Deputy Commissioner (Sales Tax) vs R.A. Akbar Alikhan and Abdul Ruheem and Co.

Ramaprasada Rao, J.—This tax case is directed against the, order of the Sales Tax Appellate Tribunal, Pondicherry, dated 30th September,

1969. The assessment year is 1966-67 and the product in discussion and which is the subject-matter in this tax case is leco, admittedly

manufactured by the Neyveli Lignite Corporation. The respondent is a dealer in leco and he was assessed finally for the year 1966-67 on a taxable

turnover of Rs. 1,20,807.82. Certain exemptions were also granted to him. Ultimately, the taxable turnover comprised inter alia the following sales:

Sales of leco Rs. 81,578.98"". A tax at the rate of 2 per cent. single point was imposed thereon by the taxing authorities and that was sustained by

the Appellate Assistant Commissioner on the ground that leco comes under ""coke in all its forms"" and, therefore, rightly assessable at 2 per cent.

single point. The Appellate Assistant Commissioner was of the view that in view of the specific provision in the Pondicherry General Sales Tax Act

(6 of 1967), hereinafter referred to as the Act, the commodity known as leco was taxable. He relied upon the text of item 18 of Schedule III to the

said Act which granted an exemption from tax to products such as firewood and charcoal. Interpreting such an item in the schedule, the Appellate

Assistant Commissioner was of the view that leco was not charcoal and, therefore, the assessee could not get the benefit of the exemption, and

accordingly, brought the turnover into the net of taxation. On a second appeal to the Sales Tax Appellate Tribunal, the Tribunal reversed the order

of the Appellate Assistant Commissioner holding that leco as ordinarily understood is charcoal and it could be classified as domestic fuel and it

gains the exemption under item 18 of Schedule III of the Act. As against this, the tax case has been filed by the State of Pondicherry represented

by the Deputy Commissioner (Sales Tax), Pondicherry.

The learned Government Pleader contends that leco has a geological origin being a product won from the earth and, therefore, it cannot be

classified as charcoal within the meaning of item 18 of Schedule III of the Pondicherry General Sales Tax Act. He tries to distinguish the ratio of

the decision of the Supreme Court rendered in Commissioner of Sales Tax, Madhya Pradesh Vs. Jaswant Singh Charan Singh, . He would

factually argue that the commodity in question being a by-product in the course of manufacture of lignite by a particular corporation, it cannot be

understood as a substitute or the equivalent of charcoal and, therefore, the Tribunal''s order is wrong.

It is no doubt true that under item 18 of Schedule III of the Pondicherry General Sales Tax Act, 1967, an exemption is granted to commodities

named therein as firewood and charcoal. It is, therefore, necessary for the appellant in this tax case to establish factually that leco is not charcoal.

The argument advanced is that leco being a by-product in the course of manufacture of lignite and as such manufacture involves experimentation on

the earth and extraction of the main chemical from and out of the said process, even the byproduct should, therefore, be geologically understood as

one which has been so extracted from the earth, and thus, understood, leco cannot be charcoal. This contention appears to be artificial. In a taxing

statute, if a word is used and if that word is a popular one and has a commercial meaning, then it is by far settled that such popular meaning or the

commercial understanding of that word should prevail in spite of the meaning that the word might secure by the application of the principles of

geology, physics or chemistry. As a matter of fact, the judgment of the Supreme Court in Commissioner of Sales Tax, M.P. v. Jaswant Singh

Charan Singh affirmed the judgment of the learned Judges of the Madhya Pradesh High Court in Commissioner of Saks Tax, M.P. v. Jaswant

Singh Charan Singh [1966] 17 S.T.C. 527 . There, the learned Judges had occasion to consider the import of the word ""coal"" as originally

understood in England. They were of the view that even in the west the word ""coal"" was sufficiently wide enough to include charcoal. It is

indisputable that coal in its geological sense is a product which is extracted from good earth. But nevertheless even in England and even according

to the dictionary"", ""coal"" has been understood as a combustible carbonaceous rock derived from vegetable matter. The learned Judges also said

that in India the English word ""coal"" as used in commerce includes charcoal. To a similar effect is the observation of the learned Judges of the

Supreme Court, who were construing the word ""coal"" in entry 1 of Part III of Schedule II of the Madhya Pradesh General Sales Tax Act (2 of

1959). They stated:

A sales tax statute, being one levying a tax on goods, must, in the absence of a technical term or a term of science or art, be presumed to have

used an ordinary term as ''coal'' according to the meaning ascribed to it in common parlance. Viewed from that angle, both the merchant dealing in

coal and consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include

''charcoal'' in the term ''coal''.

In the instant case, it is common knowledge that leco, which is an expression which is of recent origin, has never been understood as anything

otherwise than as domestic fuel. The learned Government Pleader concedes that there is no other user of leco otherwise than as combustible

material used as charcoal. Such is the popular and the commercial understanding of the expression. The learned Tribunal rightly relied upon the

elucidation of the product as given by the Neyveli Lignite Corporation Ltd., in its letter dated 12th September, 1969. Therein, the Corporation

says that leco is produced from lignite by a process of briquetting and carbonisation, and that leco is a product obtained from lignite after a certain

process and after certain substances are extracted from it, such as phenyl, tar and linoleum, etc. Thus, it is clear that even the manufacturer of this

new product has understood it and treated it as fuel corresponding to charcoal. In the light of the pronouncement of the Supreme Court under

similar circumstances and in view of the factual situation that leco in common parlance is fuel, we are unable to appreciate as to how and in what

respect the order of the Tribunal is wrong. We confirm the order of the Sales Tax Appellate Tribunal, Pondicherry, and the tax case is dismissed.