WP(C) 6250/2007 BEFORE HON’BLE THE CHIEF JUSTICE MR. MADAN B LOKUR HON’BLE MR. JUSTICE P K MUSAHARY JUDGEMENT & ORDER(CAV) Musahary,J/ Heard Dr.A K Saraf, learned senior counsel assisted by M r. D.Baruah, learned counsel for the petitioner. Also heard Mr. K N Choudhury, l earned Additional Advocate General, Assam for the Respondents. 2. The petitioner, claiming itself as a duly registered company und er the Companies Act, 1956, having its registered office in Kolkata and Branch Office at several places including Guwahati, says inter alia, that it manufact ures edible grade coconut oil and it is holding valid licence under the provisio ns of Prevention of Food Adulteration Act ( in short, PFA Act). It says that its products meets all the requirements and standard of edible oil prescribed for B UREAU of Indian standard (hereinafter in short ’Bureau’). Further says that the coconut oil manufactured by the petitioner company has passed the test conducted by the National Test House, Kolkata. The petitioner agrees that, its product u nder the Trade name Shalimar Coconut Oil falls within the taxing schedule pres cribed under Entry No.24(i) of 2nd Schedule to the Assam Value Added Taxes Act, 2003 (hereinafter referred to as ’VAT Act’ in short) without any ambiguity but the respondents No.2 and 3 have suo moto transponded the entry of coconut oil in to 5th Schedule by an order issued vide No.CST -48/2006/112 dated 11.10.2007 by the Commissioner of Taxes, Assam and notice No.12733 dated 16.11.2007 issued by the Respondent No.3, the Superintendent of Taxes, Guwahati, Unit-D. The aforesa id order dated 11.10.2007 (Annexure-VII) and notice dated 16.11.2007 (Annexure-V I) are under challenge in this writ petition. 3. The petitioner company as stated in the petition was registered as a dealer within the meaning of Assam General Sales Tax Act, 1993 that stood r epealed by enactment and subsequent Notification of the VAT Act and the petition er is a duly registered company under the provisions of VAT Act and it has been assessed by the respondent No.3. The petitioner company holds a licence under t he Assam Trade Article (Licensing & Control) Order, 1982 (hereinafter referred t o as ATAO in short). Over and above the petitioner company also holds a certif icate under Form-4 issued by the Joint Director of Health Services, Guwahati fo r sale of coconut oil as a food grade edible article which is valid upto 31.3. 2008. 4. Both edible and non-edible vegetable oil were initially taxable at the point of first and last sale in Assam vide Entry VII of Schedule IV to A ssam General Sales Tax Act (hereinafter in short called as AGST, Act) with 4+4 p aise in a rupee upto 5.10.99. Thereafter the same was transferred to Schedule -I I Entry-IV at the rate refixed at 8 paise in rupee. It was reduced to 4(four) pa ise w.e.f. 1.1.2000. Thereafter w.e.f. 1.1.2000 to 18.2.2002 all vegetable oil b oth edible and non-edible including Vanaspati vegetable oil or other edible oil including mustard oil and rapeseed oil, but excluding coconut oil became taxabl e at the first point of sale @ Rs. 12 paise a rupe. Thereafter all edible oils were listed as item No.22(i) in the 2nd Schedule to the VAT Act, which is listed as goods taxable at 4% or 4 paise in a rupee w.e.f 7.4.2005 till date. After enactment and implementation of VAT Act, the petitioner was calculating the VA T on coconut oil at the rate of 4 paise in a rupee as per Entry 24(i) of the VA T Act and similarly the petitioner was paying the tax and/or filed necessary re turn before the authorities under the VAT Act at the rate of 4 paise in a rupee. 5. There are 8(eight) schedules to the VAT Act. The first Schedule pertains to goods exempted from payment of tax. The 2nd Schedule with 3(three) parts; (a), (b) and (c), pertains to different items chargeable to tax at the ra te of 4%. We are concerned with this Schedule. The edible oils are placed at Ent ry No.24(i) in part -A of the 2nd schedule. Schedule -IV pertains to list of goo ds taxable at the point of first sale in the State while 5th Schedule pertains t o goods All other goods not covered by 1st, 2nd, 3rd and 4th Schedule. We are also, thus, concerned with the 5th Schedule inasmuch as the coconut oil manufact ured and marketed by the petitioner company is used mainly as hair oil and not a s edible oil and it has been made taxable at the rate of 12.5% by issuing the i mpugned order dated 11.10.2007. Therefore, the issue involved in this case is wh ether coconut oil which is mainly and popularly used as hair oil and not as e dible oil in Assam, would be taxable at the rate of 12.5 % under 5th Schedule t o the VAT Act. In other words, whether the coconut edible oil manufact ured by the petitioner-company in Assam would come under Entry 24(i) in part-A of the 2nd Schedule to the VAT Act to be charged tax at the rate of 12.5 %. 6. Dr. Saraf, learned senior counsel for the petitioner would submi t that the impugned decision of the respondent-authorities in coming to a conclu sion that the coconut oil in the State of Assam is not used for cooking but it i s mainly used for hair oil and it cannot be treated as edible oil, is as much pr esumptive as unreasonable and baseless inasmuch as there was no survey undertake n before coming to such conclusion which was required to be done before any deci sion is taken. Such unilateral decision was taken without affording any opportun ity of hearing to the petitioner, which is liable to be interfered with in judi cial review. The burden lies heavily on the State to prove that the coconut oil is used mainly as hair oil and not as edible oil in Assam. There is no finding o f the fact that particular class of persons who use coconut oil as cooking mediu m do not reside in the State of Assam. So also there is no finding of fact that none of the coconut oil sold by the petitioner has ever been used for edible pur pose and therefore, there is no basis to hold that coconut oil manufactured by t he petitioner is not an edible oil. Without discharging the said burden by way of organizing survey or conducting an enquiry, any decision in this regard with out issuing any notice and providing an opportunity of hearing, cannot be accept able and sustainable under the law. According to Dr.Saraf, on the question of e nquiry and burden of proof by the State whether a particular item is to be inclu ded in a taxable item, the position has been explained and settled by the Apex C ourt in several cases. In support of this he would refer to HPL Chemicals Ltd. -Vs- Commissioner of Central Excise, Chandigarh, reported in (2006) 5 SCC 208. H e further submits that there is no evidence on record that the petitioner market ed its product as a non edible oil. There is also no material on record that the product literature or label ever indicated that the coconut oil manufactured by the petitioner is not edible, nor are there any material on record that the coconut oil sold by the petitioner was perfumed and was not fit for edible purp ose. There is also no material on record before the respondent No.2 to justify a different categorization of purchase merely because the coconut oil manufactur ed by the petitioner is susceptible to multiple uses. The action of the responde nts in changing the category or re-classification of petitioner’s coconut oil fr om Entry 24(i) under 2nd Schedule to the 5th Schedule of the VAT Act is arbitra ry, unreasonable and hit by principles of Wednesbury’s test on unreasonableness as no person trained in law would reasonably interpret the food grade coconut oil manufactured by the petitioner under a valid licence to fall within the 5th Schedule to the VAT Act without any material on record by ignoring the settled p rinciple of law. 7. Seriously countering the submissions made by the learned counsel for the petitioner, Mr. K N Choudhury, learned Additional Advocate General, Ass am would submit that the conclusion arrived at by the respondent- authorities t hat coconut oil in Assam is not used for cooking and it is mostly used as hair o il is based on market survey and as per the commercial parlance or market test. For application of common parlance and commercial parlance test in respect of a particular item, he would refer us to Commissioner of Trade Tax UP-Vs-Associa ted Distributors Ltd. reported (2008) 7 SCC 409, wherein it is held that the H indi word ’Mithai’ as understood in the State of U.P. would not cover bubblegum inasmuch as bubblegum is an unclassified item taxable @ 10%. The reason was tha t the word ’mithai’ has a definite connotation and it can be said with reasonab le amount of certainty that people in this country do not consider toffee as Mit hai. Similarly in the case of coconut oil produced and sold in Assam , when a pe rson asks a salesman in a shop for coconut oil, he would instantly bring and sh ow coconut oil used as hair oil and not coconut oil used for cooking. Therefore, according to Mr. Choudhury, learned Addl.Advocate General, the coconut oil both in common and commercial parlance would mean only coconut hair oil as the peop le in the State of Assam mostly and popularly use the coconut oil as hair oil. H e would then refer to another case in SSE Pvt. Ltd.-Vs- the Sate of Assam & ors , reported in (2005) 2 GLR 468 on interpretation of taxing statute, wherein it has been held that for classification of a particular product for the purpose o f levy of tax, if the product or commodity is not defined by the Statute, the pr inciple of common parlance test must be adopted to avoid technical, scientific a nd dictionary meaning. With the support from the decision in the said case, it i s submitted that the common parlance principle has been rightly applied to the p resent case and there is no infirmity or legal wrong committed by the respondent -authorities in making coconut edible oil produced and marketed by the petitione r taxable at the rate of 12.5% under 5th Schedule to the VAT Act . The petitione r may manufacture and sell edible coconut oil but it is not popularly used as me dium of cooking in the State of Assam and this is the reason why it was made tax able at 12.5 % under the Assam General Sales Tax Act (AGST in short). Thereafter the VAT Act came into force under which edible oil was listed as item No.24(i) in the 2nd Schedule to the said Act which was made taxable at 4% w.e.f.7.4.2005. But the hair oil like coconut oil not being a product covered under Schedule No .1,2,3 and 4, it has been made taxable at 12.5% under the 5th Schedule as a resi duary item. He further submits that issuing of prior notice as claimed by the pe titioner is not necessary inasmuch as the petitioner was never in the picture in the whole process and if the petitioner was aggrieved by the issuance of clarif ication dated 11.10.2007, which was already circulated in the official Website f or information of all concerned, it could have filed a review petition under Sec tion 105 of the VAT Act for appropriate remedy but it did not prefer to do so, a nd therefore, the question of giving opportunity of hearing to the petitioner d oes not arise and it cannot be claimed as a matter of right. 8. We have carefully gone through the pleadings of the parties. We find that there is no dispute as regards the status of the petitioner as a company, manufacturer and trader of coconut oil in the State of Assam under valid licenc e/permit etc., issued by competent authorities. There is no dispute in regard to the fact that the petitioner is manufacturing /producing /marketing both hai r oil and edible oil as per grade specified by the authorities concerned. What i s in dispute is that the coconut oil is not popularly used by the people in Assa m as edible oil. It is rather popularly used as hair oil only. We are aware that edible oil means oil for being used as medium of cooking. Coconut is undoubtedl y a main medium of cooking, mainly in the southern States of India. In the rest of the country, including Assam, it is not usually /popularly used as edible oil or medium of cooking. It means that in common parlance, the coconut oil is not accepted as edible oil in Assam. The respondent-authorities may be right in exc luding the coconut edible oil from Entry 24(i) of Schedule-2 and making it charg eable under 5th Schedule as residuary item levying tax at @ 12.5 %. 9. Now coming to the meaning of a particular item under the commercia l parlance there is a need for further examination in the context of use of a pa rticular item and treatment given under a statute for charging tax on it. The me aning of ’Mithai’ as explained in the Associated Distributors case (supra) re lates to edible items namely Mithai i.e. sweet and bubblegum i.e.Toffee. Toffee is considered as sweetmeat but bubblegum is not a sweetmeat like the toffee. It is an unclassified goods taxable under the law in the State of Uttar Pradesh. In Chittaranjan Saha -vs- State of Tripura reported in (1990) 079 STC 0051, a Div ision Bench of this Court held that akin to the common parlance test is trade pa rlance or commercial parlance test. It was held further that according to this test items in taxing statute like sale tax, custom etc. should be judged and an alysed on the basis of how these expressions are used in the trade or industry o r in the market or, in other words how these are dealt by the common people, wh o deal in them. This principle was applied earlier in Commissioner of Income Tax es -Vs- Taj Mahal Hotel, (1971) 82 ITR 44 (SC): (1971) 3 SCC 550. Refer ring to various decisions, the Division Bench came to a conclusion that the comm on parlance or commercial parlance test scheme is a generally accepted test. The Courts have freedom to apply some other tests also to interpret items under the taxing statutes. One such test is popularly known as common sense test or ’com mon sense rule of interpretation’ as referred to by the Supreme Court in Tungabh adra Industries Ltd.-vs- Commercial Tax Officer, Karnool, (1960) 11 STC 827. It has also mentioned about user test for interpreting items of taxing statute. W e are not really concerned with all those tests. The matter involves simple test under the common parlance and commercial /trade test. In common parlance edibl e oil would primarily mean mustered oil, rape seed, vanaspati etc in the mainla nd and also coconut oil in the southern part of India. It is correct to say that in common parlance coconut oil is primarily manufactured for hair oil. Edible oil from coconut is also produced for cooking purpose. Both coconut hair oil as well as coconut edible oil can be produced from the coconut fruits . They are p acked in the container indicating use of the product; either for hair oil or edi ble oil. They are distinct products for separate usages. There is no complaint to the effect that the petitioner company is defaulting in displaying the purpos e or use of the product in the label pasted to the containers or packets. There is no difficulty for the common people in making out two different coconut oils, namely hair oil and coconut edible oil. There is no complaint received by the a uthorities that the common people have difficulty in identifying the coconut ha ir oil and vegetable oil sold in the market. It is, therefore, established that in common parlance edible oil is produced from coconut and sold in the country including the State of Assam. 10. Thus, it appears that there are various tests applied for determ ining the meaning or connotation of words and expressions describing an article in taxing statutes. The mostly used tests are - common sense or popular test, tr ader or commercial parlance test, scientific and technical meaning test and user test. Some time dictionary meaning is also pressed into service for interpretin g the items. For the purpose of deciding the present case it is not necessary to deal with application of the said tests. However, we feel it apt to bear in min d that the Supreme Court in other cases held that user test is logical but incon clusive. Similarly, use of dictionary meaning in interpreting an item in taxing statute is not considered relevant in all cases. A Division Bench of this court had an occasion to deal with the application of the aforesaid tests in details b y referring to various decisions of the Supreme Court. In this context, we are r eferring ourselves to Chitta Ranjan Saha (supra). The settled position of law ha s been narrated in paragraph 15 of the judgment which is reproduced below: 15. The principles laid down by the courts in various decisions discussed abov e can be summarized as follows: Where no definition is provided in the statute f or ascertaining the correct meaning of a fiscal entry the same should be as unde rstood in common parlance or trade or commercial parlance. Such words must be un derstood in their popular sense. The strict or technical meaning or the dictiona ry meaning of the entry is not to be resorted to. The nomenclature given by the parties to the word or expression is not determinative or conclusive of the nat ure of the goods. The same will have to be determined by application of the wel l-settled rules or principles of interpretation which have been referred to as common parlance rule, trade or commercial parlance rule, common sense rule f interpretation and user test . The application of the principles will again depend on the facts and circumstances of each case. No test or tests can be said to be validly applicable to all cases. There may be cases where the interpretat ion may be tested by applying more than one rule of interpretation as has been done by the courts in certain cases. 11. One thing is very clear in this case. The words ’hair oil’ and ’ edible oil’ do not involve technical or scientific interpretation. They are as simple as clear by themselves. In simple English hair oil means scented oil for dressing the hair. Edible means fit to be eaten. Therefore edible oil unmistaka bly mean oil fit for cooking meals or food items for human consumption. A hair o il would, therefore, always signify and mean oil used for nourishing hair that c annot be used for cooking meals. Similarly the edible oil would never mean oil u sed for nourishment of hair. It would only mean oil used for cooking meal. The users know the utility of hair oil and edible oil. The words ’hair’ and ’edible’ are determinative of the usages of coconut hair oil and coconut edible oil. The result is conclusive in the sense that these two words are capable of clearly i nforming the users as to which oil is meant for dressing the hair and preparing the food items. We are, therefore, firm in our opinion that dictionary meaning a nd user test could safely be used in the present case for interpreting the statu tory meaning of coconut hair oil and coconut edible oil although they may not be applicable to other cases. Therefore the test as applied to interpretation of ’ Mithai’ in Associated Distributors case (supra) has no application to the prese nt case. The meaning of ’Mithai’ as explained in the said case relates to edible items only that is ’Mithai’ not the sweetmeat or bubblegum i.e. toffee. 12. In the modern days people like to have different food items pre pared by different media of cooking. Food items prepared in coconut oil is no ex ception. People from different parts of India, including southern region, out of employment, business, trade and other avocations, come to Assam. Many people f rom southern region have come and settled in Assam for whom there is a popular d emand for coconut edible oil. It will be just a denial of reality if one makes a superficial observation that only coconut hair oil is used and edible coconu t oil is not at all used or sold in Assam. 13. Entry in 24(i) under 2nd Schedule to the VAT Act refers to edibl e oil. There is no specifications of edible oil made of mustered oil, rape-seed, sunflower or coconut. The item in the said Entry requires fulfillment of test a nd standard set by the authorities for edible oils. The authorities should not b e concerned with whether products edible oil made of coconut is popular amongst the people or in the market. Legally speaking once necessary licence for product ion and marketing of a particular item or product is issued, the presumption wou ld follow that there is demand for such item or product in the market. In such c ases user test is applied for charging a particular item under the tax statute . But the Supreme Court in M/s Mukesh Kumar Agarlwall and Company-Vs- State of M P and ors; 1988 (Supp) SCC 232, held that the particular use to which an artic le can be applied in the hands of a special consumer is not determinative of the nature of the goods. Even as the description of the goods by the authorities of a department who called them varyingly under different names is not determinati ve of the nature of the goods. It was, therefore, held that user test is logica l; but is inconclusive . In the present case for the purpose of determining char geability of the coconut edible oil under the statute, we see no reason to bring coconut edible oil manufactured and marketed by the petitioner to the fold of edible oils under Entry 24(i) in the 2nd Schedule to the VAT Act which has been made taxable at the rate of 4%. 14. We take note that the parties have different views contradictor y to each other. In respect of classification of coconut edible oil manufactured by it, the petitioner, on the basis of test under the commercial/trade parlan ce, claims that the coconut edible oil is popularly used amongst a section of pe ople in the State and so it can be included in item 24(i) and taxed @4% as pres cribed in 2nd schedule to VAT Act. On the other hand, the respondent-authoritie s have taken a reverse view based mainly on common parlance test without any ac ceptable report or material to support their claim that the coconut edible oil i n the State of Assam is not used for cooking purpose and hence it cannot be t reated as edible oil as it is mainly used as hair oil. We are not prepared to a ccept this view of the Govt. It is not really an out come of any common parlance test but an out come of guess work without