vil Appeal No 4289 of F 1991 etc
From the Judgment and Order dated 2581989 of the Punjab  Haryana High Court in Civil Writ Petition No 2635 of 1989
Soli J Sorabjee Krishnamurthy lyer Bishamber Lal Khanna HK Puri Ms Geetanjali Mohan Ms AK Verma PR Ramasesh MahabirSingh R Mohan and Ayyam Perumal for the appearing parties
The Judgment of the Court was delivered by V RAMASWAMI J
Leave granted in all Special Leave Peti tions
526 In this batch of civil appeals writ petition and trans ferred case a common question of law arises as to whether the industries which manufacture sugar from sugar cane are covered by Entry 15 of Schedule I to the Central Act 36 of 1977 hereinafter called the Cess Act 
Originally the Water Prevention and Control of Pollu tion Act 1974 hereinafter called the Act was enacted by the Parliament under Article 252 of the Constitution with a view to control the pollution of rivers and streams which has assumed considerable importance and urgency in recent years as a result of increasing industrialisation and urban isation
The Act is intended to ensure that the domestic and industrial affluence are not allowed to be discharged into water coarses without adequate treatment
This Act is now in force in almost all States and in all Union Territories
The Act provides for the constitution of a Central Board by the Central Government and State Boards by the State Governments concerned for the prevention and control of water pollution
There are also certain provisions relating to constitution of joint boards the details of which need not detain us
The Act sets out in detail the functions and powers of these Boards
Chapter VI of the Act requires the Central Govern ment and the State Governments to provide funds to the Central Board and the State Boards respectively for imple menting the provisions of the Act
The Cess Act 36 of 1977 provides for levy of cess on water consumed by persons carrying on certain industries and by the local authorities with a view to augment the resources of the Central Board and the State Boards constituted for the prevention and control of water pollution
Section 3 of the Cess Act which may be termed as the charging section states that there shall be levied and collected a cess for the purposes of the and utilisation thereunder
The cess is payable by every person carrying on any specified industry and every local authority and is calculated on the basis of water consumed by such person or local authority as the case may be for any of the purposes specified in column I of Schedule II to the Act at such rate not exceeding the rates specified in the corre sponding Entry in column II thereof as the Central Govern ment may by notification in the Official Gazette from time to time specify
Specified industry is defined in the Act as meaning any industry specified in Schedule I
There are 15 entries in Schedule I and they read as follows SCHEDULE I See Section 2c 1
Ferrous metallurgical industry
527 2
Non ferrous metallurgical industry
Mining industry
Ore processing industry
Petroleum industry
Petro chemical industry
Chemical industry
Ceramic industry
Cement industry
Textile industry
Paper industry
Fertilizer industry
Coal including coke industry
Power thermal and diesel generating industry  15
Processing of animal or vegetable products industry
The concerned assessing authorities have in all the cases under consideration issued notices demanding water cess from the sugar manufacturers on the ground that this industry falls under item 15 processing of animal or vege table products industry
The Punjab and Haryana High Court and the Allahabad High Court have taken the view that the sugar manufacturing industries would come within Entry 15 as processing vegetable products industry
On the other hand the Andhra Pradesh High Court and Patna High Court have taken the view that sugar manufacturing industries would not come within Entry 15 of the ist Schedule
A writ petition which was filed in the High Court of Karnataka Bangalore by one of the sugar mills in Karnataka raising similar question has been withdrawn to this Court in transfer peti tion No 276 of 1984 to be dealt with along with other appeals raising identical question
Similarly another writ petition has been withdrawn from the Allahabad High Court in Transfer Petition No 277 of 1984 to be dealt with along with this group of cases
The object of the Act is to control the water pollution and to ensure 528 that industrial affluents are not allowed to be discharged into the water coarses without adequate treatment
The Cess Act is not an enactment to regulate and control pollution but a fiscal measure to raise revenue for augmenting the resources of the Pollution Control Boards
The levy and collection of cess provided under the Cess Act is on water consumed by persons carrying on the industries specified in the Schedule
The Cess is levied on the person carrying on the specified industry
The question is whether industries manufacturing sugar is covered by Entry 15 that is process ing of vegetable product industry
From the botanic point of view vegetable  may include any plant but in common parlance it is understood as refer ring to edible plants or parts of edible plants
The word vegetable  has been defined in many ways
In the World Book it is defined as follows In the usual sense the word vegetable is applied to those plants whose leaves stalks roots or tubers are used for food such as lettuce asparagus cabbage beet and turnip
It also includes several plants whose fruits are the edible portions as peas beans melons and tomatoes
 In the Concise Oxford Dictionary 3rd Ed p 1365 it is defined as Plant esp
herbaceous plant used for culi nary purposes or for feeding cattle eg cabbage potato turnip bean
 Again in Webster s International Dictionary vegetable is defined as A plant used or cultivated for food for man or domestic animals as the cabbage turnip potato bean dandelion etc also the edible part of such a plant as prepared for market or the table
Vegetables and fruits are some times loosely distinguished by the used need of cooking the former or the use of man while the latter may be eaten raw but the distinc tion often fails as in the case of quinces barberries and other fruits and lettuce celery and other vegetable
Tomatoes if cooked are vegetables if eaten raw are fruit
 In the Encyclopaedie Britannica vol
23 vegetable  is defined as A general term used as an adjective in refer ring to any kind of plant life or plant product viz vegetable matter 
More common ly and specifically in common language the word is used 529 as a noun in referring to those generally herbaceous plants or any parts of such plants as are eaten by man
The edible  portions of many plants considered aS vegetables are in a botanical sense fruits
The common distinc tion between fruits and vegetables is often indefinite and confusing since it is based generally on how the plant or plant part is used rather than on what it This Court in State of West Bengal  Ors
vs Washi Ahmed etc
  with reference to the meaning of the word vegetable  in Item 6 of Schedule I to the Bengal Finance Sales Tax Act 1941 held That the word vegetable  in Item 6 of Schedule I to the Act must be construed as understood in common parlance and it must be given its popular sense meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it  and so construed it denotes those classes of vegetables which are grown in a kitchen garden or in a farm and are used for the table
 The interpretation of one of the entries in Schedule I to the Cess Act came up for consideration in Member Secre tary Andhra Pradesh State Board for Prevention and Control of Water Pollution vs Andhra Pradesh Rayons Ltd and others  The question for consideration was whether manufacturing of rayon grade pulp a base material for manu facturing of synthetics or manmade fabrics is an industry as mentioned in Schedule I to the Cess Act
It was held lm13 Whether a particular industry is an industry as covered in Schedule I of the Act it has to be judged normally by what that industry produces mainly
Every industry carries out multifarious activities to reach its goal through various multifarious methods
Whether a particular industry falls within the realm of taxation must be judged by the predominant purpose and process and not by any ancillary or incidental process carried on by a particular industry in running its business This Court also observed It has to be borne in mind that this Act with which we are concerned is an Act imposing li ability for cess
The Act is fiscal in nature
The Act must therefore be strictly construed in order to find out whether a liability is fas tened on a particular 530 industry
The subject is not to be taxed without clear words for that purpose and also that every Act of Parliament must be read according to its natural construction of words
See the observations In Re Nicklethwait 1985 11 exhibit 452 456
Also see the observations in Tenant vs Smith  and Lord Halsbury s observa tions at page 154
See also the observations of Lord Simonds in St Aubyn vs AG 1951 2 All
ER 473 485
Justice Rowlatt of England said a long time ago that in a taxing Act one has to look merely at what is clearly said
There is no room for any intendment
There is no equity about a tax
There is no presumption as to tax
Nothing is to be read in nothing is to be implied
One has to look fairly at the language used
See the observations in Cape Brandy Syndi cate vs IRC  71
This Court has also reiterated the same view in Gursahai Saigal vs CIT  CIT vs Mr P Firm Muar  Controller of Estate duty vs Kantilal Trikamlal  The question as to what is covered must be found out from the language according to its natural meaning fairly and squarely read
See the obser vations in IRC vs Duke of Westminster 1963 AC 1 24 and of this Court in AV Fernandez vs State of Kerala  Justice Krishna Iyer of this Court in Martand Dairy  Fawn vs Union of India  has observed that taxing consideration may stem from adminis trative experience and other factors of life and not artistic visualisation or neat logic and so the literal though pedestrain interpretation must prevail This Court considered the question as to whether sugar cane is green vegetable with reference to an exemption given under Sales Tax Enactment in the decision in Ms Motipur Zamindary Co P Ltd vs The State of Bihar 1962 Supp 1 SCR 498
This Court quoted with the approval a passage from the judgment of the Nagput High Court in Madhya Pradesh Pan Merchants Association vs State of Madhya Pradesh 1956 7 STC 99 wherein it was held the word vegetable in taxing statutes is to be understood as in common parlance that is denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table
It was further held that sugarcane is normally considered to be a grass specie and it would not fail within the definition of words green vegetable
The use of the word processing is also significant
Processing of 531 vegetable products industry are normally understood in the sense they relate processing of vegetables which even after processing retain its character as vegetable
Processing Section 31 Marine Product Export Develop ment Authority Act 1972 defines processing in relation to marine products as including the preservation of such products as canning freezing drying salting smoking peeling or filleting or any other method of processing which the authority made by notification in the Gazette of India specified in this behalf
Section 2g of the Agricultural and Processed Food Products Export Development Authority Act 1985 defines processing in relation to scheduled products as including the process of preservation of such products such as canning freezing drying salting smok ing peeling or rilleting and any other methods of process ing which the authority made by notification in the official Gazette specified in this behalf
Thus processing as gener ally understood in marine agricultural and food products industries is an action operation or method of treatment applying it to something
It is refining development preparation or converting of material especially that in a raw state into marketable form
It would be interesting to note that this Act contains a Schedule of the agricultural or processed food products which are to be governed by the Act which reads as follows THE SCHEDULE See Section 2i 1
Fruits vegetables and their products
Meat and meat products
Poultry and poultry products
Dairy products
Confectionary biscuits and bakery products
Honey jaggery and sugar products
Cocoa and its products chocolates of all kinds
Alcoholic and non alcoholic beverages
Cereal products
532 10
Cashewnuts groundnuts peanuts and wal nuts
Pickles chutneys and papads
Guar Gum 13
Floriculture and floriculture products
Herbal and medicinal plants
In CST vARAlladin AIR 1964 Guj 27 the expression who processes any goods in the Bombay Sales Tax was held to refer to the subjecting of any goods to a treatment or process
In Addl
CIT vs Farrukhabad Cold Storage held that processing of goods means that the goods must be adopted for a particular use
The variety of acts performed in respect of goods or their subjection to a process need not be such as may lead to the production of any new article
The act of subjecting  goods to a particu lar temperature for a long period of time as in cold storage amounts to processing of goods
On the other hand manufac ture is a transformation of an article which is commercially different from the one which is converted
The essence of manufacture is the change of one object to another for the purpose of making it marketable
In Union of India vs Delhi Cloth and General Mills AIR 1963 SC 79 this Court pointed out The word manufacture  used as a verb is generally understood to mean as bringing into existence a new substance and does not mean merely  to produce some change in a sub stance however minor in consequence the change may be In the same decision the following passage from the Permanent Edition of Words and Phrases from an American Judgment was quoted with approval Manufacture implies a change but every change is not manufacture and yet every change of an article is the result of treatment labour and manipulation
But something more is necessary and there must be transformation a new and different article must emerges having a dis tinctive name character or use
 The essential point thus is that in manufacture some thing is brought into existence which is different from that originally existed in the sense that the thing produced is by itself a commercially different commodity 533 whereas in the case of processing it is not necessary to produce a commer cially different article
Processing essentially effectuates a change in form contour physical appearance or chemical combination or otherwise by artificial or natural means and in its more complicated form involves progressive action in performing producing or making something
Vide Com Products Refining 60
vs Federal Trade Commission CCA
7 In the decisions under appeal the Allahabad High Court held that sugar mills will come within the meaning of pro cessing vegetable products industry  in Entry 15 on the ground that the word vegetable  has been used in opposition to the expression animal  and that it could not be given the meaning of vegetables which are kept on the dining tables for dinner purposes and it has a wider amplitude
It was further of the view that in interpreting the word veg etable  one has to keep in mind the object for which the Cess Act was made
The learned Judges then stated that sugar industry is one of the main source of causing water pollu tion and since the object of the Pollution Act and the Cess Act were intended to control water pollution and since the entries are to be given a wider meaning sugar industry would be covered by the Act
The Punjab  Haryana High Court also took a similar line of reasoning and said that vegetable products  essentially mean what belongs to the plant kingdom as opposed to the animal kingdom
In another words the word vegetable  has been used in contra distinction to the word animal 
Though the learned Judges were not preparedto hold that sugar cane is vegetable the word product  gives a definite colour meaning thereby all that belongs to the world of plants would come within the entry
We are unable to appredate the reasonings of the learned judges
Pollution Act may be a regulating Act but Cess Act is a fiscal enactment as is held by this Court in Member Secretary Andhra Pradesh State Board for Prevention and Control of Water Pollution vs Andhra Pradesh Rayons Ltd and Others supra and Rajasthan State Electricity Board vs The Cess Appellate Committee  Anr JT There fore we have to look merely at what is clearly said
There is no room for any intendment and there is no room for bringing within the provision of the Act anything by impli cation
Unless we give the botanical meaning to the word vegetable  it is not possible to conclude sugar cane as vegetable
The Patna High Court in Civil Writ Jurisdiction Case Nos
4413 of 1981 and 2346 of 1983 Ms Champaran Sugar Co Ltd vs State of Bihar  534 Ors
held that sugar manufacturing industry would not fall under Entry 15 Of Schedule I
The Andhra Pradesh High Court also seems to be as the same view and it had dismissed a Writ Petition without a speaking order
Construction of words and the meaning to be given for such words shall normally depend on the nature scope and purpose of the statute in which it is occurring and to the fitness of the matter to the statute
The meaning given to the same word occurring in a social security measure or a regulating enactment may not be apposite or appropriate when the same word is interpreted with reference to a taxing statute
The Cess Act is a fiscal enactment
In the context in which the word vegetable  is used in Entry 15 vegetable product  means product of or made of or out of vegetable Vegetables  as understood in common parlance are not products of manufacture unless we say that agriculture is an industry for certain purposes and vegetables are products of that industry
In order to bring an industry within any of the entires in Schedule I it has to be seen what is the end product produced by that industry
Sugar cane is not a vegetable though it may be an agricultural product
If the botanic meaning of vegetable as referring to any and every kind of plant life is to be given then some of the indus tries listed in Schedule I like Paper Industry and Textile Industry and even chemical industry which are covered by other entries could also be brought within Entry 15
The word vegetable in the context does not attract the botanic meaning
The sugar manufacturing industry do not therefore come within Entry 15 of Schedule I of the Cess Act
In Civil Appeal arising out of Special Leave Petition No 814 of 1990 the appellant is Haryana Distillery who purchases molasses which is a by product of the manufacture of sugar and manufactures alcohol
Manufacture of alchohol was held by the High Court to come within Entry 15 of Sched ule I as processing agricultural prOduct industry
We have held already that the industry manufacturing sugar itself is not an industry within the meaning of Entry 15 and a fortio ri the manufacture of alcohol from molasses could not be considered to be an industry within Entry 15 of Schedule I
In the result we allow Civil Appeals arising out of SLP Nos
15828 of 1989 7496 of 1989 778 814 830 1286 1433 of 1990 and SLP No    of 1991 entitled Upper Doab Sugar Mills Ltd  Anr
vs Union of India  Ors
Writ Petition No 77 of 1990 and Transfer CaSe C Nos
6 of 1986  91 of 1989 and dismiss Civil Appeals arising out of SLP Nos
9558 62 of 1988 and the Rule Nisi is made abso lute
NPV Appeals disposed of


Summary:
The respondents Section Officers in the offices of the Accountant General I II and III Allahabad filed a writ petition before the High Court challenging the validity of administrative instructions contained in Circular No 172 NGE 1156 72 I dated 25th January 1973 issued by the first appellant regarding the reservations for Scheduled Castes and Scheduled Tribes in relation to filling up of posts by promotion on the basis of seniority subject to fitness and praying that the first appellant and two others be re strained from promoting three of the Section Officers belonging to the Scheduled Castes to the post of Accounts Officer contending that since the respondents were senior those three Section Officers could not be promoted to the post of Accounts Officers through seniority quota before the respondents
It was also contended that the promotion to the post of Accounts Officers was regulated by Indian Audit  Accounts Department Administrative Officers Assistant Accounts Officers and Assistant Audit Officers Recruitment Rules 1963 made by the President in exercise of the powers conferred by proviso to Article 309 and clause 5 of Arti cle 148 of the Constitution after consultations with the Comptroller and Auditor General of India which laid down that recruitment to the post of Administrative Officers Assistant Accounts Officers and Assistant Audit Officers in the Indian Audit and Accounts Department was by promotion that the rules did not contain any specific provisions for reservation for Scheduled Castes and Scheduled Tribes and hat the administrative instructions contained in the circu lar could not be said to be rules made by the President after consultation with the first 483 appellant as contemplated by Article 1485 of the Constitu tion
Allowing the writ petition the High Court held that there was no reservation for scheduled castes and scheduled tribes made under the rules that the administrative in structions contained in the circular in question did not make provision for the proposed reservation in pursuance to the policy decision and that the statutory rules were not silent on the subject of promotion to the post of Assistant Accounts Officers subsequently designated as Accounts Officers and therefore it was not open to the Government to supplement the statutory rules to fill up the gaps which could be done by only amending the statutory rules in com pliance with the provisions of Article 1485 of the Consti tution
Hence the appeal by the Department
Allowing the appeal this Court HELD 11 The High Court is not right in stating that there cannot be an administrative order directing reserva tion for Scheduled Castes and Scheduled Tribes as It would alter the statutory rules in force
The rules do not provide for any reservation
In fact they are silent on the subject of reservation
The Government could direct the reservation by executive orders
No doubt administrative orders cannot be Issued In contravention of the statutory rules but they could be issued to supplement the statutory rules
In fact similar circulars were issued by the Railway Board introduc ing reservations for Scheduled Castes and Scheduled Tribes In the Railway Services both for selection and non selection categories of posts
They were issued to Implement the policy of the Central Government
491 D F Santram Shams vs State of Rajasthan and Anr  and Akhil Bhartiya Soshit Karamchari Sangh Rail ways vs Union of India  Ors   referred to
12 It is true that the President has not issued the circular in question but the first appellant has issued it
There was however proper consultation between the Govern ment and the first appellant for issuing the circular
The infirmity pointed out that it was not issued in the name of the President therefore relates only to the form and not with regard to the substance
The circular of course ought to have been issued in the name of the President as required under
Article 1485 of the Constitution as it 484 affects the service conditions of persons in the Audit and Accounts Department
But since the Government has approved the circular and the circular was in accordance with the declared policy of reservation the first appellant cannot be restrained from enforcing it
491 G H 492 A B The circular in question is valid and binding
The circular by itself provides for reservation
The authorities concerned must take that into account while effecting promo tions under the rules
492 B