STATE OF JHARKHAND & ORS.versusM/S.LAOPALAR.G. LTD.

                        [2014] 14 S.C.R. 306


A                 STATE OF JHARKHAND & ORS.
                                   v.
                      M/S.LAOPALAR.G. LTD.
                   (Civil Appeal No. 2240 of2006)
B
                          MARCH 27, 2014
               [1-J. L.
                     .        .
                        DATTlJ ANDS. A. BOBDE, JJ.]
          Central Sales Tax Act, 1956- s:8(5)(b) - Notification
    issued under - Construction and applicability of -
C Respondent-dealer engaged in manufacture of glassware -
    Industrial unit of respondent-dealer situated in Jharkhand-
    State Government issued notification S. 0. No. 25 , dated
    25. 06. 2001 directing that tax payable in respect of sale of all
    "types of glass and glass sheets" in course of interstate sale
D or commerce.from any place of business in the State of
    Jharkhand shall be calculated at the rate of 3% -
    Respondent-dealer claimed benefit of reduced rate of tax
    under the notification contending that glassware
  · manufactured by it is a form of glass and forms of glass are
E also covered by the notification - Assessing Authority
    rejected the stand of respondent-dealer -High court, however,
    held that glassware manufactured by respondent-dealer is a
    type of glass and therefore, it is entitled to benefit of reduced
    rate of tax under the notification - Held: It is settled rule of
F construction of a notification that at the outset a strict
    approach ought to be adopted in administering whether a
    dealer/manufacturer is covered by it at all and if the dealer/
  ·manufacturer is covered by it at all and if the dealer/
    manufacturer falls within the notification, then provisions of
G the notification be liberally construed - In the instant case,
    the State Government while issuing the notification used the
    expression :types of glass and not the expression "forms of
    glass" - In taxing statues the terms and expressions must
    be seen in their common and popular parlance, the two words
H
                                  306.
   STATE OF JHARKHANDv. M/S.LAOPALAR.G. LTD..                   307


"type" and "form", the distinguishable feature in the particular A
way in which the items exist- The expression "types of glass"
could not have been intended to refer to or include "forms of
glass" - Glassware manufactured by respondent-dealer
though made of glass cannot be considered or called as "type
of glass" and since the notification only provided for reduction B
in the rate of tax of types of glass and not for "forms of glass"
which is manufactured by the respondent as glassware, the
respondent would not be covered by the notification - Bihar
Finance Act, 1981 .:.. s. 16.
     Union oflndia v. Wood Papers Ltd. (1990) 4 SCC             c
     256: 1990 (2) SCR 659; .Gammon (I) Ltd. v.
     Commr. of Customs (2011) 12 SCC 499: 2011
     (7) SCR 195; Tata Iron & Steel Co. Ltd. v. State of
     Jharkhend, Kartar Rolling Mills v. CCE, Eagle
     Flask Industries Ltd. v. CCE, Govt. of India v. Indian     D
     Tobacco Assn. (2005) 7 SCC 396: 2005 (2)
     Suppl. SCR 859; Collector of Customs
     (Preventive) v. Ma/wa Industries Ltd. (2009) 12.
     SCC 73~: 2009 (2) SCR 120- referred to.
                                                                E
     Oxford Dictionary and Macniil/ian Dictionary -
     referred to.                                 ·
                     Case Law Reference:
     1990 (2) SCR 659               referred to       Para 20
                                                                F
     2011 (7) SCR 195               referred to       Para 21
     2005 (2) Sup~CR 859            referred to       Para 23
     2009 (2) SCR 120               referred to       Para 23
     CIVIL APPELLATE JURISDICTION: Civil Appeal No.             G
2240 of 2006.
      From the judgment and order dated 22.06.2005 of the
High Court of Jharkhand at Ranchi in W. P. (T) No. 4572 of
2004.
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308         SUPREME COURT REPORTS                    [2014] 14 S.C.R.


 A         Jayesh Gaurav (for Krishnanand Pandeya), Adv., for the
      Appellants.
           S. D. Sanjay, Sr. Advocate, and Ravi Bharuka (for Dr.
      Sushil Balwada),.Adv. forthe Respondent.
           The following Order of the Court was passed:
 B
                                 ORDER
         .. 1. This appeal is directed against the judgment and order
   passed by the High Court of Jharkhand at Ranchi in W.P. (T]
   No.4572 of 2004, dated· 22.06.2005. By the impugned
 C judgment and order, the H.igh Court has set aside the letter
   issued by the Assistant Commissioner of Commercial Taxes,
   Deog;:irh Circle, dated 13.05.2004, whereby the Assessing
   Authority has rejected the stand of the respondent-dealer that
   it is eligible to pay reduced rate of tax under the notification
 D S.O. No.25 (for ·short, "the notification") issued by the
   Government of Jharkhand, dated 25.06.2001 and directed the
   respondent-dealer to deposit taxes in relation to inter-State
   sales at the rate of 4 %.        '
           2. The possible construction that could b~ placed on the
- E   aforesaid notification is the subject matter of this appeal.
           3. The conspectus of facts is: the respondent-dealer is a
      Public Limited Company incorporated under the provisions of
      the Companies Act, 1956 engaged in the manufacture of glass
      and glassware made of Opal glass. The industrial unit of the
 F    respondent-dealer is situated at Madhupur in Deoghar district;
      Jharkhand.
         4. The respondent-dealer is a cre;ler registered under
   the provisions of the Bihar Finance Act, 1981 and the Central
 G Sales Tax Act, 1956 ("the Act'', for short).
            5. The State Government, in exercise of its powers under
      clause (b) of sub-section 5 of Section 8 of the Act has issued
      the notification. Since the construction of the notification is in
      issue, we deem it appropriate to extract the notification. It reads
 H    as under:
   STATE OF JHARKHANDv. M/S.LAOPALAR.G. LTD.                         309


      "S.0.25, dated the 25 1h June, 2001 - In exercise of the A
      powers conferred by clause (b) of sub-section (5) of
      Section Bf of the Central Sales Tax Act, 1956 (Act 74 of
      1958) the Governor of Jharkhand is pleased to direct
      that tax payable under sub-section ( 1) or (2) of Section 8
      of the said Act in respect of Sale of all types of glass and B
      glass sheets in the course of interstate sale or commerce
    · from any place of business in the State of Jharkhand shall
      be calculated at the rate of three per centum and no
      statutory form in this regard shall be required.
      2. This notification shall come into force with effect from    C
      161h June, 2001."
     6. Immediately after issuance of the notification, the
respondent-dealer by letter dated 27 .05.2002 had informed
the authorities under theAct, that, since the resporident:.clealer
would be covered by the notification, the rate of tax payable        0
on glassware in inter-state sales would be at the reduced rate
of 3%. Unfortunately, the authorities did not respond to the
request so made by the dealer.
      7. Later, the authorities issued a letter dated 09.01.2004     E
to the respondent manufacturer, inter a/ia, directing him to
deposit the tax in relation to its transactions in respect of the
inter-state sales to registered and unregistered dealers at the
rate of 4% and 12%, respectively: The respondent was also
directed to show-cause as to why a penalty under Sections 16         F
and 16(9) of the Bihar Finance Act, 1981 and the Act should
not be imposed and the respondent not be. directed to correct
the returns and deposit tax at the rate of 4%, if the sales is
effected to registered dealers and at the rate of 12% if the
inter-state sale is effected to un-registered dealers.
                                                                     G
     8. The respondent-dealer had filed its reply, dated
16.01.2004, wherein it took the stand that it was liable to
charge and deposit tax at the rate of 3 per cent on sale in the
course of inter-state trade in respect of its products; that the
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310         SUPREME COURT REPORTS                     [2014] 14 S.C.R.


 A    returns had been correctly filed and that the tax was validly
      deposited at the rate of.3 per cent.
            9. After the issuance of the aforesaid letter/notice, the
      authorities by their letter dated 13.05.2004, rejected its stand
      and informed that the respondent would be liable to pay tax at
 B    the rate of 4 per cent on its inter-state sales if made to a
      registered dealer and at the rate of 12 per cent if made to an
      unregistered dealer.
         10. Further, the respondent-assessee was informed by
   the authorities that the product manufactured by him is
·C
   glassware and, therefore, not covered under the notification
   by letter dated 13.07.2004.
            11. The respondent-dealer, being aggrieved by the
      communications dated 09.01.2004, 13.05.2004 and
 0    13.07.2004 had filed a Writ Petition before the High Court,
      inter alia, requesting the Court to issue a writ in the nature of
      certiorari to quash the aforesaid letters and direct the
      authorities under the Act to extend the benefit of the notification,
      which has come into force, with effect from 16.06.2001.
 E           12. The High Court, after a detailed consideration of the
      issue before them, has come to the conclusion that the
      glassware manufactured by the respondent-dealer is a type
      of g.lass and therefore, it is entitled to the benefit of reduced
      rate of tax under the notification and, accordingly, has quashed
 F    the said letters.
          13. Being aggrieved by the sa.id order of the Division
      Bench of the High Cou.rt, the State is before us in this appeal.
         14. We have heard Shri Jayesh Gaurav, learned counsel
   for the appellant-State and. Shri S.D. Sanjay, learned senior
 G counsel for the respondent-dealer. We have carefully perused
   the documents on record and the judgment and order impugned
   herein.
         15. Shri Gaurav would submit that the expression "types
 H of glass" as used in the notification would not include the
   STATE OF JHARKHAND v. MIS.LA OPALA R.G. LTD.                      311


product in question as it is merely a "form of glass". He would A -
provide us with some information in respect of types of glasses
being classified into nine types: 1)Soda glass or soda-lime
glass, 2)Coloured glass, 3)Plate glass, 4)Safety glass,
5)Laminated glass, 6)0ptical glass, ?)Pyrex glass, 8)Photo-
chromatic glass, and 9)Lead crystal glass. He would therefore B
contend that the product, "glassware" not being any of the
aforesaid types of glass but another form of glass would not
be entitled to benefit of the notification and that the High Court
has erred in its conclusion.
       16: Per contra, Shri S.D. Sanjay, learned senior counsel C
would justify the judgment and order passed by the High Court
and submit that the products of the respondent-dealer are
covered by the notification as "glassware" is the product in
which different components are fused together to give glass
its final form in accordance with the moulds in which they are D
manufactured, such as crockery, vases, etc. and therefore,
would fall in the category of ''types of glass". He would further
submit that in taxing statutes, a notification in the nature of
granting tax incentives for the promotion of economic growth
and development ought to be liberally construed and given a E
purposive interpretation.
      17.As we have indicated earlier, the short point that falls
for our consideration and decision in the case is the possible
construction that could be placed on the expression "types of
glass and glass-sheets" as contained in the notification issued      F
by the State Government in exercise of its powers under
Section 8(5)(b) oftheAct.
     18. It is relevant to notice the contents of the notification
issued by the State Government. A dissection of the notification     G
would indicate the following, namely:
     a) the Governor of Jharkhand in exercise of his powers
     under clause (b) of sub-section (5) of Section 8 of the
     Act has issued the notification;
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312        SUPREME COURT REPORTS                  [2014] 14 S.C.R.


- A       b) the notification speaks of reduction of the rate of tax
          under the Act;
          c) the reduced rate of tax is from 4% to 3%;
          d) the notification further provides that no statutory forms
          are required for the sale of the types of glass or glass
 B
          sheets which are made to the registered dealers under
          the Act;               ·
                  "j                         ·~            •


          e) if the sales of "all types of glass and glass-sheets" are
          made to unregistered dealers then the rate of tax would
 c        be at 12 per cent.        .,
         19. We do not concur with the proposition put forth by
   Shri S.D. Sanjay, learned senior counsel that a notification
   which grants tax incentives should to be liberally construed in
   support of his submission. It is settled rule of construction of a
 D notification that at the outs.et a strict approach ought to be
   adopted in administering whether a dealer/ manufacturer is
   covered by it at all and if the dealer/manufacturer falls within
   the notification, then the provisions of the notification be
   liberally construed.           '        •               '
                           •'
 E         20. Literally speaking, an exemption is freedom from any
   liability, payment of tax or duty. It may assume different
   applications in a growing economy such as provisioning for
   tax holiday to new units, concessional rate of tax to goods or
   persons for a limited period under specific conditions and ·
 F therefore, in Union of lndia'v. Wood Papers Ltd., (1990) 4
                                    I                       '
   SCC 256 this Court has observed that construction of an
   exemption notification or an exemption clause in contrast with
   the charging provision has to be tested on different touchstone
   and held that the eligibility clause in relation to an exemption
 G notification is given strict meaning and the notification has to
   be interpreted in terms of its language, however, once an
   assessee satisfies the eligibility clause, the exemption clause
   therein may be construed literally. This Court has explained
   the rationale of adopting the said approach as under:
 H
   STATE OF JHARKHANDv. M/S.LAOPALAR.G. LTD.                        313


     "4 .... In fact an exemption provision is like an exception A
     and on normal principle of construction or interpretation
     of statutes it is construed strictly either because of
     legislative intention or on economic justification of
     inequitable burden or progressive approach of fiscal
     provisions intended to augment State revenue. But once B
     exception or exemption becomes applicable no rule or
     principle requires it to be construed strictly. Truly speaking
     liberal and strict construction of an exemption provision
     are to be invoked at different stages of interpreting it.
     When the question is whether a subject falls in the c
     notification or in the exemption clause then it being in
     nature of exception is to be construed strictly and against
     the subject but once ambiguity or doubt about applicability
     is lifted and the subject falls in the notification then full·
     play should be given to it and it calls for a wider and liberal D
     construction ... "
      21. This Court in Gammon (I) Ltd. v. Commr. of Customs,
(2011) 12 sec 499 while rejecting the plea of the appellant
that the exemption notification should receive a liberal
construction to further the object underlying it relied upon the    E· ·
decision of a Three-Judge Bench of this Court in Novopan
India Ltd., which stated the aforesaid principle and the object
behind adopting literal interpretation in determining eligibility
for claiming exemption or exception from tax as follows:
     "16 . ... The principle that in case of ambiguity, a taxing    F
    . statute sho"uld be construed in favour of the assessee-
      assuming that the said principle is good and sound-·
      does not apply to the construction of an exception or an
      exempting provision; they have to be construed strictly.
      A person invoking an exception or an exemption G
      provision to relieve him of the tax liability must establish
      clearly that he is covered by the said provision. Iii case
      of doubt or ambiguity, benefit of it must go to the State.
      This is for th~ reason explained in Mangalore ·
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314           SUPREME COURT REPORTS                      [2014] 14 S.C.R.


A           Chemicals and other decisions viz. each such
           .exception/exemption increases the tax burden on other
            members of the community correspondingly. Once, of
            course, the provision is found applicable to him, full
            effect must be given to it. As observed by a Constitution
B           Bench of this Court in Hansraj Gordhandas v. CCE and
            Customs that such a notification has to be interpreted in
            the light of the words employed by it and not on any other
            basis. This was so held in the context of the principle
            that in a taxing statute, there is no room for any
C           intendment, that regard must be had to the clear meaning
            of the words and that the matter should be governed
            wholly by the language of the notification i.e. by the plain
          . terms of the exemption."
                                                     (emphasis supplied)
D             22. In CCE v. Mahaan Dairies this Court has observed
      that·
                                       I                            .
              "8. It is settled law that in order to claim benefit of a
              notification, a party must strictly comply with the terms of
              the notification. If on wording of the notification the benefit.
E
              is not available then by stretching the wo-rds of the
              notification or by adding words to the notification benefit
              cannot be conferred."
       23. CCE v. Bhalla Enterprises laid down a proposition
F that notification has to be construed on the basis of the
  language used.AsimilarvieWhas been expressed by a Division
  Bench of this Court in Tata 'iron & Steel Co. Ltd. v. State of
  Jharkhand, Kartar Rolling Mills v. CCE, Eagle Flask
  Industries Ltd. v. CCE, Govt. oflndia v. Indian Tobacco Assn.,
G (2005) 7 SCC 396, Collec'tor of Customs (Preventive) .v.
  Malwa Industries Ltd,, (2009) .12 SCC 735 and CCE v.
  Rukmani Pakkwell Traders.
            24. Having said that, we would now examine whether
      the notification would at all be applicable to the sale of product
H     in question.
     STATE OF JHARKHANDv. M/S.LAOPALAR.G. LTD.                       315


       25. In the instant case, the State Government has issued      A
 a notification and has used the expression "types of glass"
 and not the expression "forms of glass". Therefore, what
 requires to be examined is whether the two terms would be
 identical in their connotation and import.
        26. It is a settled law that in taxing statutes the terms and B ·
  expressions must be seen in their common and popular
  parlance and not be attributed their scientific or technical
  meanings. In common parlance, the two words "type" and "form"
  are not of the same import. According to the Oxford Dictionary,
  whereas the meaning of the expression_"types" is "kind, class, C
  breed, group, family, genus"; the meaning of the word"form" is
  "visible shape or configuration of something" or the "style,
  design, and arrangement in an artistic work as distinct from
  its content". Similarly, Macmil/ian Dictionary defines "type" as
  "~™of people or things with similar qualities or features D
  that make them different from other <iroups" and "form" as "the
  particular.way in which something appears or exists or a shape
· of someone or something." Therefore, "types" are based on
  the broad nature of the item intended to be classified and in
  terms of "forms", the distinguishable feature is the particular E
  way in which the items exi'st. An example could be the item
  "wax". The types of wax would include animal, vegetable,
  petroleum, mineral or synthetic wax whereas the form of wax
   could be candles, lubricant wax, sealing wax, etc.
        27. Admittedly, glassware is a forin of glass and it is F
  contended by the assessee that forms of glass are also
  covered by the said notification. The term glassware wowld
  generally encompass ornaments, objects and articles made
  from glass. The New Oxford Dictionary, the Merriam-Webster
  Dictionary and the Macmillian Dictionary refer to the said G
  general meaning while defining it. Glassware would include
  crockery such as drinking vessels (drinkware) and tableware
' and general glass items such as vases, pots, etc. Therefore, it
  cannot be accepted that the expression "types of glass" could
  have been intended to refer to or include "forms of glass".     H
316         SUPREME COURT REPORTS                 [2014] 14 S.C.R.


A .       28. In the present case, the respondent-dealer is a
    manufacturer of glassware. In our considered view, the
    glassware so manufacture'd by the respondent-dealer though
    made of glass cannot be considered or called as a "type of
    glass" in light of the aforesaid discussion and since the
B notification only provides for the reduction in the rate of tax of
    types of glass and notfor"forms of glass" which is manufactured
    by the respondent as glassware, the respondent would not be
    covered by the notification. Keeping that aspect in mind, we
    hold that the respondent-dealer, a manufacturer of articles of
C · glass, is not entitled to derive the benefit of the notification
    issued by the State Government, dated 25.06.2001. In that view
    of the matter; we cannot sustain the impugned judgment and
    order passed by the High Court.
         · 29. In the result, we allow this appeal and set aside the
D judgment and order passed by the High Court.
        · . 30. Since the matter' was pending for quite some time,
      we direct the appellants not to levy penalty while recovering
      the difference of tax payable only for the assessment years
      2002-2003 to 2005-2006.
 E
            No order as to costs.
          . Ordered accordingly.


      Sibhuti Bhushan Bose                             Appeal allowed.