M/s. Shashi Agencies, Belgaum and Others vs The Commissioner of Commercial Taxes in Karnataka, Bangalore and Another

G.C. Bharuka, J.-In this writ petition, the short question which needs to be answered, is as to whether keeping in view the Notification No. FD 69 CET 92(I), Bangalore, dated 30th April, 1992 and Notification No. FD 69 CET 92(II), Bangalore, dated 30th April, 1992, the soap flakes, soap powder, detergent powder and liquids can be held as exempt from levy of entry tax under the Karnataka Tax on Entry of Goods Act, 1979 (''Act'' for short).

Admittedly, the petitioner is carrying on business in either or some of the aforesaid commodities and had caused entry thereof in the respective local areas during the period 1-4-1992 to 31-3-1993. Sub-section (1), Section 3 of the Act provides for levy of tax under the Act which, inter alia, reads as under:-

"3. Levy of tax.-(1) There shall be levied and collected a tax on entry of any goods specified in the First Schedule into a local area for consumption, use or sale therein, at such rates not exceeding five per cent of the value of the goods as may be specified retrospectively or prospectively by the State Government by notification, and different dates and different rates may be specified in respect of different goods or different classes of goods or different local areas.

(2) xxx xxx xxx.

(9) xxx xxx xxx."

Under the aforesaid provisions, Notification No. FD 69 CET 92(I), dated 30-4-1992, was issued providing for levy of tax on various goods including soaps of different varieties and detergents. Entry 64 being the relevant provision reads as follows.-

Sl. No. Description of the Scheduled goods I Schedule Item No. Rate of tax

xxx xxx xxx

Soaps, soap flakes, soap powders, detergent powders and liquid and laundry brightners. (84) 2%

Section 11-A of the Act empowers the State Government to exempt or reduce the rate of tax in respect of specified class of persons, class of dealers or in respect of any goods or class of goods. Pursuant to the powers contained in Section 11-A of the Act, the State Government issued another Notification being FD 69 CET 92 (II), dated 30-4-1992, granting exemption in respect of certain species of soaps and detergents, which reads as under:-

Sl. No. Commodity I Schedule Item No.

xxx xxx

Soaps other than toilet soaps but excluding soap flakes, soap powder, detergent powder and liquids. (84)

Subsequently, another Notification No. FD 69 CET 92 (II), Bangalore, dated 30th July, 1992, (S.O. 2282) dated 31-7-1992 was issued, inter alia, causing amendment in respect of Sl. No. 6 of the above exempting notification. To the extent, it is relevant for the present purpose, it reads as under:-

S.O. 2282:-In exercise of the powers conferred by Section 11-A of Karnataka Tax on Entry of Goods Act, 1979 (Karnataka Act 27 of 1979) read with Section 21 of the Mysore General Clauses Act, 1899 (Mysore Act III of 1899), the Government of Karnataka being of the opinion that it is necessary in the public interest, so to do, hereby amends with effect from the 1st day of August, 1992, Notification No. FD 69 CET 92 (II), dated 30th April, 1992 as follows:-

(i) xxx xxx xxx xxx.

(ii) In the entries relating to Sl. No. 6, the words "but excluding" shall be omitted.

(iii) xxx xxx xxx xxx."

It has been contended on behalf of the petitioners that in view of the exempting notification dated 30-4-1992, as noticed above irrespective of the amendment made therein by the notification dated 30-7-1992, the commodities in question, namely soap flakes, soap powder, detergent powder and liquids remain exempted from levy of entry tax during the period under consideration, The plea raised in support thereof is that under Sl. No. 64 of the notification issued under Section 3 of the Act providing for levy of tax in respect of soaps, soap flakes, soap powders, detergent powder and liquid and laundry brightners have been treated as distinct commodities for the purpose of levy of tax and therefore even under the exempting notification, the same should be treated as differently and no other construction should be adopted by trying to read the intention of State Government to the prejudice of the tax payers. On the other hand, Mr. R.I.D''Sa, learned Additional Government Advocate, submits that the Assessing Authority under the Act has rightly held that the soap powder and detergent powder are liable to payment of tax since only certain species of ''soaps'' have been selected for grant of exemption under the latter notification.

Having heard the rival contentions, we feel that for giving construction to the notification under consideration we have to firmly bear in mind that the notification issued under taxing statutes, like the present one, has to be given their plain meaning without trying to lean either in favour of the Revenue or the tax payer. But in case the language employed by law makers lead to a definite confusion or more than one meaning, then without weighing the question from any equitable point of view, the probable and reasonable construction which favours the tax payer has to be adopted.

Coming to the notification at hand, it seems clear to us that the State Government, as a delegated authority, no doubt, has grouped washing materials like soaps, soap flakes, soap powder, detergent powder and liquid and laundry brightners in a single Entry at Sl. No. 64 for providing a uniform rate of tax being 2% but then the intention seems to be clear to treat each of the said commodities as separate and distinct for the purposes of the Act. If that be so, then while taking the same as a legislative practice even for the purposes of the exempting notification, before or after the amendment, the commodities have to be construed as different and distinct. In such a situation, in the exempting notification dated 30-4-1992, the goods said to be exempted were ''soaps other than toilet soaps'', soap flakes'' soap powder, ''detergent powder and liquids''. The expression ''but excluding'' appearing between the ''toilet soaps'' and ''soap flakes etc''., seems to be superfluous since it neither fits in with word ''soap'' nor its species like toilet soaps. Of late, this appears to have been realised by the State Government and therefore, it came out with amending notification dated 31-7-1992, referred to above thereby deleting the said expression ''but excluding'' with effect from 1-8-1992. But, in our opinion, this deletion from a later date does not make material difference because the said amendment is merely indicative of the mind of the State Government. It is clear that after deletion of the expression ''but excluding'' the relevant entry in exempting notification read like following:-

"Soaps other than toilet soaps, soap flakes, soap powder, detergent powder and liquids".

Therefore, on reading of above entry it is clear that each of the commodities mentioned therein, which even in common parlance and commercial sense are distinct and separate, become qualified for exemption as independent commodities.

For the said reasons, we are constrained to hold that the authorities under the Act have committed an error of law in subjecting soap, soap flakes, soap powder, detergent powder and liquids, to levy of tax under the Act. Accordingly, we direct the authorities to modify the impugned orders passed against the petitioners levying tax on the said commodities. The present writ petitions are accordingly allowed. Keeping in view the circumstances, there will be no order as to costs.