K.R. Subbier vs The State of Madras

Ramanujam, J.—The question that arises in this case is as to whether the cotton ropes which are used for tying of cattle, etc., would fall

under the category ""braided cords"" coming under the notification in G.O. No. 3146, Revenue, dated 3rd August, 1962.

The said notification reduced the rate of tax payable by a dealer under the Madras General Skies Tax Act, 1959 (hereinafter referred to as the

Act) in respect of sales of braided cord and tape to 1 per cent, with effect from 22nd August, 1962. The assessee in this case carries on business

in the manufacture and sale of cotton ropes and he was assessed for the year 1962-63 at Rs. 1,95,114.25 of which the turnover of Rs.

1,92,861.82 was taxed at 2 per cent and the balance of Rs. 2,252.43 was taxed at 1 per cent. The assessee preferred an appeal to the appellate

authority challenging the assessment to tax at 2 per cent, in respect of sales of cotton ropes effected from 22nd August, 1962, to 31st March,

1963, amounting to Rs. 1,11,535.33, relying on the above notification which gave the benefit of reduction in the rate of tax to ""braided cord"". The

appellate authority accepted the contention of the assessee that he is entitled to the benefit of the said G.O. for the period after 22nd August, 1962

and modified the assessment. According to the appellate authority, cotton ropes, white as well as coloured, manufactured by the assessee were

liable to be taxed only at 1 per cent, after 22nd August, 1962, in the light of the clarification issued by the Board of Revenue on 17th April, 1963,

to the following effect:

Braided cords and ropes other than tapes and laces are liable to tax at 2 per cent, up to 21st August, 1962 and 1 per cent, from 22nd August,

1962, under the Madras General Sales Tax Act, 1959 and the rate of tax u/s 9(2)(b) of the Central Sales Tax Act is 7 percent.

The Commissioner of Commercial Taxes, exercising his powers u/s 34 of the Act, revised the order of the appellate authority and restored the

order of the assessing authority, holding that cotton ropes manufactured by the petitioner will not fall within the term ""braided cord"" and that the

clarification issued by the Board of Revenue to the effect that ropes also will have the benefit of the reduction in tax contained in the said

notification will not estop the proper enforcement of the statutory provisions of the Act. The view taken by the Commissioner is challenged before

us.

The learned counsel for the petitioner contends that the clarification issued by the Board of Revenue on 17th April, 1963, that ropes also will be

entitled to the benefit of the reduction in the rate of tax cannot be overlooked by the same authority and that in any event it has got a statutory

force. According to the learned counsel, the Board of Revenue being a functionary charged with the administration of the Madras General Sales

Tax Act is bound by its own clarification and it cannot change its opinion with reference to each case. We are of the view that the clarificatory

order issued by the Board of Revenue on 17th April, 1963, to other individuals cannot be taken as a statutory order or notification. The Board of

Revenue is not an authority constituted under the Act to issue notifications u/s 17 of the Act to notify exemptions and reductions of tax and that

power is only vested with the State Government. It may be that the Board of Revenue took a particular view in respect of another individual with

reference to the article produced and sold by him. But that cannot be taken as a statutory notification or order applicable to all the assessees. If the

assessee comes squarely within the charging section with reference to the article manufactured and sold by him, he can escape liability only when

he shows that the Government has exempted that article or that it is liable to be taxed at a lesser rate by virtue of a notification issued by the

Government u/s 17 . It is well established that there cannot be an estoppel against a statute and whatever view the Board of Revenue might have

taken in respect of other individuals will not estop the Government from enforcing the statutory provisions. We are, therefore, of the view that the

assessee cannot claim any relief by virtue of the Board''s letter dated 17th April, 1963, which was addressed to other dealers with reference to the

articles sold by them. In this connection, reference may be made to the following observations of Hidayatullah, J., in Mathra Parshad and Sons v.

State of Punjab [1962] 13 S.T.C. 180:

There can be no estoppel against a statute. If the law requires that a certain tax be collected, it cannot be given up and any assurance that it would

not be collected would not bind the State Government, whenever it chose to collect it,

and of Chandra Reddy, C.J. in Venkateswara Oil Mills v. State of Andhra Pradesh [1960] 11 S.T.C. 555:

It is now well-settled that there could be no estoppel against, a statute. Here, the Hyderabad General Sales Tax Act imposes a duty on every

dealer to pay tax on the goods sold or purchased by him as required by the provisions of the Act. That being so, the dealer was under a liability to

pay tax on his turnover and it was not competent for any official of the department to release any dealer from payment of such tax. Such a release

will be null and void and cannot be relied upon by any dealer to evade payment of tax.

In a recent decision in Kashmir House v. Deputy Commissioner of Commercial Taxes [1971] 28 S.T.C. 297 a Division Bench of the Andhra

Pradesh High Court while dealing with a similar situation has expressed the view thus :

The Act does not authorise the Board of Revenue or any other authority to issue directions to the assessing authority, except of course when

dealing with an appeal or revision, to tax or not to tax any commodity as declared goods or otherwise. If the Board of Revenue or any other

authority issues such directions, they would be acting beyond their powers and the assessing authority would be justified in ignoring such

instructions. It is for the assessing authority alone to determine in the first instance whether a commodity is ''declared goods'' or not whenever the

question arises before him. That statutory right of the assessing authority cannot be bartered away by any authority. If the Board of Revenue

chooses to advise dealers whether a commodity is ''declared goods'', it is not doing so in pursuance of any authority conferred under the Act.

The learned counsel then contends that ropes come within the term ""braided cords"", occurring in the Government notification dated 3rd August,

1961. According to the learned counsel, rope is only a cord and the term ""braided"" has to be understood in a popular sense of twisted and not in

the strict sense of entwined or woven. The learned counsel also submits alternatively that rope will come under the word ""textile"", which is

completely exempted from tax under the provisions of the Act. But the question whether ropes manufactured and sold by the petitioner will come

under the expression ""textile"" has not been put forward at any stage before and we are not inclined to allow the petitioner to raise such a question

for the first time now. We, therefore, proceed to consider the petitioner''s contention that ropes will come under the term ""braided cord"". The word

braided"" has been defined in the New Standard Dictionary by Funk and Wagnalls as ""to weave together by passing of strands alternately over

and under each other ; interlace, plait; give the appearance of a braid to, as to braid the hair, or straw-Golden tresses wreathed in one"".

''Cord'' has been defined as ''a string or small rope made by twisting several strands together''; twine and ''rope'' has been defined as ''a

construction of wire or twisted fibres, as of hemp, cotton, flax or jute, so intertwined as to form a thick cord capable of sustaining a severe strain''.

Commonly, rope consists of rope yarns twisted into three strands that in turn are twisted together.

The Shorter Oxford Dictionary defines ""braid"" as ""to twist in and out, interweave, plait"", ""cord"" as ""a string, or (small) rope, composed of

several strands twisted together"" and ""rope"" as ""a length of strong and stout line or cordage, usually made of twisted strands of hemp, flax, or other

fibrous material, but also of strips of hide, pliant twigs, metal wire, etc.

Normally a small rope can be called a ""cord"". But the question is whether rope will be ""braided cord"". In this case, the rope produced and sold

by the petitioner has been produced before us and it consists of rope-yarns twisted into three strands and then in turn are twisted together so as to

form a thick cord. The strands have not been interwoven or interlaced. Jagadisan, J., in Subbaier v. R.P.F. Commissioner AIR 1963 Mad. 112

stated :

It seems to me that necessarily weaving is involved in the production of braid or braided cords.

In this case, it is not contended that the strands which go to make up the rope have been intertwined or interwoven. Therefore, it could not be

said that the rope sold by the petitioner is ""braided cord"" though it may come under the word ""cord"". The learned counsel for the petitioner seeks

reliance on a decision of this court in Madura Mills Co. Ltd. v. Government of Madras [1970] 25 S.T.C. 407 to which one of us was a party.

There the question arose as to whether the cord would opine under the expression, ""cotton yarn"" and it has been expressed that ""cord"" means

twisted thread thicker than string and thinner than rope, that ordinarily ""cord"" is understood as rope of small diameter or a thick string, that string,

cord and rope are different species of the same genus, namely, yarn and that yarn as such means spun thread which may form one of the threads of

a string, cord or rope. But that decision will not help the petitioner as the word ""braided"" did not come up for consideration in that case. While

construing the words ""braided cord"" as occurring in the notification, it is not possible to overlook the significance of the word ""braided"" and place

emphasis only on the word ""cord"". As already stated, though the rope manufactured and sold by the petitioner may come under the same genus as

cord it cannot come under the words ""braided cord"". In our view, the order of the Commissioner of Commercial Taxes is correct and does not call

for any interference. The tax case is, therefore, dismissed with costs. Advocate''s fee Rs. 150.