Civil Appeals Nos
58 59 and 880 883 of 1971
From the Judgment and order dated 10 4 1970 of the Madras High Court in Writ Petition Nos
43767 and 52068 and Tax Cases Nos
135 138 of 1970 respectively
P Ram Reddy A V Rangam and Miss A Subhashini for the Appellant in CAs
58 5971
Sachin Chandra Chaudhury and Mrs section Gopalakrishnan for Respondent
Gobind Das
P H Parekh and Miss Manju Jetley for the Intervener Ms Durga Steel The Judgment of the Court was delivered by BEG J
The two Civil Appeals Nos58 59 of 1971 arise out of a judgment of a Division Bench of the Madras High Court dismissing two Writ Petitions filed against notices issued by a Commercial Tax officer showing institution of Sales tax assessment proceedings in respect of certain iron and steel goods for the assessment year 1965 66 in Writ Petition No 437 of 1967 and for the assessment year 1966 67 in Writ Petition No 520 of 1968
The High Court of Madras had certified the cases as fit for appeal to this Court under Article 132 and 1331a and c of the Constitution
Although the Writ Petitions had been dismissed on the ground that they involve an investigation into the question of fact whether the iron and steel scrap out of which the manufactured goods sought to be subjected to Sales tax had been made were already taxed or not yet the State of Tamil Nadu was aggrieved by the decision of the Madras High Court holding that the manufactured goods said to consist of steel rounds flats angles plates bars or similar goods in other forms and shapes could not be taxed again if the material out of which they were made had already been subjected to sales  tax once an iron and steel scrap as both were Iron and steel
It was possible to leave the assessing authorities free to decide all the questions which they had jurisdiction to consider
But it appears that the Madras High Court thought it proper to decide the question as the Sales  tax 170 authorities had already adopted the view in other cases that such goods though covered by the broad genus Iron and Steel were separately taxable commodities because each kind of Iron and Steel goods was a commercially different and separately taxable species or category
Moreover this very question was also before the High Court in regular revision petitions under the Tamil Nadu Sales Tax Act hereinafter referred to as the Tamil Nadu Act 
Civil Appeals Nos 880 883 of 1971 arise out of four petitions for revision under the provisions of the Tamil Nadu Act for the years 1964 65 and 1965 66 which were allowed by the Madras High Court 4 setting aside assessment orders by following its judgment and decision mentioned above given on 24 6 1970 on Writ Petitions Nos
437 of 1967 and 520 of 1968
The Madras High Court had also granted Certificates of fitness for appeal to this Court under Article 132 read  with Article 1331ac in the four cases before it on revision petitions
Hence six cases were connected and heard together by us
58 59 of 1971 before this Court arise in all of them
All the six cases before us relate to what are known as declared goods under Section 14 of the Central Sales Tax Act hereinafter referred to as the Central Act 
It was claimed on behalf of the r dealers sought to be assessed in each case that by reason of the restrictions imposed by Section 15 of the Central Act the levy of tax under the Tamil Nadu Act was not permissible
The list of goods given there at No iv as it stood in 1968 was IV Iron and Steel that it to say a pig iron and iron scrap b iron plates sold in the same form in which they are directly Produced by the rolling mill C steel scrap steel ingots steel billets steel bars and rods d i steel plates ii steel sheets iii sheet bars and tin bars sold in the same form in which they are iv rolled steel sections directly produced by the rolling mill v tool alloy steel  sole in the same from in which they are directly produced by the rolling mil By the Central Sales Tax Amendment Act 61 of 1972 clause iv r was redrafted
It now reads as follows iv iron and steel that is to say i pig iron and cast iron including ingot moulds bottom plates iron scrap cast iron scrap runner scrap andiron skull scrap ii steel semis ingots slabs blooms and billets of all qualities shapes and sizes iiiskelp bars tin bars sheet bars heebars and sleeper bars 171 iv steel bars rounds rods squares flats octagone and A hexagone plain and ribbed or twister in coil from as well as straight lengths v steel structurals angles joints channels tees sheet piling sections sections or any other rolled sections vi sheets hoops strips and skelp both black and galvanised hot and cold rolled plain and corrugated in all qualities in straight lengths and in coil form as rolled and in rivetted condition viiplates both plain and chequered in all qualities viiidiscs rings forgings and steel castings ix tool alloy and special steels of any of the above categories x steel melting scrap in all forms including steel kull turnings and borings xi steel cubes both welded and seamless of all diameters and lengths including tube fittings xiitin plates both hot dipped and electrolytic and tin free plates xiiifish plate bars bearing plate bars crossing sleeper bars fish plates bearing plates crossing sleepers and pressed steel sleepers rails heavy and crane rails xivwheels tyres axles and wheel sets xv wire rods and wires rolled drawn galvanised alumanised tinned or coated such as by copper xvidefectives rejects cuttings or end pieces of any of the above categories It will be seen that Iron and Steel is now divided into 16 categories which clearly embrace widely different commercial commodities from mere scrap iron and left overs of processes of manufacturing to wires and wheels tyres axles and wheel sets
Some of the enumerated items like melting scrap or tool alloys and special steels could serve as raw material out of which other goods are made and others are definitely varieties of manufactured goods
The G reason given in the statement of objects and reasons of the 1972 Act for an elucidation of the definition of iron and steel was that the definition had led to varying interpretations by assessing authorities and the courts so that a comprehensive list of specified declared iron and steel goods would remove ambiguity
The Select Committee which recommended the amendment called each specified category a sub item falling under Iron and Steer 
Apparently the intention was to consider each sub item as a separate taxable commodity for purposes of Sales  tax
Perhaps some items could overlap but no difficultly arises in cases before us due to this feature
As we have 172 pointed out the statement of reasons for amendment spoke of Section 14iv as a definition of Iron and Steel
A definition is expected to be exhaustive
Its very terms may however show that it is not meant to be exhaustive
For example a purported definition may say that the term sought to be defined includes what it specifies but in that case the definition itself is not complete
Although we have looked at the subsequent amendment of 1972 in order to find an indication of the original intention because subsequent history of legislation is not irrelevant yet we think that even if we confine our attention to Section 14 as it originally stood at the relevant time with which we are concerned in the cases before us the object was not to lay down that all the categories or sub items of goods as specified separately even before the amendment of 1972 were to b viewed as a single saleable commodity called Iron and Steel for purposes of determining a starting point for a series of sales
The more natural and normal meaning of such a mode of listing special or declared kinds of goods seems to us to be that the object of specification was to enumerate only those categories of items each of which was to serve as a new starting point for a series of sales which were to be classed as declared goods
What we have inferred above also appears to us to be the significance and effect of the use of words that is to say in accordance with their normal connotation and effect
Thus in Stroud s Judicial Dictionary 4th Edn5 at page 2753 we find THAT IS TO SAY
1 That is to say  is the commencement of an ancillary clause which explains the meaning of the principal clause
It has the following properties 1 it must not be contrary to the principal clause 2 it must neither increase nor diminish it 3 but where the principal clause is general in terms it may restrict it see this explained with many examples Stukeloy vs Butler Hob 171 The quotation given above from Stroud s Judicial Dictionary shows that ordinarily the expression that is to say is employed to make clear and fix the meaning of what is to be explained or defined
Such words are not used as a rule to amplify a meaning while removing a possible doubt for which purpose the word includes is generally employed
In unusual cases depending upon the context of the words that is to say this expression may be followed by illustrative in stances
In Megh Raj  Anrvs Allah Rakhia  Ors1 the words that is to say
 with reference to a general category land were held to introduce the most general concept when followed inter alia by the words Rights in or over land
Both were wide classes
The object of using them or subject matter of legislation was obviously to lay down a wide power to legislate
But in the context of single point sales  tax subject to special conditions when imposed on separate categories of specified goods the expression was apparently employed to specifically enumerate separate categories of goods on a given list
The purpose of such specification and enumeration in a statute dealing with sales  tax at a single point in a series of sales would very naturally be to indicate the types of goods each of which would constitute at separate class for a series of sales
Otherwise the listing itself loses all meaning and would be without any purpose behind it
Learned Counsel appearing for an intervener argued that the chemical position of iron and steel affords a clue to the meaning of Iron and Steel as used in Section 14 of the Central Act
We are unable to agree that this could be what Parliament or any legislature would be thinking of when enumerating items to be taxed as commercial goods
The ordinary meaning to be assigned to a taxable item in a list of specified items is that each item so specified is considered as a separately taxable item for purposes of single point taxation in a series of sales unless the contrary is shown
Some confusion has arisen because the separate items are all listed under one heading Iron and Steel
If the object was to make iron and steel taxable as a substance the entry could have been Goods of Iron and Steel Perhaps even this would not have been clear enough
The entry to clearly have that meaning would have to be Iron and Steel irrespective of change of form shape or character of goods made out of them
This is the very unusual meaning which the respondents would like us to adopt
If that was the meaning sales  tax law itself would undergo a change from being a law which normally taxes sales of goods to a law which taxes sales of substances out of which goods are made
We however prefer the more natural and normal interpretation which follows plainly from the fact of separate specification and numbering of each item
This means that each item so specified forms a separate species for each series of sales although they may all belong to the genus  Iron and Steel Hence if iron and steel plates are melted t and converted into wire and then sold in the market such wire would only be taxable once so long as it retains its identity as a commercial goods belonging to the category wire made of either iron or steel
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 up 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
As we all know sales  tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have 174 been made
As soon as separate commercial commodities emerge or come into existence they become separately taxable goods or entities for purposes of sales  tax
Where commercial goods without change of their identity as such goods are merely subjected to some processing or finishing or aremerely jointed together they may remain commercially the same goods which cannot be taxed again in a series sales so long as they retain their identity as goods of a particular type
In State of Madhya Bharat vs Hiralal1 this Court held that a dealer who bought some scrap iron locally and imported some iron plates from outside and then converted the material into bars flats and plates by rolling them in his mills and then sold them was still entitled to exemption given to iron and steel from sales tax
But in that case the language of the provision giving the exemption justified this interpretation
The exemption was given to a sale by either an importer or a purchaser of goods prepared from any metal other than gold or silver
In that context it had become necessary to examine whether the exemption from sales  tax was meant for all goods made out of a particular sub stance or for goods as separate commercial commodities
This Court held that the raw material from which the goods were made was decisive for the purposes of the exemption given
This Court said at p 315 A comparison of the said two Notifications brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel while the former is exempted from tax the latter is taxed
Therefore iron and steel used as raw material for manufacturing other goods are exempted from taxation
So long as iron and steel continue to be raw materials they enjoy the exemption
Scrap iron purchased by the respondent was merely re rolled into bars flats and plates
They were processed for convenience of sale
The raw materials were only re rolled to give them attractive and acceptable forms
They did not in the process lose their character as iron and steel
The dealer sold Iron and steel  in the shape of bars flats and plates and the customer purchased iron and steel  in that shape
We therefore hold that the bars flats and plates sold by the assessee are iron and steel exempted under the Notification
 The law to be interpreted in Hiralal s case supra was entirely different
In interpreting it this Court did observe that a mere change of the form of a substance excepted from sales  tax did not matter
The language of the notifications involved there made it clear that the exemption was for the metal used
In the cases before us now the object of single point taxation is the commercial commodity and not the sub stance out of which it is made
each commercial commodity here becomes a separate object of taxation in series of sales of that commercial commodity so long as it retains its identity as that commodity
vs 1 1966 17 STC 313 315
175 The State of Punjab  ors1 where Subba Rao CJ speaking for a Constitution Bench of this Court said at p 447
Now coming to Civil Appeals Nos 39 to 43 of 1965 the first additional point raised is that when iron scrap is converted into rolled steel itdoes not involve the process of manufacture
Before the High Court this contention was not pressed
That apart it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity viz rolled steer sections
During the process the scarp iron loses its identity and becomes a new marketable commodity
 The process is certainly one of manufacture
It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new market able commodity is the decisive test in determining whether an excise duty is leviable or not on certain goods
No doubt in the law dealing with the sales tax the taxable event is the sale and not the manufacture of goods
Nevertheless if the question is whether a new commercial commodity has come into existence or not so that its sale is a new taxable event in the Sales  Tax law it may also become necessary to consider whether a manufacturing process which has altered the identity of the commercial commodity has taken place
The law of sale tax is also concerned with goods of various descriptions
It therefore becomes necessary to determine when they cease to be goods of one taxable description and become those of a commercially different category and description
It appears to us that the position has been simplified by the amendment of the law as indicated above so that each of the categories falling under Iron and Steel constitutes a new species of commercial commodity more clearly new
It follows that when one commercial commodity is transformed into another it becomes a separate commodity for purposes of sales tax
We think that the Madras High Court had committed an error in applying Hiralal s case supra to the decision of cases now before us which turns really on a correct interpretation of Section 14 of the Central Act
On the question now before us we approve of the reasoning adopted by a Division Bench of the Punjab High Court in Devgun Iron  Steel Rolling Mills vs State of PunJab2
Section 15 of the Central Act places certain restrictions and conditions upon State enactments imposing Sales tax
It says Every sales tax law of a State shall in so for as it imposes or authorises the imposition of a tax on the sale or 1 1967 20 STC 430 at 447
2 1961 12 STC p 590 176 purchase of declared goods be subject to the following restrictions and conditions namely a the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof
and such tax shall not be levied at more than one stage b where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce and tax has been paid under this Act in respect of the sale of such goods in the course of inter State trade or commerce the tax levied under such law shall be reimbursed to the person making such sale ill the course of inter State trade or commerce in such manner and subject to such condition as may be provided in any law in force in that State
It has not been shown to us that any provision of the Tamil Nadu Sales Tax Act violates Section 15 of the Central Act enacted in accordance with Article 2663 of the Constitution
Section 3 of the Tamil Nadu Act leviesm taxes on sales and purchases of goods as defined in Section 2j of the Act j goods means all kinds of movable property other than newspapers actionable claims stocks and shares and securities and includes all materials commodities and articles including these to be used in the fitting out improvement or repair of movable property and all growing crops grass or things attached to or forming part of the land which are agree to be severed before sale or under the contract of sale Section 4 of the Tamil Nadu Act lays down 4 Tax in respect of declared goods
Notwithstanding anything contained in Section 3 the tax under this Act shall be payable by a dealer or the sale or purchase inside the State of declared goods at the rate and only at the point specified against each in the Second Schedule on the turn over in such goods in each year whatever be the quantum of turnover in that year
Item 4 of the second schedule specifies the rates of tax in accordance with the Central Act
It reproduces Section 14iv of the Central Act
On an amendment of Section 14iv of the Central Act serial No 4 of the second schedule of the Tamil Nadu Act was also correspondingly amended so as to reproduce the sixteen items found in Section 14iv of the Central Act
Other provisions only fortify our conclusion
177 The result is that we allow these appeals
We set aside the orders of the High Court and restore the orders of the assessing authorities in cases giving rise to Civil Appeals Nos 880 883 of 1971
In cases but of which Civil Appeals Nos58 59 of 1971 arise we set aside the judgment of the High Court but maintain its order dismissing the Writ Petitions and order that the assessing authorities will now proceed to determine such question of fact and law as still survive for determination after the decision given above of the question considered by us
The parties will bear their own costs
PHP Appeals allowed


Summary:
The respondents are dealers under the Tamil Nadu Sales Tax Act
Section 14 of the Central Sales Tax Act declares certain goods enumerated therein of   special importance in inter state trade or commerce
The list of goods given at serial No IV reads as under IV Iron and Steel that is to say a pig iron and iron scrap 
b iron plates sold in the same form in which they are directly produced by the rolling mill c steel scrap steel ingots steel billets steel bars and rods d i steel plates ii steel sheets iii sheet bars and tin bars iv rolled steel sections I mill
v tool alloy steel J sole in the same from in which they are directly produced by the rolling mill
The said clause IV was amended by the Central Sales Tax Amendment Act Act 61 of 1972 by which certain more entries were added
Section 15 of the Central Sales Tax Act provides that the tax payable under a State Law on sale or purchase of declared goods shall not be levied at more than one stage
Respondents used to purchase iron scrap and thereafter used to convert them into steel rounds flats plates etc
The scrap was already subject to tax once
The respondents contended that the entry Iron  Steel was wide enough to include scrap as well as the steel rounds flats plates etc
made out of the scrap which was subject to tax once and that therefore the sale of the steel rounds flats plates etc cannot be subjected to tax again under the Tamil Nadu Sales Tax Act
The High Court accepted the contention of the respondents
Allowing an appeal by certificate  HELD 1
The intention was to consider each sub item in clause IV as a separate taxable commodity for purposes of sales tax
The object was not to lay down that all the categories or sub items of goods specified separately were to be viewed as a single saleable commodity called iron and steel for purposes j of determining a starting point for a series of sales
The note against sub division of Clause IV makes it clear that even each sub category of a sub item retains its identity as a commercially separate item for purposes of sales tax so long as it retains the sub division
171Gm 172B C 2
The expression that is to say  is employed to make it clear and fix the meaning of words to be explained or defined
Such words are not used as a rule to amplify a meaning while removing a possible doubt for which purpose the word includes  is generally employed
The precise meaning of the words 169 that is to say  must vary with the context
The purpose of the expression in a sales A lax law would be to indicate the types of goods each of which would constitute separate class for a series of sales
172F H 173B 3
The chemical composition of iron and steel cannot afford a clue to the meaning of iron and steel
Sales Tax Law taxes sales of goods and is not a taxation on sales of substance out of which goods are made
We prefer to follow the more natural and normal interpretation which follows plainly from the fact of separate specification numbering of each item
State of Madhya Pradesh vs Hira Lal 1966 17 STC 313 315 distinguished
The case cf Devidas applied
173C E F 4
It has not been shown to us that any provision of the Tamilnadu Sales Tax Act violates section 15 of the Central Sales Tax Act enacted in accordance with Article 2863 of the Constitution
Section 2j of the Tamil Nadu Act defines goods and section 4 imposes charge in respect of tax on declared goods
The Tamilnadu Act borrows clause IV of section 14 of the Central Sales Tax Act
176 C H C