Holding

Tobacco seed, its oil and cake are not "tobacco" or "any form of tobacco" under the definition, and therefore are not exempt from sales tax.

Summary

Mahalaxmi Oil Mills and other assessees claimed that tobacco seed oil and tobacco seed cake were exempt from sales tax under Section 8 of the Andhra Pradesh General Sales Tax Act, 1957, which exempts "tobacco and all its products". The State of Andhra Pradesh contended that the definition of "tobacco" in the Act, mirroring the definition in the Central Excise and Salt Act, 1944, does not include tobacco seeds or products derived from them. The Supreme Court examined the two‑part definition—what the term means and what it expressly includes—and held that the wording is exhaustive, expressly limiting "tobacco" to leaves, stalks and stems, thereby excluding seeds. Consequently, tobacco seed oil and cake, being products of the seed, are not "any form of tobacco" and cannot claim the exemption. The Court affirmed the High Court’s decision and dismissed the appeals and writ petitions.

Issues considered

Whether tobacco seed, tobacco seed oil and tobacco seed cake fall within the definition of "tobacco" under the Andhra Pradesh General Sales Tax Act, 1957.
Whether the exemption under Section 8, Fourth Schedule Entry 7, applies to these items.
Whether the amendment and explanatory reference to the Central Acts alter the interpretation of the definition.

Legislation cited

Additional Duties of Excise (Goods of Special Importance) Act, 1957s. Section 2(c)
Andhra Pradesh General Sales Tax Act, 1957s. Section 8
Central Excise and Salt Act, 1944
Central Sales Tax Act, 1956s. Section 15

Subjects

sales tax exemptiondefinition of tobaccostatutory interpretationtobacco seed oiltobacco seed cakeexcise dutylegislative intent

Judgment

MAHALAKSHMI OIL MILLS ETC. ETC.
A
v.
STATE OF ANDHRA PRADESH & ORS.

SEPTEMBER 14, 1988

13 [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

Andhra Pradesh General Sales Tax Act, 1957: Section 8 and
Fourth Schedule Entry 7-'Tobacco or any form oftobacco'-Whether
includes 'tobacco seeds'-Whether exempted from tax.

The appellant-assessee had claimed before the Andhra Pradesh
c High Court that tobacoo seed oil and tobacco seed cake, being forms of
tobacco, were entitled to exemption under section 8, read with entry 7 '.
of the Fourth Schedule, of the Andhra Pradesh General Sales Tax Act,
1957, which confers exemption-from sales tax in respect of certain goods
including 'tobacco'. The petitioners in the writ petitions have claimed
I) the same relief directly in this Court.

The High Court held that "tobacco seed" was not "tobacco .. and

1
that only leaf, stalks and stems of the tobacco plant could be said to be
"'tobacco" within the meaning of its definition.

E Before this Court it is urged on behalf of the Assessees that: (i) the
\.\-'Ord "tobacco', in its ordinary connotation. takes in the tobacco plant
and every part of it, including the seed (ii) the definition of 'tobacco'
makes it clear that it takes in every form of tobacco, manufactured or
unmanufactured; and (iii) tobacco seeds, not only when they are in their
raw unmanufactured state but also when, on manufacture, they (
F manifest themselves in the form of tobacco seed oil or tobacco seed cake
will fall within the definition. On the .other hand, on behalf of the State
it is submitted that the definition, which covers both what the expres-
sion means as well as what it includes, is exhaustive, and tobacco seed
does not come within either the first part or the second part of the
definition.
G
Dismissing the appeals and the petitions, it was,

HELD: (!) The definition consists of two separate parts which
specify what the expression means and also what it includes. The
joint use of the words "mean and include" makes the definition 'f:..1
H exhaustive. I I094C]
l088
•
' !'
MAHALAKSHMI OIL MILLS v. STA1E OF A.P. 1089

Dilworth v. Commissioner of Stamps, [1899) AC 99 referred to.
A
(2) Tobacco seed does not come within the first part of the defini-
tion, for the expression. "tobacco cured or uncured, manufactured or
unmanfactured" has to be read as a whole and will not take in tobacco
seed. It will not come under the second part because it specifically
mentions leaves, stalks and stems but leaves out seeds. [1094A-B) B

(3) The definition, when it says that tobacco means any form of
tobacco, lays emphasis that the item under consideration should be
tobacco in form. [l096A)

(4) Tobacco seed; once it is separated from the plant, is an item
entirely different from tobacco and does not fall within the expression
c
·'tobacco or any form oftobacco'. [1096C)

(5) Since tobacco seed does not fall within the definition, the oil
and cake produced by the crushing of the seeds will not also be covered by
the definition or eligible for·the consequent e,;:emption. [1094B) D

(6) The effect of accepting the assessee's claim for exemption
would be to automatically catapult them into the levy of excise and
additional excise duties, hut the fact that tobacco oil and cake have not
been considered to be excisable commodities for the past several years is
as indication as to how the legislature and administration understood E
and applied these provisions all along. l1096H; 1097B)

C.J. T. v. Taj Mahal Hotel, [1971) 82 I.T.R. 44 S.C. Amara
Purushotham Mamidi Obaiah v. State of A.P., [1962) 29 S.T.C. 654;
and 1977-40 S.T.C. referred to.
F
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 259
to 261 (NT)/77 etc.

From the Judgment and Order dated 21.10.76 and 24.12.76
of the Andhra Pradesh High Court in W.P. Nos. 439 and 287 of 1975
and 4144 of 1976 and W.P. No. 8905 of 1987 G

A.S. Nambiar, B. Parthasarthi and B. Kanta Rao for the
Appellants.

P.A. Choudhary, T.V.S.N. Chari, Badridas and Ms. V. Grover
for the Respondents. H
1090 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R. •
The Judgment of the Court was delivered by ''
A
RANGANATHAN, J. A common question is involved in all
these matters which are, therefore, being disposed of by this common
judgment. The question is whether tobacco seed oil and tobacco seed
cake are entitled to exemption under the Andhra Pradesh General
B Sales Tax Act, 1957 (hereinafter referred to as the 'Act'). The ques-
ti on arise~ in the following circumstances.

2. Section 8 of the Act confers an exemption from sales tax in
respect of certain goods. It provides that: •
'
c 'Subject to such restrictions and conditions as may be pre- '
scribed including conditions as to licence fees, a dealer who
deals in the goods specified in the fourth schedule shall be
exempt from tax under this Act in respect of such goods.'

Entry 7 in the Fourth Schedule was 'tobacco and all its products.'
D
3. The Andhra Pradesh High Court in Amara Purushotham
Mamidi Obaiah & Co. v. State of A.P., [1962] 29 STC 654, was called
upon to consider whether tobacco seed, tobacco seed oil and tobacco
seed cake were exempt from sales-tax under the above provision. The
Bench held that tobacco seeds could be said to be tobacco only so long
E as they remain attached to the plant. They, however, ceased to be
tobacco the moment they are removed from the plant. Thereafter,
they may be considered to be a product of tobacco. But they constitute
a separate and a distinct class of goods with independent properties
and potentialities not the same as those of the parent plant. Products ,,,
manufactured out of tobacco seed could not be said to be products of
F tobacco. The Court, in this context, referred to the analogy of cotton
seeds, which have been considered to be distinct from cotton. The
above Bench decision was rendered in spite of the wide words of the
exemption, which covered not only tobacco in its comprehensive sense
but also all products of tobacco.

G 4. The Act was amended by Amendment Act 9 of 1970. There
was a slight amendment, which is not material for our present purpose,
in section 8 which substituted the words "licences and licence fees" in
place of words "licence fees" alone which had been mentioned in the
section previously. Tobacco. continued to be the item in entry 7 of the
Fourth Schedule but this entry now referred only to "tobacco". The
t -
H words "and all its products", which had been used earlier, were omit- \.
) MAHALAKSHMI OIL MILLS v. STATE OF A.P. [RANGANATHAN, J.] 1091

ted. An explanation was added to the Fourth Schedule to the.following A
effect:

"Explanation-Expressions in items 5, 6 and 7 have the
same meanings assigned to them in Additional Duties of
Excise (Goods of Special Importance) Act of 1957 (Central
Act 58 of 1957. )" B

5. The new explanation to Schedule IV makes it necessary for us
to consider the provisions of Central Act 58 of 1957. This is an Act
which provides for the levy and collection of additional duties of excise
in respect of certain goods, over and above the duties of excise levied
and collected in respect of such goods under the Central Excise and
Salt Act, 1944 (hereinafter referred to as the '1944 Act'). The. state- c
. ment of objects and reasons of Act 58 of 1957 has been referred to
before us and its short contents may be extracted here:

"The object of the bill is to impose additional duties of
excise in replacement of the sales taxes levied by the Union D
and States on sugar, tobacco and millmade textiles and to
distribute the net proceeds of these taxes, except the pro-
ceeds attributable to Union Territories. to the States. The
distribution of proceeds of the additional duties broadly
follows the pattern recommended by the Second Finance
Commission. Provision has been made that the States E
which levy a tax on the sale or purchase of these com-
modities after the Ist April, I958 do not participate in the
distribution of the net proceeds. Provision is also being
made in th~ Bill. for includilig these three goOds in the
category of goods declared to be of special importance in
inter-State trade or comineree so that, following the impo- F
sition of uniform duties of excise .on them, the rates of sales
tax, if levied by any State are subject from Ist Aoril, 1958
to the restrictions in section ·15 of the Central Sales Tax
Act, 1956.''

In short, the object of the Act was to substitute additional duties of G
excise in place of sales tax so far as these goods were concerned. Since
the State Legislature were at liberty, if they wished, to levy taxes on
the sale or purchase of these commodities, the Act provided that the
additional excise duties will be distributed only among such States as
did not levy a tax on the sale or purchase of these commodities. Also,
by including these goods in the category of goods declared to be of H
1092 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

special importance in inter-State trade or commerce, the legislation
A ensured that, if any State levied sales tax in respect of these com-
modities, such levy was subject to the restrictions contained in the
Central Sales Tax Act, 1956.

6. Apparently, the intention of the Andhra State Legislature
B when the Amendment Act of 1970 was introduced was to exempt
_certain goods from the purview of sales tax because they also came
within the purview of the levy of additional duties of excise under Act
58 of 1957. This is the reason why the Explanation to the entries in the
Fourth Schedule to the Act incorporated the definition of these goods
as contained in Act 58 of 1957.
c 7. Turning then to Act 58 of 1957, section 2( c) of that Act pro-
vided that the words and expressions "sugar'', "tobacco", "cotton
fabrics" and "woollen fabrics"-to mention only four of the items
referred to in the definition section-shall have the same meanings
respectively as have been assigned to them in Item Nos. 1, 4, 19 and 21
o ofthe First Schedule to the 1944 Act.
t
8. The above definition takes us to the 1944 Act. There the
definition of the word 'tobacco' is contained in item No. 4 of the First
Schedule. The definition reads:

E "Tobacco means any form of tobacco, whether cured or
uncured and whether manufactured or not and includes the
leaf, stalks and stems of the tobacco plant, but does not
include any part of a tobacco plant while still attached to
the earth."

F The Schedule thereafter proceeds to set out two broad categories,
namely, 11nmanufactured tobacco and manufactured tobacco. The
former is divided into eight sub-categories in respect of each of which a
separate duty of excise is prescribed. Three of the entries mentioned
are:

G (3) if flue-cured and not otherwise specified.

(6) if other than flue-cured and not otherwise specified.

(8) Stalks

H The se"ond category of manufactured tobacco is classified into various
' MAHALAKSHMI OIL MILLS v. STATE OF A.P. (RANGANATHAN,J.] 1093

items like cigars and cheroots, cigarettes, biris, smoking mixtures for A
pipes and cigarettes and chewing tobacco of various kinds, snuff arid
hookah tobacco.

9. The question whether tobacco seed oil and tobacco cake fall·
within entry 7 of Schedule IV to the Act, as amended, came up for
consideration before a Division Bench of the same High Court (1977-40 B
S.T.C. 572)'. This Bench agreed with the conclusion of the earlier
Division Bench, though not with its line of reasoning. It was of the
view that the definition clause, properly interpreted in the light of the
decision of the House of Lords in Dilworth v. Commissioners of
Stamps, [1899] A.C. 99 and C./. T. v. Taj Mahal Hotel, [1971] 82 ITR
44 (S.C.), justified the inference that "tobacco seed" was not
"tobacco" and that only leaf, stalks and stems of the tobacco plant c
could be said to be "tobacco" within the meaning of the definition in
item 4 of the Schedule to the 1944 Act. The Bench concluded:

"Under these circumstances, it is obvious that the defini-
tion of the word "tobacco" according to item 4 of Schedule D
I to the Central Excises and Salt Act of 1944 does not bring
"tobacco seed" within its purview, and thereforn, tobacco
seed. is not exempted from the levy of sales tax under the
A.P. General Sales Tax Act, since tobacco seed does not
fall within the meaning of the word "tobacco" as defined in
the Fourth Schedule to the A.P. General Sales Tax Act. E

It is clear in view of this conclusion of ours that since .
tobacco seed is not "tobacco" for purposes of exemption
under section 8 of the Act, much less can tobacco seed oil
or tobacco seed oil-cake or tobacco seed cake can be said to
be tobacco for the purposes of this exemption." F

The . Bench, therefore, denied the exemption to the appellants/
petitioners before us and hence these petitions/appeals.

10. Before us, it is urged on behalf of the asessees that the word
"tobacco", in its ordinary connotation, takes in the tobacco plant and G
every part of it, including the seed. The definition also make it clear
that it takes in every form of tobacco, manufactured or unmanufac-
tured. Thus tobacco seeds, not only when they are in their raw
unmanufactured state but also when, on miumfacture, they manifest
themselves in the form of tobacco seed oil or tobacco seed cake will
fall within the definition. On the other hand, on behalf of the State it is H
1094 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

submitted that the definition, which covers both what the expression
means as well as what it includes, is exhaustive. Tobacco seed does not
come within the first part of the definition, for the expression
"tobacco, cured or unc11red, manufactured or unmanufactured" has to
be read as a whole and will not take in tobacco seed. It will not come
under the second part because it specifically mentions leaves, stalks and
stems but leaves out seeds. Since tobacco seeds do not fall within the
definition, the oil and cake produced by the crushing of the seeds will
not also be covered by the definition or eligible for the consequent
exemption.

11. We are inclined· to accept the contention urged on behalf of
C the State that the definition under consideration which consists of two
separate parts which specify what the expression means and also what
it includes is obviously meant to be exhaustive. As Lord Watson
observed in Dilworth v. 'Commissioner of Stamps, [1899] AC 99 the
joint use of the words "mean and include" can have this ef(ect. He
said, in a passage quoted with approval in earlier decisions of this
Ii> Court:

Sect. 2 is, beyond all question, an interpretation clauses,
and must have been intended by the Legislature to be taken
into account in construing the expression "charitable
device or bequest," as it occurs ins. 3. It is not said in terms
that "charitable bequest" shall mean one or other of the
things which are enumerated, but that it shall "include"
them. The word "include" is very generally used in
interpretation clauses in order to enlarge the meaning of
words or phrases occurring in the body of the statute; and
when it is so used these words or phrases must be construed
as comprehending, not only such things as they signify
according to their natural import, but also. those things
which the interpretation clause declares that they shall
include. But the word "include" is susceptible of another
construcfion, which may become imperative, if the context
of the Act is sufficient to show that it was not merely
. employed for the purpose of adding to the natural signi-
ficance of the words or expressions defined. It may be equi-
valent to "mean and include" and in that case it may afford
an exhaustive explanation of the meaning which, for the
purposes of the Act, must invariably be attached to these
words or expressions."
H (Underlining ours)
·'
• MAHALAKSHMIOILMILLS v. STATE OF A.P. [RANGANATHAN, J.] 1095
~
13. ·Looking, therefore, at the terms of the definition more
A
closely, it is quite clear that tobacco seeds do not fall within the second
or inclusive part of the definition. This part of the definition is im-
portant. It specifically excludes from .. the definition any part of the
tobacco plant so long as it is still attached to the earth. It makes
mention only of parts of the plant after it is severed from the earth. It
is common knowledge that when a plant is severed from the earth, its B
-
parts will comprise of not only the leaves, stalks and stems but also the
· seeds. Yet the inclusive part of the definition enumerates only the
leaves, stalks and stems and, deliberately one should think, avoids
mention of seeds.

14. Can then the words 'tobacco' and 'any form of tobacco' in
the first part of the definition be given a wider .meaning and read as c
including the seeds also, particularly as it talks of tobacco in any form,
cured or uncured, manufactured or unmanufactured? We do not think
they can be for several reasons. In the first place, tobacco seeds hardly
answer ICY the description of either the 'expression 'manufactured to-
bacco' or the expression 'unmanufactured tobacco' in their ordinary D
connotation; and the expression 'cured or uncured' cannot also be
associated with tobacco seeds. The expression used in the first part of
the definition, though very wide, is, therefore, singularly inappropriate
to take within its purview tobacco seeds as well. Secondly, the defini-
tion occurs in a statute levying excise duty which is concerned not with
the parts of a plant grown on the field but with the use to which those E
parts are put or can be put after severance. The legislature could not
but have been aware that if the leaves, stalk and stem of the tobacco
plant are used for manufacturing cured tobacco, biris, cigarettes and
so on, the seed is also used to produce oil and cake. It takes care to
mention the first three items which are used iri the manufacture of
some forms of tobacco consumption which are also enumerated but F
refrains from referring to seeds which it would have done had it been
intended to Include the oil and cake also for purposes of the levy. The
categories of unmanufactured tobacco enumerated in the entry in· the
Schedule include 'stalks' but not 'seeds'. This also. indicates that seeds
are not intended to be included. In other words, the omission of the
word 'seeds' from the second part of the definition casts its shadow on G
the first part as well. Indeed it rather looks as if the second part of the
definition is intended to restrict rather than expand the scope of the
first part. Thirdly, it is to be noticed that the first part of definition is
i somewhat restrictively worded. It could have said, for instance, that
'tobacco'-.means any part of the tobacco plant and includes its leaves,
stalks and stems after the plant is severed from the earth. What it does H
SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A say is, however, different. The present definition, when it·says that
!•
tobacco means any form of tobacco lays emphasis that the item under
consideration should be tobacco inform. The leaves, stalks and stems,
even after drying, curing and other processes and even 'manufacture'
retain the form of tobacco, as understood in common parlance .. But it
is otherwise with the seeds. They are not tobacco in form. They do not
B have the properties of tobacco. They are not used to exploit the
narcotic qualities of tobacco. Apart from their use for seeding
purposes, the seeds are only used for the manufacture of oil and cake.
We are told that the oil is used as an ingredient in the manufacture of
scents and the cake as manure. Having regard to all this, we agree with
the High Court that tobacco seed once it is separated from the plant, is
C an item entirely different from tobacco and does not fall within the
expression 'tobacco or any form
.
of tobacco'.
,
15. We would like to add that, even if by stretching the language
somewhat, tobacco seeds can be brought within the first part of the
definition, the oil and cake we are concerned with here cannot. This
D again, we say, for two reasons. In the first place, as discussed earlier,
tobacco seed oil or cake can hardly be said to be a form of the tobacco
seed. It is true that one can say that it is the contents of the seed that
have manifested themselves, on being crushed, into two forms-the oil
and the cake. But this is not enough. The definition requires that the
item in question should be a form of the tobacco seeds that is man-
E ufactured. While, as already pointed out, the leaves, stalks and stems
even after manufacture retain the form of tobacco, the complete
metamorphosis of the seed on its manufacture renders it impossible to
describe the oil and cake as a form of the tobacco seed. Secondly, in
our view, we should take note of the circumstance that earlier theitem
in Schedule IV covered not only tobacco but all its products. Never-
F theless. it was held not to include the oil and cake. The legislature has
subsequently amended the provision by deleting the reference to "all
products of tobacco". In this context of an abridgement of the defini-
tion, it will not be correct, in our view, to construe the item so as to
bring tobacco seed oil and cake within the scope of the exemption.

G 16. Sri Choudhary points out that, if the contention of the asses-
sees were accepted, they would be only iumping, as it were, from the
frying pan into the fire. Since the item of exemption under the Act is
worded identically with the item of the levy under the 1944 and 1957
Acts, the effect of accepting the assessees' claim for exemption would
be to automatically catapult them into the levy of excise and additional
H excise duties as well ~ into the rigours of the restrictions and regula-
MAHALAKSHMIOILMILLS v. STATE OF A.P. (RANGANATHAN,J.} 1097

tipns prescribed under those enactments. True, the consideration that A
if the oil and cake fall under item,7, such consequences as have been
mentioned will follow cannot really guide or deter us in construing the
definition. However the fact that the oil and cake have not been con-
sidered to be excisable commodities for the past several years is an
indication as to how the legislature and the administration have under-
stood and applied these provisions all along.
B

J 17. Certain other judicial decisions were cited by both parties
but we are not discussing them. They neither directly deal with the
point before us nor do they deal with definitions or situations which
furnish a useful analogy for comparison.
c
18. For the reasons discussed above, we affirm the view taken by
the High Court and dismiss these appeals and petitions. We, however,
make no orders as to costs.

R.S.S. Appeals dismissed.