AI Structured Summary
Not yet generated for this judgment
Judgment
K. Jayachandra Reddy, J.—The common question of law that arises for consideration in all these writ petitions is whether the agarbathies fall under the category of perfumes and is liable to sales tax under item 36 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act" for short).
All these petitioners carry on business in agarbathies and other goods and are registered dealers. They have been paying sales tax on sales of agarbathies as general goods taxable at every point of sale at 4 per cent up to July 8, 1983 and 5 per cent from July 8, 1983. While so, by the Andhra Pradesh General Sales Tax Amendment Act 18 of 1985, item 36 of the First Schedule to the Act has been amended as follows :
"Cosmetics and toilet preparations, including scents, perfumes, face-powders, talcum powders, hair-tonics, hair-oils, hair lotion, fact creams and snows, pomades, depilatories, tooth-powder, tooth-paste and tooth brushes."
Before this amendment which came into force from July 1, 1985, the words "scents and perfumes" were not there. Even after the amendment, the petitioners have been paying tax on the sale of agarbathies as general goods at 5 per cent only. While so, the Commercial Tax Officers provisionally taxed them at 10 per cent purporting to be as provided under item 36 of the First Schedule referred to above. They also issued notices to the petitioners proposing to provisionally tax the sale of agarbathies at 10 per cent for the month of February, 1986. Apprehending that the respondent (Commercial Tax Officer) is likely to issue similarly notices for each month, the petitioners have filed these writ petitions. It is submitted that agarbathies which are called as incense sticks are used mostly to keep the atmosphere fragrant and are used normally for religious purposes by person of all religions and they do not come under the category of "scents and perfumes" used in item 36 of the First Schedule which has to be read in the context of the main entry, viz., cosmetics and toilet preparations and applying the principle of ejusdem generais, the word "perfumes" in item 36 should be understood along with companion expressions, like face creams, snows, pomades, depilatories, tooth-powder, tooth-paste, etc., which are luxury goods and the agarbathies in that sense cannot come under the category of perfumes because it is not luxury goods nor does it come under cosmetics and toilet preparations and, therefore, it cannot be charged to tax under item 36 and can be taxed only as general goods.
The learned Government Pleader submitted that the agarbathies come under the category of perfume as held by the Supreme Court in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151 and reliance is also placed on the decision of the Orissa High Court in Kamaru Zuman Khan v. State of Orissa 1981 47 STC 22 which was given following the judgment of the Supreme Court in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151.
We shall first examine the decisions wherein this question arose directly. In Commissioner of Sales Tax v. India Herbs Research and Supply Co. 1970 25 STC 151, their Lordships of the Supreme Court considered the meaning of the word "perfume" and whether the same includes "dhoop and dhoop-battis". It was contended on behalf of the department that dhoop-battis which are the same as agarbathies do not come with the category of scents but they come within the category of perfumes. Their Lordships referred to Oxford English Dictionary for the meaning of the word "perfume". In Oxford English Dictionary the word "perfume" is defined as follows :
"Perfium, perfium, sb. Also 6 par -) a. F. perfume 1528 in Laborde Gloss.), = Obs. It, perfumo, Sp. perfumo, sb. from obs. It. perfumare, Sp. perfumer, F. perfumer : 1. a. Orig. The odorous fumes or vapour given off by the burning of any substance, esp. by such as emit an agreeable odour, as incense. b. Hence, the volatile particles, scent, or odour emitted by any sweet-smelling substance; the fragrance diffused by liquid scent, exhaled by flowers, etc., 2. A substance, natural or prepared, which emits, or is capable of emitting an agreeable odour; a fluid containing the essence of flowers or other odorous substances; scent, Orig. applied to such as diffuse a sweet-smelling odour when burned."
Their Lordships of the Supreme Court, after examining the meaning of the word "perfume" as given in the Oxford English Dictionary, observed : "The word ''perfume'' originates from the word ''fumare'' which means to ''smoke'' or to emit vapour given off by some burning substance. In Encyclopaedia Britannica, Volume 17, 1965 Edition, at page 505, it is similarly pointed out that the literal meaning of the word ''incense'' is the same as ''perfume'' but ''perfume'' has later on acquired an extended meaning so as to include anything sweet from smoking incense to fragrance of flowers."
Their Lordships of the Supreme Court held that dhoop-battis fall within the category of perfume. In Kamaru Zuman Khan v. State of Orissa 1981 47 STC 22, a Division Bench of the Orissa High Court consisting of Ranganath Misra, J. (as he then was) and K. B. Panda, J., following the judgment of Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 151 (SC) held that agarbathies can be taxed as an article of perfumery. The Bench observed as follows :
"The Supreme Court decision directly dealt with this question. Whether ''perfume'' in its ordinary sense would cover dhoop and dhoop-batti was the question for consideration and the learned Judges held that dhoop and dhoop-batti fell within the category of ''perfume''. There can be no argument that ''perfume'' and ''perfumery'' are different classifications. If agarbatti is ''perfume'', it would be covered under the classification of ''perfumery'' included in the Orissa Act as item of taxable luxury goods and the Supreme Court decision concluded this question."
In the instant case prior to February 1, 1987, there was no separate entry for agarbathies. By G.O. Ms. No. 85 Revenue dated January 27, 1987, which came into force with effect from February 1, 1987, an entry 173 is added and that covers agarbathies and they are taxable at 6 per cent. Prior to that the question is whether item 36 is attracted. The decisions in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151 (SC) and Kamaru Zuman Khan v. State of Orissa 1981 47 STC 22 (Ori) clinch the issue, namely, that the agarbathies are covered under the classification of "perfumery" and they are liable to be taxed under item 36.
The learned counsel for the petitioners submitted that the abovesaid judgment of the Supreme Court is distinguishable and reliance is placed on the decisions of some of the High Courts. In Assessing Authority v. Amir Chand Om Parkash 1974 33 STC 120, a Division Bench of the Punjab and Haryana High Court considered the question whether dhoop and agarbatthies are items of perfumery so as to come within the entry dealing with luxury goods. In that case, section 5 of the Punjab General Sales Tax Act, 1948, was relevant which laid down that before any item can be subjected to the enhanced rate of sales tax, as given therein, it is not only necessary that it must be luxury goods, but it must also be specified in Schedule A to the Act, and therefore, when an entry is made in Schedule A in the form of a generic term, it is open to the court to decide, whether a particular item answering that general description is or is not a "luxury item". In that view of the matter, the Division Bench, after referring to Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151 (SC), considered whether dhoop and agarbathies were luxury item by virtue of the application of section 5 of the Punjab General Sales Tax Act. The Division Bench referred to the abovesaid judgment of the Supreme Court and observed that there is no provision in the U.P. Sales Tax Act, 1948, that the State Government should make this declaration only in respect of luxury goods, and that the decision of the Supreme Court referred to above is of no assistance. The learned counsel for the petitioners submits that the same principle should be applied to the instant case also. We are unable to agree. No doubt, the decision in Assessing Authority and Another Vs. Amir Chand Om Parkash, deals with a case of agarbathies, but there having regard to the language of section 5 of the Punjab General Sales Tax Act, the Division Bench observed that there was no similar provision under the U.P. Sales Tax Act in respect of luxury goods. In this view of the matter, the Division Bench of the Punjab and Haryana High Court observed thus :
"According to the proviso to sub-section (1) of section 5 of the Act, before any item can be subjected to the enhanced rate of sales tax, as given therein, it is not only necessary that it must be luxury goods but it must also be specified in the Schedule. Thus both these things are necessary. The Legislature included certain goods in Schedule A and in its wisdom delegated the power of adding to, or deleting from, that Schedule to the State Government, but this power has been circumscribed by saying that the State Government can include only ''luxury goods''. Therefore, where the Legislature or the State Government does not mention any specific article, but mentions only a particular type of an article by its generic description, i.e., items made of glass or of leather or perfumery, it must be assumed that while using a wide term in the Schedule, which may cover thousands of varieties of articles, some being of daily necessity and use and the others being item of luxury, the intention of the Legislature or the State Government was to include only those of the items which can be described as ''luxury goods''."
In the Schedule to the A.P. General Sales Tax Act, we find all the kinds of goods and some of them are taxable only by 3 per cent and some of them by 1 per cent and some of them by 10 per cent. Therefore, the distinction bought out by the Division Bench of the Punjab and Haryana High Court in Assessing Authority v. Amir Chand Om Parkash 1974 33 STC 120, regarding the applicability of the ratio laid down in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151 (SC) does not apply to the case before us.
Reliance is also placed on a judgment of the Bombay High Court in Commissioner of Sales Tax v. Gordhandas Tokersey 1983 52 STC 381. In that case, the question that arose was whether sandalwood oil was not perfume within the meaning of the entry 19 of Schedule E to the Bombay Sales Tax Act, 1959. There also, a reference was made to the decision of the Supreme Court in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151. But the Division Bench of the Bombay High Court, however, held that the ratio laid down by the Supreme Court does not apply to the case of sandalwood oil as the same does not come within the meaning of "perfume" and it is also held that "perfume" should be confined only to those objects which emit an agreeable odour in their nature state. In that view, the Division Bench observed that so far as the sandalwood and sandalwood oil are concerned, they have to be used in the most important industries with other substances like soaps, powders, etc., and also in ayurvedic medicinal preparations and, therefore, they do not come within the meaning of "perfume". It can thus be seen that the decision therein has no direct bearing on the question before us.
Yet another decision on which reliance was placed by the learned counsel of the petitioners, it that of a Division Bench of the Madras High Court in A. Boake Roberts and Co. (India) Ltd. v. Board of Revenue (C.T.) 1978 42 STC 270. There also the Division Bench considered the meaning of the word "perfumes" and the question that fell for consideration was whether "synthetic essential oils" would fall within the item which deals with scents and perfumes, powders, snows, etc. The Division Bench ultimately held that synthetic essential oils do not come within the meaning of "perfumes". In arriving at such a conclusion it relied on the decision of a Division Bench of the Kerala High Court in Deputy Commissioner v. Jos Zacharih 1965 16 STC 799 and quoted an extract from that decision which reads as follows :
"By the application of the rule of ejusdem generis the expression ''toilet requisites'' in entry 48 will have to be confined to items coming under the first category, that is, toilet preparations, like scents and perfumes, powders, snows, scented hair-oils, scented sticks, cosmetics and soaps."
Having examined the ratio laid down in that case, we are of the view that that decision is distinguishable. The Division Bench of the Madras High Court was considering the nature of the synthetic essential oils and during the course of the judgment, it is made clear that they cannot by themselves emanate scent or fragrance and on the other hand, they smell pungent and, therefore, the word "perfume", by applying the rule of ejusdem generis, has to be confined to the items coming under the category of toilet preparations like, scents, etc.
In the case of agarbathies, as held by the Supreme Court in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151, they do emit fragrance; the word "perfume" which originates from the word "fumare" means smoke given off by some burning substance. Reliance is also placed upon Balaji General Stores Vs. Deputy Commissioner of Commercial Taxes, Vijayawada, . In that case, the question that came up for consideration was whether the goods "tooth-paste" and "tooth-brushes" were subject to levy of single point sales tax under entry 36 of the First Schedule to the A.P. General Sales Tax Act. In view of the direct decision of the Supreme Court in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 37 STC 151, it is not necessary for us to examine the ratio laid down in that case for the same reasons given above.
The learned counsel for the petitioner also placed reliance on State of Tamil Nadu v. Pyare lal Malhotra 1976 37 STC 319, a judgment of the Supreme Court, and submitted that if the word "includes" is generally employed, the object underlying taxation in that particular entry has to be considered. In that case, the Supreme Court was considering the list of goods given in item No. (iv) of section 14 of the Central Act, namely, pig iron and iron scrap; iron plates and several other items made of iron and steel, which were divided into 16 categories and which embrace different commercial commodities. In that context the meaning of the word "includes" was considered and it was held as follows :
"The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object appears to us to be to tax sales of goods of each variety and not the sale of the substance out of which they are made."
The learned counsel for the petitioners submits that applying the above principle and also applying the rule of ejusdem generis, it must be held that the word "perfumes" is in general and would apply to cosmetics and toilet preparations and not to agarbathies. We cannot accede to this contention in view of the direct decision of the Supreme Court in Commissioner of Sales Tax v. Indian Herbs Research and Supply Co. 1970 25 STC 151. As already noted the Division Bench of the Orissa High Court in Kamaru Zuman Khan v. State of Orissa 1981 47 STC 22, held that agarbathies come within the meaning of "perfume". The only other decision which dealt with agarbathies is Assessing Authority v. Amir Chand Om Parkash 1974 33 STC 120. There the consideration was different in view of the classification of goods as found in the entry. In the instance case, the only simple question that we have to consider is whether agarbathies come within the meaning of "perfume" as included in item 36 of the First Schedule to the A.P. General Sales Tax Act. The Supreme Court has concluded this question.
In the result, the writ petitions are dismissed with costs. Advocate''s fees in each writ petitions : Rs. 50.
Writ petitions dismissed.