M/S. Motipur Zamindary Co. (P) Ltd vs The State Of Bihar
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeals Nos. 185 to 187 of 1961
Decision Date: 20 November 1961
Coram: J.L. Kapur, Bhuvneshwar P. Sinha, M. Hidayatullah, J.C. Shah, J.R. Mudholkar
In the matter titled M/S. Motipur Zamindary Co. (P) Ltd versus The State of Bihar, a judgment was delivered on 20 November 1961 by the Supreme Court of India. The judgment was authored by Justice J. L. Kapur and the bench comprised Justices J. L. Kapur, Bhuvneshwar P. Sinha, M. Hidayatullah, J. C. Shah and J. R. Mudholkar. The petitioner in the proceedings was M/S. Motipur Zamindary Co. (P) Ltd and the respondent was the State of Bihar. The official citation of the decision appears in the 1962 volume of the All India Reporter at page 660 and also in the 1962 Supplement to the Supreme Court Reports at page 498, with subsequent citator references recorded as R 1977 SC 1638, R 1979 SC 300, RF 1986 SC 626 and R 1992 SC 224.
The central issue concerned the interpretation of Section 6 of the Bihar Sales Tax Act, 1947, under which the Government had issued Notification No. 9884‑F 7 dated 28 August 1947. The notification exempted certain goods from the payment of sales tax, expressly mentioning “green vegetables other than potatoes, except when sold in sealed containers.” The appellant, a producer of sugar cane, was assessed sales tax on the basis that sugar cane was not covered by the exemption. The appellant argued that sugar cane ought to be classified as a green vegetable, thereby falling within the exemption, and further contended that, as a producer rather than a dealer as defined in Section 2(c) of the Act, the assessment was improper.
The Court examined the meaning of the term “vegetables” in the statutory context, concluding that it must be understood in its ordinary sense, referring to produce grown in a kitchen garden or farm and intended for table consumption. Authoritative dictionary definitions characterized sugar cane as a “grass,” not as a vegetable. Accordingly, the Court applied the reasoning in Ramavtar Budhaiprasad v. Assistant Sales Tax Officer, Akola, A.I.R. 1961 S.C. 1325, and rejected the view expressed in State of Bombay v. R. S. Phadtare, [1956] 7 S.T.C. 495.
In addition, the Court held that the appellant qualified as a dealer within the meaning of Section 2(c). The amendment to Section 2(c) effected by the Bihar Annual Finance Act, 1950, was not a temporary measure but a permanent change applicable to the present proceedings. The amendment did not require the President’s assent because the subject matter fell wholly within entry 54 of the State List.
The case arose in the civil appellate jurisdiction as Civil Appeals Nos. 185 to 187 of 1961, filed by special leave against the judgment and order dated 13 May 1959 of the Patna High Court in Miscellaneous Judicial Case No. 352 of 1957. The appeals were accompanied by Petitions Nos. 163 to 165 of 1959 filed under Article 32 of the Constitution for enforcement of fundamental rights. Counsel for the appellant, including the Attorney‑General of India, represented the petitioner, while counsel for the respondent presented the State’s case.
On 20 November 1961, Justice Kapur delivered the judgment in this matter. The central issue before the Court was whether sugar‑cane could be classified as a “green vegetable” within the meaning of item 6 of notification No 9884‑FT dated 28 August 1947, issued under section 6 of the Bihar Sales Tax Act 1947 (Bihar Act XIX of 1947). The notification provided an exemption from sales tax for goods listed as “green vegetables”. After hearing the arguments of both sides, the Court announced that it would dismiss the three appeals and the three petitions under Article 32 of the Constitution, ordering the parties to bear costs, and then proceeded to set out its reasons for that decision.
The three appeals by special leave were brought by the assessee, a private limited company, against sales‑tax assessments for the fiscal years 1950‑51, 1951‑52 and 1952‑53. The assessments imposed liabilities of Rs 28,866, Rs 23,383 and Rs 23,298 respectively. In addition to these appeals, the same company filed three separate petitions under Article 32, challenging the constitutional validity of the assessments. In the proceedings the company is referred to as the “appellant” and the State of Bihar as the “respondent”. The appellant had first objected to the assessments, then appealed to the Deputy Commissioner of Commercial Taxes, and subsequently sought revision before the Board of Revenue. The Board, on the appellant’s request, referred a specific question to the High Court for opinion: whether sugar‑cane was a “green vegetable” within the meaning of item 6 of the aforesaid notification and therefore exempt from tax. The High Court answered the question against the appellant, holding that sugar‑cane was not included in the term “green vegetables”. That answer is now before this Court for review. In the petitions filed under Article 32, the appellant contended that, as a producer of sugar‑cane, it was not a “dealer” within the definition contained in the Act, and consequently no tax should be payable on its sales. Section 6 of the Act, as it stood at the relevant time, stated: “No tax shall be payable under this Act on the sale of any goods or class of goods specified in this behalf by the (State) Government by notification in the Official Gazette, subject to such conditions as may be mentioned in the notification: Provided no notification shall be issued under this section without giving in the Official Gazette such previous notice as the State Government may consider reasonable, of its intention to issue such notification.” The notification relied upon was issued on 28 August 1947 and bore the number 9884‑FT. Its opening words read: “In exercise of the powers conferred by section 6 of the Bihar Sales Tax Act, 1947 (Bihar Act XIX of 1947), and in supersession of”.
The Governor of Bihar issued a notification stating that no tax shall be payable under the Act on the sale of any goods listed in the second column of the annexed schedule, provided that any exceptions appearing in the third column of that schedule are observed. The schedule enumerates several classes of goods; entry number six reads “Green vegetables” and specifies the exception “Except when sold in sealed containers other than pota‑toes.” The point in issue is whether sugar cane falls within the description “green vegetables” in entry six and, consequently, whether it is exempt from sales‑tax assessment.
In support of the contention that sugar cane is exempt, counsel for the appellant relied on a decision of the Bombay High Court in The State of Bombay v. R. S. Phadtara, where the court held that sugar cane constitutes a “fresh vegetable” and is therefore exempt under a similar notification issued under the Bombay Sales Tax Act. Justice Changla, citing page 496 of that judgment, observed that in its plain and natural sense the word “vegetable” is wide enough to include sugar cane, although the Advocate General urged a narrower, popular meaning understood by those who deal in or consume vegetables. The judge noted that the taxing statute should be given a construction that provides relief to the taxpayer, and that the Sales Tax Tribunal had adopted precisely that approach, which the judge considered proper. This view, however, conflicts with the opinion expressed by this Court in Ramaytar Badhriprasad v. Assistant Sales Tax Officer, Akola, where the court held that “betel leaves” are not covered by the term “vegetables” under an almost identical entry. Citing the Nagpur High Court in Madhya Pradesh Merchants Association v. State of Madhya Pradesh, this Court explained that the word “vegetable” in taxing statutes must be understood in common parlance, meaning the class of vegetables grown in a kitchen garden or farm and used as food at the table. Applying that ordinary meaning, sugar cane cannot be placed within entry six, which deals with green vegetables. Dictionary definitions reinforce this view: Webster defines “sugar cane” as “a grass extensively grown in tropical and warm regions for its sugar,” and the Oxford dictionary describes it as “a tall perennial grass cultivated in tropical and sub‑tropical countries and forming the chief source of unmanufactured sugar.” Accordingly, sugar cane does not fall within the meaning of “green vegetables.” The second question which was
In the matters placed before the Court, the petitions presented under article 32 raised the question whether the appellant company could be regarded as a “dealer” within the meaning assigned to that term by section 2(c) of the Act. The statutory definition, reproduced in full, states: “dealer means any person who sells or supplies any goods (including goods sold or supplied in the execution of a contract) whether for commission, remuneration or otherwise and includes any family or a Hindu joint family, the Government and any society club or association which sells or supplies goods to its members”. The Court observed that the language of this sub‑section is extremely wide and that it unquestionably embraces the activities of the appellant company. Consequently, the contention that the appellant was not a dealer was found to be without any substantive basis and was rejected outright.
The appellant then argued that the definition of “dealer” which had been incorporated into the Act by the Bihar Annual Finance Act of 1950 should be applied only to the financial year beginning on 1 April 1950 and not to later years. To support this claim, reliance was placed upon the preamble of the Bihar Annual Finance Act, 1950, which reads: “whereas it is expedient to amend the Bihar Sales Tax Act, 1947, and the Bihar Agricultural Income Tax Act, 1948, to levy a tax on passengers and goods carried by public service vehicles and public carriers and to lay down rates on Sales Tax payable under Bihar Sales Tax Act 1947 to fix limit of taxable agricultural income to lay down rates of Agricultural Income Tax Act and Super Tax chargeable under Bihar Agricultural Income Tax Act, 1948 for the financial year beginning on the 1st day of April 1950 and to make further provisions in connection with the finance of this State of Bihar”. The Court held that a preamble cannot be used to restrict or alter the ordinary meaning of the clear wording of section 2(c), which is applicable to the appellant’s present case. It was emphasized that it would be an erroneous approach to infer a temporary amendment merely because the preamble mentions a specific financial year. No evidence was produced to show that clause (2)(i) of the Bihar Annual Finance Act was intended to create a temporary change in the definition of “dealer” contained in clause (c) of section 2. Accordingly, the appellant’s contention was repelled. The appellant further submitted that the President’s assent had not been obtained for the Bihar Annual Finance Act, 1950. The Court found this argument untenable, observing that the taxation of sales of goods falls squarely within entry 54 of the State List, and therefore the amendment to the definition of “dealer” did not require presidential assent. In the Court’s opinion, the appeals and the writ petitions filed under article 32 were without merit. Accordingly, they were dismissed with costs, and a single hearing fee was imposed.
The Court entered a final order that the appeal was dismissed, thereby concluding the proceedings and refusing any further relief. By issuing this dismissal, the Court indicated that the matter before it would not be entertained any further, and that the appellant’s request for relief was not granted. The dismissal of the appeal signified that the petition was rejected in its entirety and that the remedy sought by the appellant would not be provided. Consequently, the case was closed without any additional directions or orders, and the parties were left without any further judicial intervention on the issues raised in the appeal.