Case: Porritts and Spencer (Asia) Limited Vs. State of Haryana

BHAGWATI, J.1. The short question which arises for determination in this appeal is whether dryer felts manufactured by the assessee fall within the category of "all varieties of cotton, woollen or silken textiles, " specified in Item 30 of Schedule B of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act) If they are covered by this description, they would be exempt from Sales Tax imposed under the provisions of the Act, otherwise they would be liable to sales tax. T he assessing authorities held that the dryer Felts manufactured by the assessee were not "textiles" within the meaning of Item 30 of Schedule B and they were, therefore, not exempt from sales tax. The Tribunal, on appeal, also took the same view and rejected the claim of the assessee to exemption from sales tax in respect of sales of dryer felts. The assessee thereupon moved the Tribunal for making a reference to the High Court and on this application, the following question of law was referred by the Tribunal for the opinion of the High Court:"Whether on the facts and circumstances of the case, the products manufactured by the petitioner are not covered by Item 30 of Schedule B of the Punjab Genera l Sales Tax Act, 1 1948, and therefore, not exempt from sales tax both under the Punjab General Sales Tax Act, l948 and the Ccntral Sales Tax Act, 1956."2. The Reference was heard by Division Bench and on a difference of opinion between the two Judges constituting the Division Bench, the Reference was placed before a third Judge. The third Judge held that dryer felts were not included in the expression textiles occurring in Item 30 of Schedule B of the Act and were, therefore, not exempt from sales tax and on this view the question referred to h Court was answered against the assessee and in favour of the Revenue. The assessee thereupon preferred the present appeal with special leave obtained fro m this Court.It is clear from section 5 sub-section (1) of the Act that it levies sales tax on the taxable turnover of a dealer subject to the provisions of the Act. Sub-section (2) of section S defines "taxable turnover" mean that part of a dealers gross turnover during any period which remains .after deducting therefrom inter alia his turnover on the sale of goods declared tax free under section 6. Section 6 provides that no tax should be payable on the sale. of goods specified in the first column of Schedule B subject to the conditions and exception, if any set out in. the corresponding entry in the second column thereof any no dealer shall charge sales tax on the sale of goods which are declared tax-free fro m time to time under this section. Schedule B sets out in the first column, various categories of goods which are declared tax-free under section 6 and Item 30 specifies the following category of tax-free goods:"All Varieties of cotton, woollen or silken textiles including rayon artificial silk or nylon whether manufactured by handloom or powerloom or otherwise but not including pure silk fabrics, carpets, druggets, woollen durees and cotton floor durees.3. The question is: whether dryer felts manufactured by the assesee fell within this category of goods so as to be exempt from sales tax ? Can it be said that dryer felts constitute a variety of cotton or woollen textiles ? The answer to the question depends on what is the true meaning of the word "textiles as used in Item 30 of Schedule `B. Now, the word textiles is not defined in the Act, but it is well settled as a result of several decisions of this Court. Of which we may mention only a few, namely, Ramavatar Budhaiprasad v. Assistant Sales Tax officer, Akola (A. T. K. 1961 SC 1325.) and M/s Motipur Jamindary Co. Ltd. v. State of Bihar (A. I. R. 1962 SC 660 .) and the State of West Bengal v Washi Ahmed ([1977] 3 SCR 149.) that in a taxing statute words of every, day use must be construed not in their scientific or technical sense but as, understood in common parlance. The question which arose in Ramavatars case (supra) was whether betel leaves are vegetables and this Court held that they are not `irekldel within that term. , This Court chuoted with approval the following passage from the judgment of the High Court of Madhya Pradesh in Madhya Pradesh Pan Merchants Association, Santard Market, Nagpur v. State of Madllya Pradeh(7 S. T. C. 99 at 102.):"In our opinion, the word "vegetables cannot be given the con-lprehellsive mcaning the term bears in natural nistory and has not been given that meaning in taxing statutes beC fore The term "vegetables is to be understood as commonly understood denoting thosc classes of vegetable matter which are grown in kitchen gardens and are used for the tabl e."4. And observed that "the word vegetables in taxing statutes is to be understood as in common parlance i.e. denoting class of vegetabies which are grown in a kitchen garden or in a farm and are used for the table." This meaning of the worc.. vegetables was reiterated in M/s Motipur Jamindary case where sugarcane was held not to fall within the definition of the word vegetables ancl the same meaning was given to the word vegetables in Washi Ahmeds case (supra) where greerl ginger was held to be vegetables within the meaning of that word as used in common parlance.5. It was pointed out by this Court in Washi Ahmeds case (supra) that the sarne principle of construction in .elation to words used in a taxing statute has also been adopted in English, Canadiall and Americar Courls. Pollock B. pointed out in Gretfell v. 1. R. c.([1876] I E. D. 242 at 248.). that if a statutc contains language which is capable of being construed in a p3pular sense, such a statute is to the construed according to the strict or technical meaning of the laaguage contained in it, but is to be construed in its popular sense? meaning, of eourse, by the words "popular sense that which people conversant with the subject-matter , with which the statute is dealing. would attribute it." So also the Supreme Court of Canada said Planters Nut and Chocolate Co. Ltd v. The King([1951] 1 D.L.R. 385) while interpreting the words fruits and vegetables in the Excise Act." They are ordinary words in every day use and are, therefore to be construed according to their popular sense". The same rule was expressed in slightly different language by Story, J., in 200 Chests of Tea([1824] 9 Wheaton (US.) 430 at 438.) where the learned Judge said that the particular words used by the Legislature in the denomination of articles are to be understood according to the common commercial understanding of the terms used, and not in their scientific or technical sense, for the Legislature does "not suppose our merchants to be naturalists, or geologists, or botanists.". "There call, therefore, be no doubt that the word textiles in Item 30 of Schedule B must be interpreted according to its popular sense, meaning "that scene which people conversant with the subject-matter with which the statute is dealing would attribute to it". There we are in complete Agreement with the Judges who held in favour of the Revenue and against the assessee. But the question is: What result does the application of this test yield ? Are dryer felts not textiles within the ordinary accepted meaning of that word ? the word textiles is derived from the Latin texere which means to weave and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description as made out of any other material is woven into a fabric, w hat comes into being is a textile and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other hind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such phenomenal advance in science and technology, so wondrous i.. the variety of fabrics manufactured from materials hithereto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be textiles . What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces o r in big rolls: it may be weak or strong, light or heavy, bleach or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. It may-be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that dryer felts are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against dryer felts falling within t he category of textiles, if otherwise they satisfy the description of textiles.Now, what. are dryer felts ? They are of two kinds, cotton dryer felts and woollen dryer felts. Both are made of yarn, cotton in one case and woollen in the other. Some synthetic yarn is also used The process employed is that of weaving according to warp and woof pattern. This is how the manufacturing process is described by the assessing authority in its order dated 12th November, 1971 "the raw material used by . the company is cotton and woollen yarn which they themselves manufactured from raw cotton and wool and the finished products called felts are manufactured on power looms from cotton and woollen yarn." Dryer felts ar e, therefore, clearly woven fabrics and must be held to fall within the ordinary meaning of the word textiles. We do not think that the word textiles has any narrower meaning in common parlance other than the ordinary meaning given in the dictionary, namely, a woven fabric. There may be wide ranging varieties of woven fabric and they may go on multiplying and proliferating with new developments in science and technology and inventions of new methods" materials and techniques, but nonetheless they would all be textiles. The analogy of cases where the word vegetables was held not to include betel leaves or sugar-cane is wholly inappropriate. There, what was disapproved by the Court was resort to the botanical meaning of the word vegetables when that word had acquired a popular meaning which was different. It was said by Holmes, J., in his inimitable style: "A word is not a crystal, transparent and unchanged; it is the skin of a living Thought and may vary greatly in colour and content according to the circumstances and the time in which it is used." Where a word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the Legislature. The reason is that as pointed out by Story, J., in 200 Chest. (of Tea (supra), the Legislature does "not suppose our merchant s to be naturalists, or geologists, or botanists". But here the word textiles is not sought by the assessee to be given a scientific or technical meaning in preference to its popular meaning. It has only one meaning. namely, a woven fabric and that is the meaning which it bears in ordinary parlance. It is true that out minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard dryer felts as textiles: But it must be remembered that the concept or textiles is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as textiles. Take for example rayon and nylon fabrics which have now become very popular for making wearing apparel. When they first came to be made, they must have been intruders in the field of textiles because only cotton, silk and woollen fabrics were till then recognized as textiles. But today no one can dispute that rayon and nylon fabrics are textiles and can properly be described as such. `We may take another example Which is nearer to the case before his. It is common knowledge that certain kinds of hats are made out of felt and though felt is not ordinarily used for making wearing , apparel, can it be suggested that felt is not a textile ? The character of fabric or material as textile does not depend upon the use to which it may be put. The uses of textiles in a fast developing economy are manifold and it is quite common now to find textiles being, used even for industrial purposes. If were look at the Customs Tariff Act, 1975, we find in Chapter 59 occurring in section XI of the First Schedule that there is a reference to textile fabrics and textile articles, of a kind commonly used in machinery or plant and clause (4) of that Chapter provides that this expression shall be taken to apply inter alia to woven textile felts.... of a kind commonly used in paper making or other machinery........... ".6. This reference in a statute which is intended to apply to imports made by the trading community clearly shows that dryer felts which are woven textile felts... of a kind commonly used in paper making machinery" are regarded ill common parlance, according to the sense of ordinary traders and merchants, textile fabrics. We have, therefore, no doubt that dryer felts are textiles within the meaning of that expression in Item 3() of Schedule B.7.

Decision reasoning: 1[ds]The answer to the question depends on what is the true meaning of the word "textiles as used in Item 30 of Schedule `B. Now, the word textiles is not defined in the Act, but it is well settled as a result of several decisions of this Court. Of which we may mention only a few, namely,Ramavatar Budhaiprasad v. Assistant Sales Tax officer, Akola (A. T. K. 1961 SC1325.) and M/s Motipur Jamindary Co. Ltd. v. State of Bihar (A. I. R. 1962 SC 660  .) and the State of West Bengal v Washi Ahmed ([1977] 3 SCR 149.)   that in a taxing statute words of every, day use must be construed not in their scientific or technical sense but as, understood in common parlance. The question which arose in Ramavatars case (supra) was whether betel leaves are vegetables and this Court held that they are not `irekldel within that term. , This Court chuoted with approval the following passage from the judgment of the High Court of Madhya Pradesh in Madhya Pradesh Pan Merchants Association, Santard Market, Nagpur v. State of Madllya Pradeh(7 S. T. C. 99 atour opinion, the word "vegetables cannot be given themcaning the term bears in natural nistory and has not been given that meaning in taxing statutes beC fore The term "vegetables is to be understood as commonly understood denoting thosc classes of vegetable matter which are grown in kitchen gardens and are used for the tablobserved that "the word vegetables in taxing statutes is to be understood as in common parlance i.e. denoting class of vegetabies which are grown in a kitchen garden or in a farm and are used for the table." This meaning of the worc.. vegetables was reiterated in M/s Motipur Jamindary case where sugarcane was held not to fall within the definition of the word vegetables ancl the same meaning was given to the word vegetables in Washi Ahmeds case (supra) where greerl ginger was held to be vegetables within the meaning of that word as used in commonwas pointed out by this Court in Washi Ahmeds case (supra) that the sarne principle of construction in .elation to words used in a taxing statute has also been adopted in English,248.). that if a statutc contains language which is capable of being construed in a p3pular sense, such a statute is to the construed according to the strict or technical meaning of the laaguage contained in it, but is to be construed in its popular sense? meaning, of eourse, by the words "popular sense that which people conversant with the, with which the statute is dealing. would attribute it." So also the Supreme Court of Canada said PlantersNut and Chocolate Co. Ltd v. The King([1951] 1 D.L.R. 385)while interpreting the words fruits and vegetables in the Excise Act." They are ordinary words in every day use and are, therefore to be construed according to their popular sense". The same rule was expressed in slightly different language by Story, J., in 200 Chests of Tea([1824] 9 Wheaton (US.) 430 at 438.) where the learned Judge said that the particular words used by the Legislature in the denomination of articles are to be understood according to the common commercial understanding of the terms used, and not in their scientific or technical sense, for the Legislature does "not suppose our merchants to be naturalists, or geologists, or botanists.". "There call, therefore, be no doubt that the word textiles in Item 30 of Schedule B must be interpreted according to its popular sense, meaning "that scene which people conversant with thewith which the statute is dealing would attribute to it". There we are in complete Agreement with the Judges who held in favour of the Revenue and against the assessee. But the question is: What result does the application of this test yield ? Are dryer felts not textiles within the ordinary accepted meaning of that word ? the word textiles is derived from the Latin texere which means to weave and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description as made out of any other material is woven into a fabric, w hat comes into being is a textile and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other hind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such phenomenal advance in science and technology, so wondrous i.. the variety of fabrics manufactured from materials hithereto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be textiles . What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces o r in big rolls: it may be weak or strong, light or heavy, bleach or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. Itused for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that dryer felts are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against dryer felts falling within t he category of textiles, if otherwise they satisfy the description of textiles.Now, what. are dryer felts ? They are of two kinds, cotton dryer felts and woollen dryer felts. Both are made of yarn, cotton in one case and woollen in the other. Some synthetic yarn is also used The process employed is that of weaving according to warp and woof pattern. This is how the manufacturing process is described by the assessing authority in its order dated 12th November, 1971 "the raw material used by . the company is cotton and woollen yarn which they themselves manufactured from raw cotton and wool and the finished products called felts are manufactured on power looms from cotton and woollen yarn." Dryer felts ar e, therefore, clearly woven fabrics and must be held to fall within the ordinary meaning of the word textiles. We do not think that the word textiles has any narrower meaning in common parlance other than the ordinary meaning given in the dictionary, namely, a woven fabric. There may be wide ranging varieties of woven fabric and they may go on multiplying and proliferating with new developments in science and technology and inventions of new methods" materials and techniques, but nonetheless they would all be textiles. The analogy of cases where the word vegetables was held not to include betel leaves oris wholly inappropriate. There, what was disapproved by the Court was resort to the botanical meaning of the word vegetables when that word had acquired a popular meaning which washere the word textiles is not sought by the assessee to be given a scientific or technical meaning in preference to its popular meaning. It has only one meaning. namely, a woven fabric and that is the meaning which it bears in ordinary parlance. It is true that out minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard dryer felts as textiles: But it must be remembered that the concept or textiles is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as textiles. Take for example rayon and nylon fabrics which have now become very popular for making wearing apparel. When they first came to be made, they must have been intruders in the field of textiles because only cotton, silk and woollen fabrics were till then recognized as textiles. But today no one can dispute that rayon and nylon fabrics are textiles and can properly be described as such. `We may take another example Which is nearer to the case before his. It is common knowledge that certain kinds of hats are made out of felt and though felt is not ordinarily used for making wearing , apparel, can it be suggested that felt is not a textile ? The character of fabric or material as textile does not depend upon the use to which it may be put. The uses of textiles in a fast developing economy are manifold and it is quite common now to find textiles being, used even for industrial purposes. If were look at the Customs Tariff Act, 1975, we find in Chapter 59 occurring in section XI of the First Schedule that there is a reference to textile fabrics and textile articles, of a kind commonly used in machinery or plant and clause (4) of that Chapter provides that this expression shall be taken to apply inter alia to woven textile felts.... of a kind commonly used in paper making or other machinery...........reference in a statute which is intended to apply to imports made by the trading community clearly shows that dryer felts which are woven textile felts... of a kind commonly used in paper making machinery" are regarded ill common parlance, according to the sense of ordinary traders and merchants, textile fabrics. We have, therefore, no doubt that dryer felts are textiles within the meaning of that expression in Item 3() of Schedule B.