Martand Dairy & Farm v. The Union of India & Ors .

')'I'' KRISHNA IYER, J.-Mr. s. T. Desai, counsel for the appellants ....,~ in both the appeals, correctly assured us that the facts are not in dispute, although the legal inference bearing on taxability is very much in controversy.

The appellant, who has atTived in this Court by certificate under Art. 133(1) (a) of the Constitution, urges before us that he is not liable to sales tax under the Central Sales Tax Act, 1956 (LXX!V of 1956) {for short, the Act) sought to be levied from him. Ad-mittedly the appellant is a leading dairy of Benaras anid has been sending cream to Calcutta for being converted into butter or ghee. The long journey involved and the considerable quantities despatched necessarily called for protective receptacles during transport. So the cream used to be carefully sent in canisters whose lids were sealed by the seller. The Calcutta buyers received the cream and paid for it on the basis of the ghee/butter recovered from the cream supplied. Although there was some controversy even on the facts, counsel on both sides proceeded on the factual findings recorded by the Judge (Revisions) who held that the sales were of cream, that they were inter-State sales and that the exemption extended by Government notification under the Act for cream could not he enjoyed by the assessee as he fell with.in the area of exclusion contained in the ex-emption notification. It is appropriate at th.is stage to reproduce the notification, dated May 10, 1956, under which the exemption is claimed. It reads :

"No. ST-3506/X D/10-5-56 Exemption has been allowed to :

Milk and Milk products such as Chhena, Dahl, kha, Butter and Cream but excluding (i) products sold in sealed containers (ii) sweet-meats and (iii) ghee."

Th.is in general tenns cream is exempted from payment of Central Sales Tax by virtue of this notification but it carves out an exception 41 to the exemption. If the cream were 'sold in sealed containers' the seller could not come within Jhe exemption notification. We need not go into the technique of sealing adopted in this case since it is common ground now that the cream is put in containers whose lids are properly soldered. The short question is whether cream sold in soldered containers in. the circumstances set out above can be described appropriately as 'products sold in sealed containers'.

Fascinated we were by the imaginative and realistic pictnrisation of the expression 'products sold in sealed containers' projected by Shri S. T. Desai, counsel for the assessee-appellant but, on further reflection, we veered round to the view presented by Sri Sanghi, for tl·e State, that after all law is not always logic and taxation considera-. tions may stem from administrative experience and other factors of life and not artistic 1isualisation or neat logic and so the literal, though pedestrian, interpretation must prevail.

. . :MARTANI) PAIRY ANI) :FARM v •. UNJON (l(rishna Iyer, J.) 267 }1)e High Co11rt has negatived 'the plea of the assessee anQ since -"'. wf ai:e jnclined U1 agtee with its reasoning, we express out grounds o;nly · priefly, althQugh we may, . in passing, make reference to two decisions cjted, before us, viz., Govindram l?.amprasad v. Assessing Authority (Sales Tax)(') and Commissioner of Sales T!JX, U.P. v, G. ·t;. Industries('). Govindram(l ).:_a decision of the Madhya Pra-desl\' }ligh Court-'-is not germane to the qljestion \ve are dealing with and therefore we need not discuss it. The latter-The Commissioner of Sales Tax, U.P. ( 2)-we shall discuss as it in some measure, governs thC issue before us.

The assessce's main contention is that cream solt! in sealed con-tainhs must bear a 'markel' meaning, if we may say' so, and not be taken literally. What Shri Desai urges is that there are many articles which th.c consumers buy on the strength of the image projected before them in their packed st.ate. For instance, a well-secured box of choco-lates, carton of dried fruits or a tin of coffee put out with well-known mar'kings, a sealed bottle of whisky sold in such manner that its quality, quantity and genuineness are easily acceptable-these, going by the consumers' habit of looking for articles properly packed or tinned an.d acquiripg a special value as a unit of consumer commodity, may legitimately be described as items 'sold in sealed ,containe~'. If we con-sult our housewives or our village vendor$, there' is no doubt that there. ill11strations may be blJme out as apt and may even be supplemented hy .other like instances. A thing is bought loose for a price by, a buyer on certai11 assumptions. But a securely packed or properly sealed commodity sold by a well-known manufacturer is· ptlrchased by the consumer based on a sort of flavoured considerations. The asses-see's case is that here no cream in sealed containers as a unit with an individuality is sold. On the other hand cream qua cream is bar-gained for and despatched. The canister is used because, ex necessilae large quantities of cream cannot be transported over distances with-out being put in some container and its leakage and spoilage can be prevented only by soldering or sealing. Hems sold in containers are usually .so sold for two reasons : (i) for easy consumption by the retail consumer who, by mere sight, is able to distinguish the parti-i cular patented brand, and picks it off the counter ; (ii) to prevent

adulteration or mixing wit.h spurious stuff. In the instant case the con-tainers used are for bulk transmission--like tea chests-and sealing is fgr preventing abuse on the way or pilferage. And soldering is a sure mctho4. of sealing. Further, if the item were not a liquid like cream, but a solid, it could be transported even in gunny bags-merely stitch-ed and without any seal. If this view be sound, certainly the Benaras cream dealer is out of the liability zone. We do not examine the im-pact <?11. taxability had the receptacles. been returned by the buyer since it 1 ~oes not arise on the evidence. . I{

Shri Desai further drew our attention to the fact that the containers had no particular design nor did they·bear any special marks. or ba_ve a uniforin size.: Tbus:.the sealed container had np connection with

(' J; & l).T.C. 407 •.

·(') 21 S.T.C .. 63.

268 liliPREMli COURT i!.BPOllTS [1975] SUPP·· $.C.R. A-the bargain or the stuff sold. The emphasis was on the cream and the

container had no pertinence in the context. In this connection, he also referred to s. 8 of the Act which refers to containers and packing material. There is force in the argument, certainly. But, as earlier indicated, judicial adventure in interpretation-particularly ill taX matters,-is sever!y circumscribed, Mr. De.sai posed the question whe-ther sale in loose quantities and unsealed containers (in this very case, cream also been sold in milk cans which were not sealed and had been granted tax exemption) made any difference from similar salu in old kerosene tins, the soldering being no sin which attached taX guilt. Not that we are oblivious to the force of this argument, but we are influenced by the words whose normal meaning should ordinarily guide interpretation. All that the notification states is that products sold in sealed containers must sail out of the harbour of exemption. The simple question is this : Was the sale, of cream? Yes. Was it, when sold, packaged in containers which were sealed? Yes. On these two affirmative answers the exclusion from the exemption operates. Such is the contention put forward on bcljalf of the taxing authority by Shri Satighi, learned counsel.

l n this connection, he drew our attention to Commissioner of Sales Tax, U.P. (supra). Sikri, J. (as he then was), speaking for the Court, considered a somewhat similar question of exemption where sales-tax dealers in cooked food 'other than cooked food sold in sealed containers' were conferred exemption, on certain conditions. The commodity trere was confectionery sold in sealed containers and the High Court upheld the assessee's case with these words :

"In commercial world in such trades, particularly where food materials are concerned, it would be seen that the name and reputation of the manufacturer by itself is a sufficient evi-dence or guarantee of the quality of the contents. The most usual form or method for furnishing such evidence or gua-rantee of the quality and quantity of the contents is by way of putting its seal by the manufacturer in order to secure the. goods in the container in such manner that to have access to the contents of the container the seal so put has to be des-troyed or broken. For if it were not so done neither the re-tailer nor the purchaser would be sure whether the goods inside the container as to their quality and quantity are the same as represented and have not been otherwise adulterated . or mixed up by extraneous elements is hardly necessary to mention that a dealer carrying on the business of selling sweet-meats and coufectionery on· a comparatively smaller scale would find it uneconomical commercially to put the stuff sold or to be sold in sealed containers; it is only a large scale manufacturer who manufactures and exports the confec-tionery, who would need selling the same in a container. In our opinion, therefore, it is only that class of dealers carrying on the business of sale of confectionery in sealed containers as explained above who were not intended to be exempted from the liability to pay sales tax on their turnover."

On appeal, this Court, after noticing ihe plausibility of the opposite point of view and guessing the possible administrative and other reasons for the exclusion from exemption, held :

"Be that as it may, in the context it is difficult to give to the expression 'sealed container' a meaning different from the ordinary dictionary meaning.~ "Sealed container" merely means a container which is "so closed tliat access 'to the contents' is impossible without breaking the fas-tening". The expression 'seal' in this context does. not involve an allixture of the seal of the seller such as impressing a signet in wax etc., as evidence or guarantee of authenticity. An article may be regarded as put in sealed containers if it is closed securely in any v<ssel or container by any kind of fastening or covering that must be broken before access can be obtained to what is packed inside. This is the popular, perhaps the literal, meaning of the expressions used in the notification. Maybe the State thought that sealed containers \Vi)uld be used only by big manufacturers. who were able to bear .. the . burden of tax; maybe administrative convenience in assessing quanti~ ties sold induced this step. It is not for the Court to launch on obscure fiscal astrology but merely to construe what has been expressed in plain words. We should have been happier if the State had. furnished the reasons prompting ihe exclusion from the exemption. An intelligent appreciation of the reason of the rule is an aid to judicial construction but the State has not been as alert on this score as we might have wished. Why should a sale, if generally exempt from tax, being a milk product, forfeit it merely because the wholesome step of sealing the container and insulating the food article from contamination, is· taken <luring transit ? But counsel for the State has expressed his inability to throw light on this aspect or on the reasons for the policy. Had ;·he State's counter-affidavit been more illuminating on these questions, it would have performed a service to this Court and to the public and rendered the task of judicial construction simpler.

',\'itli these observations, we dismiss the appeals but there will i be no order as to costs in this Court.