Shakti Industries vs Revisional Authority-cum-Deputy Excise and Taxation Commissioner (Inspection)

Rajive Bhalla, J.

The petitioner prays for issuance of a writ of certiorari quashing orders dated 15.04.1994 (Annexures P-8, P-8/A, P-8/B and P-8/C), passed by the Deputy Excise and Taxation Commissioner-cum- Revisional Authority, Rohtak, holding that as Hookas are not "utensils", sales tax would be charged, under the entry relating to general trade.

The petitioner is engaged in the business of manufacture and sale of brass/ iron Hookas and their parts. The State of Haryana, issued a notification, dated 18.03.1988, prescribing a rate of 3 paise in a rupee on sale of ferrous and non ferrous metal utensils including brass utensils. The petitioner deposited sales tax at three paise in a rupee by treating Hookas as utensils and accordingly filed a return for assessment year 1989-90, which was accepted by the Assessing Officer. However, for the next assessment year, the Assessing Officer, vide order dated 30.12.1992 held that Hookas are not utensils and by treating them as general goods charged them to sales tax @ 8%. The petitioner filed an appeal before the Joint Excise and Taxation Commissioner (Appeals), Rohtak, which was allowed on 31.03.1993, by holding that as Hookas are utensils, the petitioner is obliged to pay tax at the rate of 3 paise in a rupee. The revisional authority, however, served notices for re-assessment, for assessment years 1988-89, 1990-91, 1991-92 and 1992-93, calling upon the petitioner to show cause why these assessment orders be not revised as Hookas and their parts are not utensils.

The petitioner filed a writ petition, praying that the show cause notices be quashed but the writ petition was dismissed as pre-mature. The petitioner, thereafter, filed an application dated 15.06.1994, asking the revisional authority to furnish information of the material that forms the basis of its opinion that Hookas and their parts are not utensils. The revisional authority did not respond to the application but vide order dated 08.12.1993, passed orders Annexures P-8, P-8/A, P-8/B and P-8/C, holding that Hookas are not utensils and ordered recovery of the shortfall in payment of tax. The revisional authority based its opinion upon an order dated 08.12.1993, passed by the Sales Tax Tribunal, Haryana, in STA No. 211 of 93-94 (M/s. Standard Steel and Metal Industries, Sonepat v. The State of Haryana), holding that a Hooka is not a utensil.

Counsel for the petitioner submits that admittedly the State of Haryana has notified that ferrous and non-ferrous metal "utensils", including pressure cookers would invite sales tax at three paise in a rupee. The expression "utensils" is not defined in the Act or under the rules and does not restrict the meaning of the word "utensil" to utensils used in a kitchen. The meaning assigned by the revisional authority, based upon an opinion recorded by the Tribunal in the case of M/s. Standard Steel and Metal Industries, Sonepat (supra), is incorrect. A utensil is a tool, receptacle/instrument, vessel or a container and may or may not be used in a kitchen and may depending upon its user, be used for various purposes, at home, in the kitchen, for ceremonial purposes, dairy farming in hotels, restaurants etc. The base of the Hooka, is a receptacle/container used for storing water. A hooka is used in rural households and is also an integral part of social interactions, thereby clearly proving that hooka is a utensil and would, therefore, fall in the entry pertaining to ferrous and non ferrous utensils. The revisional authority has not dealt with submissions oral or written advanced on behalf of the petitioner. The petitioner had been collecting and paying tax for the last many years @ 3% and as there was a bonafide dispute as to classification, namely, the levy of interest and penalty is not warranted.

Counsel for the revenue, on the other hand, submits that while exercising power under Section 40(2) of the Haryana General Sales Tax Act, the revisional authority has rightly relied upon an order passed by the Tribunal in M/s. Standard Steel and Metal Industries, Sonepat (supra), to hold that sale of a Hooka falls in general trade and must be taxed @ 8% to a rupee. The mere fact that the word "utensil" is not defined under the Act, does not detract from the fact that a Hooka cannot be held to be utensil as it is used for smoking and cannot be used in a kitchen, hotel, restaurant etc. As regards the assumption of jurisdiction by the revisional authority, it is contended that as the order passed by the Tribunal holding that a Hooka is not a utensil, was binding upon the Assessing Officer, the revisional authority was empowered, in the exercise of power under Section 40 of the Act, to revise the assessment orders. It is further contended that the levy of interest and penalty is a natural consequence of the failure of the petitioner to pay tax at the correct rate.

We have heard counsel for the parties, perused averments in the petition as well as reply filed by the State of Haryana and the impugned orders.

The question that calls for an answer is whether the Hooka, (brass/iron base) manufactured and sold by the petitioner is a "utensil", for purposes of payment of sale tax under the Haryana General Sales Tax Act, 1973.

Admittedly, vide notification dated 18.03.1988, the State of Haryana notified a rate of three paise in a rupee as sales tax for "ferrous and non-ferrous metal utensils including pressure cookers". Admittedly, the petitioner was assessed to sales tax by treating the Hooka, manufactured by the petitioner, as a utensil, but for the following assessment years the Assessing Officer changed his opinion and held that a Hooka is not a utensil and, therefore, chargeable to VAT at 8 paise in a rupee. The petitioner filed an appeal, which was allowed by holding that a hooka is a utensil. The revisional authority, thereafter, revised assessments by placing reliance upon an order dated 08.12.1993, passed by the Sales Tax Tribunal Haryana in M/s. Standard Steel and Metal Industries, Sonepat (supra), holding that a hooka is not a utensil. A relevant extract from the order, passed by the Sales Tax Tribunal, in M/s. Standard Steel and Metal Industries, Sonepat (supra), reads as follows:-

"I have considered the submissions of the parties and have also seen the facts on record. The sole point for consideration before the Tribunal in the present case is whether the Hooka is a utensil or a general goods. This issue is quite clear. The utensils are those pots(goods) which are generally used in kitchens, restaurants and hotels etc. The hookas cannot be said to be utensils in common parlance and is certainly a general good which has rightly been treated as such and has been taxed at the general rate of tax. Since the tax was due with the returns, the levy of interest and penalty both is fully in accordance with the provisions of law for late payment and is hereby confirmed. I, therefore, find no force in the arguments and the appeal is dismissed."

A perusal of the above order reveals that the Tribunal has without reference to any definitions of the word "utensil" or any meaningful discussion, abruptly, held that as utensils are pots/goods, that are generally used in kitchens, restaurants and hotels, a hooka cannot be classified as a utensil.

Before we answer the question posed, namely, whether a hooka is a utensil, for the purposes of a Haryana General Sales Tax Act, it would be appropriate to record that words and expressions used in a taxing statute are to be construed strictly and where a generic word appears in a statute, the word so used has to be interpreted and understood in it common generic sense, by reference to the local area to which it applies, and after considering legislative intent, if discernible from the statutory provision.

The relevant entry uses the words "ferrous and non- ferrous metal utensils including pressure cookers". Neither the Act nor the Rules define the word "utensil". The word, therefore, has to be understood and interpreted in its common generic sense as understood in the State of Haryana. Before recording our final opinion as to the meaning of the word "utensil", it would be appropriate to reproduce the meaning of the word "utensil, as set out in various dictionaries both legal and general, as follows:-

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 and Phrases, Volume 3, Sixth Edition;

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

CHAMBERS 21st CENTURY DICTIONARY, REVISED EDITION-

"utensil ''ju tensil''- noun an implement or tool, especially one for every day or domestic use. Cooking utensils. 14C: from French utensil, from Latin utensils ''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. See synonyms under TOOL. [- OF utensil- L utensils fit for use u-tens, ppr. Of uti use]".

A utensil as commonly understood and defined, is an implement, a tool, a receptacle, a vessel, a container etc. that may be used for various purposes, depending upon the nature of the utensil and the use to which it is put. The same utensil may be used in a kitchen, in a hotel, in a restaurant, for worship, for ceremonial purposes, in a dairy farm, for farming and various other purposes that may require the use of a utensil, as a tool, a receptacle, an instrument, a vessel or a container. A utensil is not necessarily confined to articles used in a kitchen, a hotel or a restaurant but is often misunderstood as referring to an item used in a kitchen. While interpreting words, used in a statute, a court shall make an attempt to discern legislative intent and if discernible, proceed to interpret the word accordingly. A perusal of the relevant entry reveals that it does not confine the word utensil to utensils used in a kitchen. If the State had intended to confine the meaning of the word "utensil" to articles used in kitchens, it could have easily added the words "used in a kitchen", after the word "utensil". The State was conscious that if it assigned such a restrictive meaning to the word ''utensil'' it would lead to multiple complications and, therefore, used the generic term "utensil" without linking it to any particular utensil, except pressure cookers, or to the mode and manner of its user or to the place of its user. The word utensil, therefore, must necessarily be understood as a tool, a receptacle, a vessel, an instrument, or a container, than may be used as a tool, a receptacle, an instrument, a vessel or a container.

A Hooka, particularly in rural areas of the State of Haryana, is admittedly used to smoke tobacco at home. A hooka is also an integral part of social interactions in rural areas and is, therefore, used at home and in social and public interactions. A Hooka has a brass base fitted with two pipes. The first pipe is attached to an earthen pot where coal and tobacco are placed and the second pipe is used to puff tobacco smoke. The brass base is a receptacle used for storing water and for fixing the pipes of a Hooka.

A Hooka, as referred to above, is used in rural societies, at home or outside and as it is a receptacle/container used for storing water, through which smoke is passed before it is inhaled it would necessarily partake the nature of a utensil. We are, therefore, inclined to hold that in the absence of any legislative intent to confine the meaning of the word "utensil, to any particular place, mode or manner of user, the hooka manufactured by the petitioner must necessarily fall within the meaning of the word "utensil".

The opinion recorded by the Sales Tax Tribunal, which forms the basis of the order passed by the revisional authority, reveals a general sweeping assumption that utensils are used only in kitchens, hotels and restaurants, without referring to any definition, recording any meaningful discussion and without referring to fact that a Hooka is used at home and in social interactions, in the State of Haryana. The revisional authority, did not record any independent opinion but relied upon the opinion recorded by the Sales Tax Tribunal in M/s. Standard Steel and Metal Industries, Sonepat (supra).

We are, therefore, of the firm opinion that the order passed by the revisional authority holding that a Hooka would fall under the entry relating to general trade is based upon a narrow and erroneous interpretation of the word "utensil".

In view of what has been recorded hereinabove, we answer the question in favour of the petitioner by holding that the Hooka and its parts manufactured/sold by the petitioner partake the nature of a "utensil", liable to sales tax at the rate of 3 paise in a rupee.

Consequently, we allow the writ petition, set aside orders dated 15.04.1994 and restore the original assessment orders.