amount of tax is also directed to be E
waived. These appeals are allowed with the aforementioned observations and
directions. In the facts and circumstances of this case, however, there shall
be no order as to costs.

S.K.S. Appeal allowed.