P.K. Plastics vs Commissioner of Commercial Tax and Others

The Order of the Court was delivered by : Prakash Shrivastava, J. - Petitioner has assailed the correctness of the order dated 5/8/2010 passed by the Commissioner (Commercial Tax) Madhya Pradesh, Indore u/s 70 of the Madhya Pradesh VAT Act, 2002 (for short "the Act"). Petitioner is engaged in the business of purchase and sale of plastic and steel items such as water jug and bottle, lunch box etc. Petitioner was assessed to tax on the sale of these items @ 4% from 1/4/2006 to 31/7/2009 and @ 5% after 1/8/2009. Petitioner had filed the application before the Commissioner u/s 70 of the Act for determining the rate of tax on the items purchased and sold by the petitioner. The Commissioner, by order dated 5/8/2010 held that only the water jug is covered within the meaning of utensils in the Entry 6 of Part II of Schedule II of the Act and taxable @ 5% and that the remaining items are covered by the Entry 1 Part IV of Schedule II of the Act taxable @ 13%. The Commercial Tax Officer in the mean while issued the notice dated NIL (Annexure P.3) for the block assessment for the period 1/4/2006 to 26/12/009 intending to make the block assessment and levy tax @ 13% on the sale of the items in question. Aggrieved with the same, the petitioner has filed the present Writ Petition.

The stand of the respondent is that the petitioner had furnished the quarterly returns under the Act disclosing the turnover taxable @ 4% till 31/7/2009 and @ 5% after 1/8/2009 and had paid the tax accordingly and there was deemed assessment u/s 20-A of the Act. The petitioner''s case was later taken in scrutiny. Further case of the respondent is that the Commissioner has rightly passed the order u/s 70 of the Act and has rightly held that except for water jug, the other items in question are taxable @ 13% under Entry 1 Part IV of Schedule II of the Act, and therefore, the commercial tax officer has rightly issued the notice for making the block assessment for the period 1/4/2006 to 26/12/2009.

Shri G.M. Chaphekar, learned Sr. Counsel appearing for the petitioner submitted that the Commissioner has committed an error in restricting the meaning of "utensils" to only the vessel used in the kitchen. Referring to the judgments on the point he submitted that such a restricted meaning cannot be given to the word "utensils" and that other items purchased and sold by the petitioner are also covered within the meaning of utensils and taxable @ 4% or 5% as per the Entry 6 Part II of Schedule II.

Ms. M. Raveendran, Learned Counsel for the respondents submitted that the order passed by the Commissioner u/s 70 of the Act does not suffer from any error since the Commissioner has rightly held that only water jug is covered within the meaning of "utensils" and other items in question are not the utensils as they are not meant for use in the kitchen.

We have heard the Learned Counsel for parties and perused the record.

It is the settled position in law that the terms appearing in the taxing statutes are required to be understood in the manner defined therein and in the absence of any such definition, they should be understood in their popular meaning as understood in commercial or common parlance or they should be construed in the same way in which they are understood in ordinary parlance in area in which the law is in force. If an expression is capable of a wider meaning as well as narrower meaning the question whether the wider or narrower meaning should be given depends on the context and the background of the case. The Supreme Court in the matter of Mukesh Kumar Agrawal Vs. State of MP reported in (1988) 68 STC 324(SC) has held that:-

In a taxing statute words which are not technical expressions or words of art, but are words of everyday use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance, i.e., "that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it". Such words must be understood in their "popular sense". The particular terms used by the legislature in the denomination of articles are to be understood according to the common commercial understanding of those terms used and not in their scientific and technical sense " for the legislature does not suppose our merchants to be naturalists or geologists or botanists.

The controversy involved in the present matter needs to be considered keeping in view the aforesaid settled position in law.

Section 70 of the Act gives power to the Commissioner to determine the disputed questions including the question in respect of the rate of tax on any goods. The petitioner had approached the Commissioner under this Section for determining the rate of tax in respect of the following items:-

Water Jugs.

Lunch Box.

Casseroles (Hot Pots)

Stainless Steel Flask

Thermos Fasks

Tray

Plastic Insulated Water Bottle

Water Bottle in Pouch cover

Pet Bottles

Plastic Containers 11. Dry Fruit Box

Spoon Stand & Brush Stands

Fruit Basket

The case of the petitioner is that these items are covered under Entry 6 of Part II of Schedule II of the Act which reads as under:-

All kinds of utensils and enameled utensils including pressure cookers and pans, but excluding utensils made of precious metals.

The Commissioner, in the impugned order, has held that except for water jug all other items are covered by the Entry 1 of Part IV of Schedule II which reads as under:-

All other goods not covered by Schedule I and Part I to III of this Schedule.

Entry 1 of Part IV of Schedule II is a Residuary Entry and it is the settled position in law that the Residuary Entry should be applied as a last resort when a particular item is not found to be covered by any other entry of the Schedule.

Entry 6 of Part II of Schedule II is very wide entry which covers "all kinds of utensils and enameled utensils" except those which are expressly excluded from the entry i.e. utensils made of precious metals and hand made utensils.

The question that arises for consideration is in respect of the common parlance meaning of the word "utensils" since it has not been defined under the Act.

Before going to the common parlance meaning of the word, we may look into the dictionary meaning of the word "utensils" which has been defined in different dictionaries as under:-

Shorter Oxford Dictionary

Utensil:- Any article useful or necessary in a house hold; a domestic implement, vessel, or article of furniture; and instrument or vessel in common use in a kitchen, dairy, etc; any vessel or other article serving a useful end or purpose; a tool or implement used by artisans, farmers, etc.

Stroud''s Judicial Dictionary of Words & Phrases, Volume 3. Sixth Edition

UTENSIL:- anything necessary for our use and occupation; household stuffe" (Cowel).

Chambers 21st Century Dictionary. Revised Edition

utensil ''j utensil''-- noun an implement or tool, especially one for every day or domestic use. Cooking utensils. 14C: from French utensile, from Latin utensilis ''fit for use'' or ''useful'', from uti to use.

The New International Webster''s Comprehensive Dictionary of English Language. Encyclopedic Edition

u-ten-sil (yoo-ten sel) n. A vessel, tool, implement, etc; serving a useful purpose, especially for domestic or farming use.

These definitions give a broad idea of the meaning of utensils which has been defined differently in different dictionaries either widely or narrowly.

The Division Bench of this Court in the matter of Yadav Metal Industries Vs. Commissioner of Sales Tax, MP reported in (1980) 46 STC 30(MP) while considering the similar issue has taken note of the ordinary dictionary meaning of utensils to include any article useful or necessary in a household and has held that the entry cannot be restricted to cover those utensils only which are generally used in kitchen.

The Division Bench of the Karnataka High Court in the matter of Stovekraft Pvt. Ltd Vs. State of Karnataka reported in [2006] 147 STC 329 (Karn) while examining the similar entry in respect of the stainless steel vacuum flask and other items held that:-

From the aforesaid meaning assigned to the word "utensil" it is clear that the word "utensil" includes a vessel and the word "utensil" is not synonymous with the word "vessel". Utensil means any article useful or necessary in a house-hold commonly used in a kitchen. In other words, an implement, tool or vessel fit for use and serving useful purpose. As the entry stands, the words used are "all utensils" "including". The word "all" and "including" has special significance. The word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute. When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import, but also things which the interpretation clause declares that they shall include. The words used in an inclusive definition denote extension and cannot be treated as restricted in any sense. When we are dealing with an inclusive definition it would be inappropriate to put a restrictive interpretation upon the terms of wider limitation. As the word "utensil" is not defined under the Act, but in entry No. 5 the word used is "all utensils" "including", it is inappropriate to put a restrictive meaning to the word "utensil" as understood in common parlance. The word "utensil" is a term of wider denotation.

Though the Karnataka High Court has taken the view that utensils means any article useful or necessary in a household commonly used in a kitchen, but the said restricted meaning in respect of use in the kitchen only cannot be approved in view of the earlier Division Bench judgment of this Court in the matter of Yadav Metal Industries (supra).

The similar Entry came up for consideration before the Chhattisgarh High Court in the matter of M/s. Kamesh Traders Vs. State of Chhattisgarh and another passed in WP No. 6975/2008 decided on 2nd December, 2010 wherein the Chhattisgarh High Court has taken the view that the Entry makes no distinction between the utensils on the basis of the material for making the utensils except precious metals and that the articles used as articles of kitchen and for domestic purpose are covered in it. The Chhattisgarh High Court in the said judgment has taken the view that serving tray, flask, stainless steel tiffin with plastic body, water jug and hot pot (casserole) are covered within the common parlance meaning of utensils.

Keeping in view the above analysis and considering the material placed before this Court, we are of the opinion that in common parlance utensils means items of daily household use generally used for preparing, serving or keeping food or beverages.

The Commissioner, by the impugned order has taken the view that only the items which are used in the kitchen are covered within the meaning of utensils. The said interpretation of the Commissioner is not correct. It is too narrow an interpretation which cannot be upheld keeping in view the common parlance meaning of utensils. Even otherwise, the view which has been taken by the Commissioner runs counter to the Division Bench judgment of this Court in the matter of Yadav Metal Industries Vs. Commissioner of Sales Tax, MP reported in (1980) 46 STC 30(MP).

Thus, the impugned order passed by the Commissioner u/s 70 of the Act restricting the meaning of "utensils" to the items used in the kitchen cannot be sustained and is hereby set aside. The matter is remanded back to the Commissioner for deciding the petitioner''s application afresh in the light of the observations made above. The Writ Petition is accordingly disposed of.

No costs.