Case: Commissioner of Sales Tax, U.P Vs. Indian Herbs Research and Supply Company

RAMASWAMI, J.1. The question of law involved in this appeal is whether "dhoop" or "dhoop-batti" falls under the category of "perfume" and is liable to sales tax under item No. 37 of Notification No. 905/X dated March 31, 1956, issued under section 3-A of the U.P. Sales Tax Act (U.P. Act No. 15 of 1948), hereinafter called the "Act".2. The respondent is a manufacturer of and dealer in "dhoop-batti". The respondent also deals in indigenous medicines. The return filed by the respondent was not accepted by the Sales Tax Officer who estimated the turnover as including the sale of "dhoop" and assessed the turnover at 3 pies per rupee. The respondent appealed but the Judge (Appeals) was of the opinion that the case called for enhancement in tax as the sale of "dhoop-batti" fell within item No. 37 of Notification No. ST. 905/X dated March 31, 1956, and was liable to be taxed under section 3-A of the Act, i.e., at a single point. The Judge (Appeals) estimated the turnover of dhoop-batti at Rs. 10, 000 and enhanced the tax from Rs. 348-14-9 to Rs. 838-11-0. "The appellate order was confirmed in revision by the Judge (Revisions) who rejected the contention of the respondent that dhoop-batti was used for the purpose of puja and could not be classified in the category of "perfume". Thereafter a reference was made to the High Court under section 11(1) of the Act on the following question of law :"Whether dhoop or dhoop-batti does not come under the category of perfume and is not liable to tax under item No. 37 of the Notification No. 905/X dated March 31, 1956, under section 3-A of the U.P. Sales Tax Act ?"3. The High Court answered the question in favour of the respondent, holding that dhoop and dhoop-batti do not fall within the category of "perfume" under item No. 37 of the Notification No. 905/X dated March 31, 1956. This appeal is brought by special leave from the judgment of the Allahabad High Court dated February 23, 1966, in Miscellaneous Sales Tax Reference No. 381 of 1962.Section 3-A of the Act provides :"Single point taxation. - (1) Notwithstanding anything contained in section 3, the State Government may, by notification in the official Gazette, declare that the turnover in respect of any goods or class of goods shall not be liable to tax except at such single point in the series of sales by successive dealers as the State Government may specify.(2) If the State Government makes a declaration under sub-section (1), it may further declare that the turnover in respect of such goods shall be liable to tax at such rate not exceeding ten naye paise per rupee as may be specified.(3) Every notification made under this section shall be laid before the Legislative Assembly of the State as soon as may be after it is made and if a resolution amending or modifying it is passed by the Assembly within the Session in which it is laid, it shall, from the date of passing of the resolution, be amended or modified accordingly but without prejudice to the validity of anything previously done or of any liability incurred or assessment made."The Notification No. 905/X dated March 31, 1956, was issued by the State Government in exercise of the powers conferred by section 3-A of the Act and it declare that with effect from April 1, 1956, the goods specified therein will be liable to single point tax, which in the case of goods imported from outside U.P. will be at the point of sale by the importer and in the case of goods manufactured in U.P. at the point of sale by the manufacturer. Item No. 37 of the notification reads :"Scents and perfumes (in English) and Itra tatha sugandhian (in Hindi)."4. The respondent is admittedly a manufacturer of dhoop and dhoop-battis. If these articles fall within the category of "scents or perfumes" within the language of the notification then they will be liable to be taxed in the hands of the assessee at the rate of one anna per rupee which is the tax declared in the notification instead of the multi-point sales tax of only three pies in the rupee.On behalf of the appellant if was conceded that dhoop-batti does not fall within the category of "scents" but it would fall within the category of "perfume" which is a word of much wider import than scents and includes therein all "incense". The contrary viewpoint was presented on behalf of the respondent who contended that the word "perfume" as used in the notification must have the meaning which is commonly understood and dhoop-batti cannot be called "perfume" because it does not by itself emit in its natural state any agreeable odour but after heat is applied fumes are produced which have an agreeable odour. In other words, the contention of the respondent was that dhoop-batti does not by itself emit any fragrance but does so only when it is burnt and cannot therefore fall within the language of the notification. We are unable to accept the argument put forward on behalf of the respondent as correct. In our opinion, there is no warrant for restricting the meaning of the expression "perfume" only to substances which emit fragrance in their natural state and not as including those which produce fragrance as a result of the application of heat or the application of some foreign matter to induce the chemical reaction which would result in the odours being released from the substance. In Oxford English Dictionary the word "perfume" is defined as follows :"Perfium, perfium, sb. Also 6 par - . (a. F. parfum 1528 in Laborde Gloss). = obs. It. perfumo, Sp perfumo, sb. from obs. It. perfumare, Sp. perfumer, F. perfumer : 1. a. orig. The odorous fumes or vapour given off by the burning of any substance, esp. by such as emit an agreeable odour, as incense. b. Hence, the volatile particles, scent, or odour emitted by any sweet-smelling substance; the fragrance diffused by liquid scent, ex-haled by flowers, etc. 2. A substance, natural or prepared, which emits, or is capable of emitting an agreeable odour; a fluid containing the essence of flowers or other odorous substances; scent. Orig. applied to such as diffuse a sweet-smelling odour when burned."It is evident therefore that the word "perfume" originates from the word "fumare" which means to "smoke" or to emit vapour given off by some burning substance. In Encyclopaedia Britannica, Volume 17, 1965 Edition, at page 505, it is similarly pointed out that the literal meaning of the word "incense" is the same as "perfume" but "perfume" has later on acquired an extended meaning so as to include anything sweet from smoking incense to fragrance of flowers. We are accordingly of the opinion that the word "perfume" in item No. 37 of the Government notification should be construed in its ordinary sense, i.e., any substance natural or prepared which emits or is capable of emitting an agreeable odour either when burned or by the application of some foreign matter to induce any chemical reaction which results in fragrant odours being released from that substance. If we are right in taking this view dhoop and dhoop-battis manufactured by the respondent fall within the category of "perfume" under item 37 of the Government notification and are liable to tax imposed therein. We should like to add that in M/s. Prahalad Das Gupta, Rajadarwaza, Varanasi v. Sri C. S. Saxena, Sales Tax Officer, Varanasi (Civil Misc. Writ No. 1878 of 1962 decided on 17-10-1962), the Division Bench of the Allahabad High Court has taken the view that agarbattis fall within the dictionary meaning of "perfume" as it was a kind of incense which gave out agreeable odour when burned and therefore fell within item No. 37 of the Government notification. This decision supports the opinion that we have expressed that dhoop and dhoop-battis fall within the category of "perfume" and are liable to tax under item No. 37 of the Government notification.

Decision reasoning: 1[ds]The contrary viewpoint was presented on behalf of the respondent who contended that the word "perfume" as used in the notification must have the meaning which is commonly understood andt be called "perfume" because it does not by itself emit in its natural state any agreeable odour but after heat is applied fumes are produced which have an agreeable odour. In other words, the contention of the respondent was thatdoes not by itself emit any fragrance but does so only when it is burnt and cannot therefore fall within the language of the notification.We are unable to accept the argument put forward on behalf of the respondent as correct. In our opinion, there is no warrant for restricting the meaning of the expression "perfume" only to substances which emit fragrance in their natural state and not as including those which produce fragrance as a result of the application of heat or the application of some foreign matter to induce the chemical reaction which would result in the odours being released from theare accordingly of the opinion that the word "perfume" in item No. 37 of the Government notification should be construed in its ordinary sense, i.e., any substance natural or prepared which emits or is capable of emitting an agreeable odour either when burned or by the application of some foreign matter to induce any chemical reaction which results in fragrant odours being released from that substance. If we are right in taking this view dhoop andmanufactured by the respondent fall within the category of "perfume" under item 37 of the Government notification and are liable to tax imposed therein. We should like to add that in M/s. Prahalad Das Gupta, Rajadarwaza, Varanasi v. Sri C. S. Saxena, Sales Tax Officer, Varanasi (Civil Misc. Writ No. 1878 of 1962 decided onthe Division Bench of the Allahabad High Court has taken the view that agarbattis fall within the dictionary meaning of "perfume" as it was a kind of incense which gave out agreeable odour when burned and therefore fell within item No. 37 of the Government notification. This decision supports the opinion that we have expressed that dhoop andfall within the category of "perfume" and are liable to tax under item No. 37 of the Government notification.