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Judgment
Prakash Shrivastava, J.—By way of the present writ petition, the petitioner has challenged the order dated March 17, 2003, passed by the Additional Commissioner, Commercial Taxes, in Revision Case No. 84/Indore/03/Prantiya. In brief, the petitioner is a company engaged in the business of manufacture and sale of toffees, chewing gums, bubblegum, etc. In the quarterly returns filed under the M. P. Commercial Tax Act, 1994 (for short, "the Act"), the petitioner had treated chewing gums and bubblegums as covered by entry 5 of Part VII of the Second Schedule taxable at eight per cent. The assessing officer completed the assessment by order dated October 29, 2002, treating these items covered by entry 21 of Part IV of the Second Schedule of the Act for the period May 11, 1998 to December 31, 1999, under entry 23, Part III of the Second Schedule for the period January 1, 2000 to March 14, 2000 and under entry 14 of Part III of the Second Schedule for the period March 15, 2000 to March 31, 2000 and levying tax at 12 per cent. The petitioner had challenged the assessment order in revision before the Additional Commissioner of Commercial Tax, which has been rejected by the order dated March 17, 2003.
The learned counsel appearing for the petitioner submitted that the assessing as well as the revisional authorities have committed an error in treating the chewing gum and bubblegum as "lozenges" and levying tax at 12 per cent under the entry applicable to lozenges whereas the tax was livable at eight per cent under the residuary entry. He further submitted that in the common parlance meaning chewing gums and bubblegums are not lozenges and that for the other assessment periods, this issue has been settled by the M. P. Commercial Tax Appellate Board by holding in favour of the petitioner.
The learned counsel for the respondents has supported the impugned order and submitted that no error has been committed by the authorities in treating chewing gums and bubblegums as "lozenges" and levying the tax accordingly.
We have heard the learned counsel for the parties and perused the record.
The relevant entries of the Second Schedule to the M. P. Commercial Tax Act during the period in question, i.e., April 1, 1999 to March 31, 2000 are as under :
Residuary entries during the relevant period
Entry No. 1, Part VII, Schedule II (April 1, 1999 to December 31, 1999) and entry No. 1, Part VI, Schedule II (January 1, 2000 to March 14, 2000)
"All other goods not included in Schedule I or any other part of this Schedule
8%"
Entry No. 39, Part IV, Schedule II
All other goods not included in Schedule I or any other part of this Schedule
8%
Entries covering lozenges during relevant period
Entry No. 21, Part TV, Schedule II
(April 1, 1999 to December 31, 1999)
(I) Cakes and pastries,--
(i) Biscuites, chocolates, toffees, lozenges and peppermint drops whether sold loose or in sealed containers
(ii) Bakery goods other than bread and the goods mentioned in (i) and (ii) above...
12%
Entry No. 23, Part III, Schedule II
(January 1, 2000 to March 14, 2000)
(i) Cakes and pastries
(ii) Biscuites, chocolates, toffees, lozenges and peppermint/drops whether sold loose or in sealed containers
(iii) Bakery goods other than unbranded bread and the goods mentioned in (i) and (ii) above...
12%
Entry No. 14, Part III, Schedule II
(March 15, 2000 to March 31, 2000)
(i) Cakes and pastries
(ii) Biscuites, chocolates, toffees, lozenges and peppermint drops either sold loose or in sealed containers
(iii) Bakery goods other than unbranded bread and the goods mentioned in (i) and (ii) above...
12%
It is the settled position in law that while interpreting the entries in sales tax legislation, the words used in the entries must not be construed in any technical sense or from the scientific point of view, but as understood in common parlance. The words used by the Legislature must be given their popular sense meaning, i.e., the meaning which people conversant with the subject-matter with which the statute is dealing would attribute to it. For finding out the true meaning of the entries mentioned in the Sales Tax Act, what is relevant is not the educational meaning, but how those entries are understood in common parlance especially in commercial circles since sales tax primarily deals with dealers who are engaged in commercial activities. It is also the general principle that if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it. (see Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. G.S. Pai and Co., , Ganesh Trading Co., Karnal Vs. State of Haryana and Another, , Filterco and Another Vs. Commissioner of Sales Tax, Madhya Pradesh and Another, and M/s. Pappu Sweets and Biscuits Vs. Commissioner of Trade Tax U.P Lucknow,
Keeping in view the aforesaid, it is to be seen, if in the common parlance chewing gum and bubblegum are treated as "lozenges". Chewing gum and bubblegum not only have different ingredients, taste features and characteristics, but they are also items different from lozenges in common parlance inasmuch as a customer asking for chewing gums or bubblegums would not be given lozenges by a shop keeper.
The Supreme Court in the matter of Commissioner of Trade Tax, U.P. v. Associated Distributors Ltd. reported in [2008] 15 VST 39 (SC); [2008] 13 STJ 150, while holding that bubblegum is different from sweetmeat, has noted the distinguishing features of bubblegum as follows (page 51 in 15 VST) :
If the ratio of the aforesaid judgment is properly comprehended then bubblegum in the common parlance cannot be construed as mithai (sweetmeat). When we apply common parlance test and in fact ask someone to bring the sweets from the market, he will never bring bubblegum. In common parlance, even items of confectionery will not be construed as sweetmeat (mithai). In fact, bubblegum is not an item for eating. It is kept in the mouth and after chewing the same is thrown out. The bubblegum while kept in the mouth by the children is also inflated as a balloon. In fact, it is used as a ''mouth freshener''. It is not made only of sugar. It contains gum base, vexes, etc., along with sugar.
According to wikipedia, the encyclopedia, bubblegum is a type of chewing gum especially designed for blowing bubbles.
The Commissioner, Sales Tax, U.P., has relied on the judgment in Nutrine Chewing Gum Products Co. Pvt. Limited, Lucknow [1985] STI 21 and observed that :
In chewing gum, sugar is an almost insignificant... over it is not eatable. Its use is entirely different. Children use it just for a fun and athletes for controlling the breath. In common parlance also nobody treats it as an item of confectionery. I, therefore, hold that chewing gum is an unclassified item''.
The same issue had come up before the Full Bench of the M. P. Commercial Tax Appellate Board in the case of this very petitioner for another assessment period where the Full Bench of the Board, after examining the matter in detail, by order dated January 31, 2004 found that the lozenges and chewing gums/bubblegums are identified differently in common parlance. The Full Bench of the Board has held as under :
One can say that toffee is a kind of firm or hard sweet softnery, which when sucked or chewed dissolves in the mouth. Lozenges a rhombus or diamond shaped figure, a small sweet or medicinal tablet orange also dissolves in the mouth. Chewing gum and bubblegum is not made by boiling sugar and butter and it also does not dissolve in the mouth. On the contrary after sucking or chewing it some rubber type material is left in the mouth. That is how the children and people in the popular sense or in common parlance identify these goods."
The Full Bench of the Board in the above order had also taken note of the scope of entry No. 21, Part IV of the Second Schedule and found that the bubblegums and chewing gums cannot be held to be covered under that entry as they are different from the items mentioned in that entry and therefore chewing gums and bubblegums fall in the residuary entry. The Full Bench held as under
In the present case the entry in question is neither headed by ''all kinds of confectionery'' nor is ending with the word ''etc.''. Entry No. 21(ii) of part IV of the Second Schedule to the Act mentioned earlier, contains, biscuits, chocolates, toffees, lozenges and peppermint drops whether sold loose or in sealed containers are confectionary goods of same category being expressions taking colour from each other but bubblegum/chewing gums are confectionery goods of different category. It is accepted principle of law that in case of controversy of tax on commodities, one of the principles which is usually applied, is known as doctrine of ''noscitur a sociis''. i.e., where two or more words are stated together they are to be construed in a cognate manner. To put it differently, each word takes colour from each other. One application of the above general principle is the doctrine of ''ejusdem generis'' which say that wherever the general words are followed by particular or specific words of same nature, the general words would take its meaning from the later specific word, however this is not the case in present appeal. Here the goods or items ''bubblegums'' and ''chewing gums'' neither find place at all in the entry nor the entry is head by ''all kinds of confectionery''. Therefore the above principle does not apply here.
In view of the above factual analysis, the rulings and principles propounded by the honourable Supreme Court of India in its various judgments, the Appellate Board has come to the conclusion that goods ''bubblegum'' and ''chewing gum'' cannot be covered in entry No. 21(ii) of part IV of the Second Schedule to the Act as these goods are quite different from those already mentioned in that entry. Therefore, they cannot be taxed at the rates prescribed for that entry goods. Consequently order dated July 5, 2001 and dated August 22, 2000 passed by the Appellate Deputy Commissioner and assessment officer, respectively, are set aside and the case is remanded to the assessment officer for passing fresh orders after verification treating these goods as residuary item, falling under entry No. 1 of Part VII of the Second Schedule to the Act unless he finds some other suitable entry for these goods.
It is also worth noting that for the assessment period April 1, 1997 to March 31, 1998 and for April 1, 1998 to March 31, 1999, in the case of the present petitioner the assessing authority had passed the assessment orders dated September 15, 2000 and November 29, 2001, respectively, treating chewing gums and bubblegums covered under entry 21, Part IV of the Second Schedule and the Appellate Deputy Commissioner, Commercial Tax, Ujjain vide order dated February 22, 2001 and April 12, 2002 had rejected the appeals, but the Appellate Board by following its Full Bench order dated January 31, 2004 has allowed the appeal of the petitioner-assessee for those periods by the orders dated October 8, 2004 and November 2, 2004, respectively, by setting aside the assessment and appellate order and by holding that chewing gums and bubblegums are covered under the residuary entry. It will not be out of place to mention here that the revisional authority in the present case is the same person who had passed the orders as first appellate authority for the period 1997-98 and 1998-99 which have ultimately been set aside by the Appellate Board.
In view of the aforesaid analysis, we hold that chewing gums and bubblegums are not covered within the meaning of "lozenges" on account of their distinct popular sense meaning. The impugned assessment order dated October 29, 2002 and the revisional order dated March 17, 2003 are set aside to that extent and the assessing authority is directed to reassess the tax treating chewing gums and bubblegums as items under the residuary entry. The writ petition is accordingly allowed. No costs.