Civil Appeals Nos 2014 to 2016 of 1977 Appeals by special leave from the judgment and order dated the 17th November 1976 of the Allahabad High Court in Civil Misc
Writ Nos 107 108  357 of 1976
SS Ray Depankar Gupta Raja Ram Agarwal OP Khaitan NR Khaitan Bharat Ji Agarwal Mrs Neelam Thakur and Umesh Khaitan for the Appellants
131 SC Manchanda R Ramchandran and OP Rana for the Respondent
The appellant the Hindustan Aluminium Corporation Limited carries on the business of manufacturing and dealing in aluminium metal and various aluminium products
On December 1 1973 the State of Uttar Pradesh notified under section 3 A 2 of the UP Sales Tax Act 1948 that the turnover in respect of the following goods set forth in item No 6 of the attached schedule would be liable to tax at all points of sale at 3 12 6
All kinds of minerals and ores and alloys except copper tin zinc nickel or alloy of these metals only
 On May 30 1975 the State of Uttar Pradesh published a notification under section 3A 2 A of the Act in which item No 1 of the schedule read as follows 1
All kinds of minerals ores metals and alloys except those included in any other notification issued under the Act and a rate of 2 was prescribed
The notification dated December 1 1973 was amended and item No 6 was deleted
On August 14 1975 the UP Legislature enacted the UP Sales Tax Amendment and Validation Act 1975 section 31 7 of which amended the aforesaid notification of May 30 1975 retrospectively so that it would be deemed always to have read as follows 1
All kinds of minerals ores metals and alloys including sheets and circles used in the manufacture of brass 132 wares and scraps containing only any of the metals copper tin zinc or nickel except those included in any other notification issued under the Act
 On July 11 1975 the appellant wrote to the Sales Tax Officer contending that the aluminium ingots billets rolled products extrusions and other aluminium products manufactured and sold by it upto May 31 1975 fell within item No 6 of the notification dated December 1 1973 and thereafter their sale was covered by item No 1 of the notification dated May 30 1975
However the Commissioner of Sales Tax UP issued a circular on October 15 1975 to all Sales Tax Officers advising that aluminium ingots only should be taxed as metal and in regard to other items such as rods bars rolled products extrusion sections tax at the rate of 7 would be payable as on unclassified items
On December 30 1975 the Sales Tax Officer made provisional assessments under rule 413 UP Sales Tax Rules 1948 for the quarters ending June 30 1975 and September 30 1975
The Sales Tax Officer applied a rate of 3 12 under the Notification of December 1 1973 to aluminium ingots only and treated the remaining products as unclassified items attracting sales tax at 7
Similarly under the Notification of May 30 1975 a rate of 2 was applied to the turnover of aluminium ingots while the remaining products were charged to tax at 7 as unclassified items
The appellant filed a writ petition in the Allahabad High Court against the provisional assessments
During the pendency of the writ petition the Sales Tax Officer made a final assessment order for the assessment year 1975 76 on August 3 1976
The writ petition was amended in the High Court and relief was now sought against the final assessment order
On November 17 1976 the High Court passed judgment on the writ petition holding that while aluminium ingots wire bars and billets would fall in the category metals and alloys rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from the ingots and billets and therefore outside the category of metals and alloys
The rolled products included plates coils sheets circles and strips
The extrusions were manufactured in the shape of bars rods structurals tubes angles channels and different types of sections
In regard to properzi redraw rods the High Court considered that a further 133 enquiry was necessary and therefore directed the Sales Tax Officer to re examine the matter
The present appeals are directed against the part of the High Court judgment refusing relief in regard to rolled products and extrusions
It is vehemently contended that the High Court has erred in holding that the rolled products and extrusions are new commercial commodities distinct from the aluminium ingots and billets from which they are prepared
It is urged that they represent the marketable form merely of ingots and billets
We have been referred to a number of documents and publications as well as the Aluminium Control Order 1970 and the submission is that when reference is made to aluminium as a metal it includes rolled products and extrusion products
We are not satisfied that the appellant is right
There is no doubt that as laid down by this Court in Porritts  Spencer Asia Ltd vs State of Haryana a word describing a commodity in a sales tax statute should be interpreted according to its popular sense the sense being that in which people conversant with the subject matter with which the statute is dealing would attribute to it
Words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance
That principle has been repeatedly reaffirmed in the decisions of this Court
It holds good where a contest exists between the scientific and technological connotation of the word on the one hand and its understanding in common parlance on the other
We are here concerned however with a very different situation
We are concerned with the manner in which these and similar expressions have been employed by those who framed the relevant notifications and with the inference that can be drawn from the particular arrangement of the entries in the notifications
We must derive the intent from a contextual scheme
Section 3A of the UP Sales Tax Act empowers the State Government to prescribe by notification the rate and the point at which the tax may be imposed on the sale of a commodity
A consideration of the notifications issued from time to time will show that the expression metal has been generally employed to refer to the metal in its primary sense
The reference is to the metal in the form in which it is marketable as a primary commodity
Subsequent 134 forms evolved from the primary form and constituting distinct commodities marketable as such must be regarded as new commercial commodities
The notification No ST 2631X 902 64 50 of November 21 1952 for example sets forth two clauses a Copper tin nickel or zinc or any alloy containing any of these metals only and b Scrap meant for melting and sheets including circles meant for making brass ware and containing only any or all of the said metals viz copper tin nickel and zinc
It is clear that while clause a makes specific reference to certain metals clause b separately sets forth the products which emerge as a result of processing the original metal
Clause b speaks of sheets including circles meant for making brass ware and containing only any or all of the metals specified in clause a
A sheet of copper only or tin only or nickel only or zinc only is regarded as belonging to a distinct entry in the notification from copper tin nickel or zinc in its unfabricated from
This schematic arrangement has been followed in notification No ST 3500X dated May 10 1956 notification No 1366X 990 1956 dated April 1 1960 and notification No St 9377X 906 AB 4 1971 dated October 6 1971
In all those notifications the framers of the notifications followed the scheme that one clause dealt with the metal in its original saleable form and another separate clause dealt with fabricated forms in which it was saleable as a new commodity
It is admitted before us on behalf of the appellant that aluminium ingots and billets are saleable commodities as such in the market
In the circumstances the inference is irresistible that when such a notification refers to a metal it refers to the metal in the primary or original form in which it is saleable and not to any subsequently fabricated form
It is true that in the notification dated May 30 1975 as amended retrospectively on August 14 1975 the entry reads All kinds of minerals ores metals and alloys including sheets and circles used in the manufacture of brass wares and scraps containing only any of the metals copper tin zinc or nickel except those included in any other notification issued under the Act
 But here the expression including does not enlarge the meaning of the word metal and must be understood in a conjunctive sense 135 as a substitute for and
This is the reasonable and proper construction having regard to the scheme followed in the framing of notifications
It is urged that item No 6 in the notification of 1973 and Item No 1 in the notification of 1975 speak of all kinds of minerals ores metals and alloys and it is said the word all should be given its fullest amplitude so as to include even subsequently fabricated forms of the metal
It seems to us that the construction suggested is inconsistent with the scheme to which we have referred
While broadly a metal in its primary form and a metal in its subsequently fabricated form may be said to belong to the same genus the distinction made between the two constitutes a dichotomy of direct significance to the controversy before us
The question whether rolled steel sections are a different commodity from scrap iron ingots was considered by this Court in Devi Das Gopal Krishnan and Others vs The State of Punjab and Others and this Court had no hesitation in holding that when scrap iron ingots are converted into rolled steel sections they go through a process of manufacture which brings into existence a new marketable commodity
We are of the opinion that the same conclusion must follow when aluminium ingots and billets are converted into aluminium rolled products and extrusion products
Learned counsel for the appellant places reliance on Tungabhadra Industries Ltd Kurnool vs Commercial Tax Officer Kurnool where this Court took the view that hydrogenated groundnut oil commonly called Vanaspati was ground nut oil within the meaning of rule 182 of the Madras General Sales Tax Turnover and Assessment Rules 1939
In that case the Court was of opinion that the process of hydrogenation did not alter the essential identity of the oil and reference was made to the broad compass of the expression groundnut oil besides the circumstance that the use to which the original groundnut oil could be put would also be the use to which the hydrogenated oil could be applied
It seems to us that the case is distinguishable
We then turn to State of Madhya Bharat now the State of Madhya Pradesh and Others vs Hiralal the next case placed before us
This Court held that scrap iron when put through a process of re rolling to produce attractive and acceptable forms of iron and steel in the shape of 136 bars flats and plates must be regarded as continuing to be iron and steel for the purpose of the notification issued under the Madhya Bharat Sales Tax Act
The case however has been distinguished by this Court in State of Tamil Nadu vs Pyare Lal Malhotra on the ground that the nature of the raw material from which the goods were made was the decisive criterion for deciding the earlier case
It observed The language of the notification 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 commodities and not the substance out of which it is made
Each commercial commodity here becomes a separate object of taxation in a series of sales of that commercial commodity so long as it retains its identity as that commodity
 And the Court then referred with approval to Devi Dass Gopal Krishnan supra
Our attention has been invited to State of Gujarat vs Shah Veljibhai Motichand Lunawada where the Gujarat High Court held that corrugated iron sheets were merely iron in another shape and form and could not be regarded as articles or products manufactured or fabricated out of iron
We have perused the three judgments delivered in that case but it seems to us that the majority opinion is of doubtful validity specially having regard to the observations of this Court made in Pyare Lal Malthora supra
We are also referred to Maharaja Book Depot vs State of Gujarat
This Court held that an exercise book is paper as defined in section 2a vii of the and Item 13 in Schedule I to the Gujarat Essential Articles Dealers Regulation Order 1971
The Court accepted that construction on the ground that it would be in consonance with and would carry out effectively the object or purpose of the Act and the Regulation Order
It is desirable to recall that the was enacted to control the distribution and price of essential commodities
A sufficiently comprehensive interpretation was called for 137 in order that all products essential to the community which would reasonably fall within the scope of the definition could be covered
Learned counsel for the appellant relies on the wide definition of the word aluminium in the Aluminium Control Order 1970 but we must remember that the word has been given the broad definition set out there only for the purposes of that Control Order
It cannot be pressed into service for resolving the controversy before us
Learned counsel for the appellant also relies on the Glossary of Terms for Aluminium and Aluminium Alloys prepared by the Indian Standards Institution1 the Glossary of Terms prepared by the British Standards Institution2 Engineering Metallurgy3 Non Ferrous Metals and their Alloys4 Metal Industry Hand Book and Directory 1962 and allied literature
In considering the material it is necessary to caution ourselves that the literature is concerned with conceptions particular to the aluminium industry while we are here concerned with the application of a sales tax statute
Finally it is urged that two interpretations are possible of the relevant entries in the notifications of 1973 and 1975 and therefore the interpretation favourable to the dealer should be adopted
We are of the definite opinion that the only interpretation possible is that aluminium rolled products and extrusions are regarded as distinct commercial items from aluminium ingots and billets in the notifications issued under the UP Sales Tax Act
In the result the appeals fail and are dismissed with costs


Summary:
Pursuant to a circular issued by the Commissioner of Sales Tax that aluminium ingots only should be taxed at the lower rate and that all other items like rods bars rolled products extrusion sections etc should be taxed at higher rates as unclassified items the Sales Tax Officer taxed aluminium ingots manufactured by the appellant at the lower rate and treating the remaining products manufactured by them as unclassified items taxed them at the higher rate
The High Court dismissing the appellant s writ petition impugning the assessment made by the Sales Tax Officer held that while aluminium ingots wire bars and billets would fall in the category of metals and alloys rolled products prepared by rolling ingots and extrusions manufactured from billets were different commercial commodities from the ingots and billets and that they fell outside the category of metals and alloys
The method of assessment made by the Sales Tax Officer was therefore upheld
In appeal to this Court it was contended that the High Court erred in holding that the rolled products and extrusions were new commercial commodities distinct from the aluminium ingots and billets from which they were prepared and that they represented the marketable form merely of ingots and billets
Dismissing the appeal  HELD The expression metal  has been generally employed in the relevant notifications to refer to the metal in its primary sense ie in the form in which it is marketable as a primary commodity
Subsequent forms evolved from the primary form and constituting distinct commodities marketable as such must be regarded as new commercial commodities
In all the relevant notifications therefore the framers followed the scheme that one clause dealt with metal in its original saleable form and another separate clause dealt with fabricated forms in which it was saleable as a new commodity
Aluminium ingots and billets are saleable commodities as such in the market
When such a notification refers to a metal it refers to the metal in the primary or original form in which it is saleable and not to any subsequently fabricated form
133 H The word all occuring in all kinds of minerals ores metals and alloys including sheets  in the notification cannot be interpreted to include even subsequently fabricated forms of the metal for such an interpretation would be inconsistent with the scheme of the notifications
While broadly a metal in its primary form and a metal in its subsequently fabricated form may be said to belong to the same genus the distinction made between the two constitutes a dichotomy of direct significance to the controversy in the instant case
135 B C Having regard to the scheme followed in the framing of the notifications the expression including does not enlarge the meaning of the word metal
It must be understood in a conjunctive sense as a substitute for and
134 H Devi Dass Gopal Krishnan and Others vs The State of Punjab and Others 1967 20 STC 430 followed
Tungabhadra Industries Ltd Kurnool vs Commercial Tax Officer Kurnool 1960 11 STC 827 and State of Madhya Bharat now State of Madhya Pradesh and Others
vs Hiralal 1966 17 STC 313 distinguished
State of Tamil Nadu v Pyare Lal Malhotra 1976 37 STC 319 and 325  Maharaja Book Depot vs State of Gujarat  referred to
State of Gujarat vs Shah Velijibhai Motichand Lunawada 1969 23 STC 288 not approved
A word describing a commodity in a sales tax statute should be interpreted according to its popular sense the sense in which people conversant with the subject matter with which the statue is dealing would attribute to it
Words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance
But what is relevant in the circumstances of the present case is the manner in which these and similar expressions have been employed by those who framed the relevant notifications and with the inference that can be drawn from the particular arrangement of the entries in the notifications
The intent must be derived from a contextual scheme
133 D F Porritts  Spencer Asia Ltd vs State of Haryana 1978 42 STC 433 followed