1966 (4) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of item No. 7 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union territory of Delhi regarding the exemption of flower plants.

Detailed Analysis:

The judgment by the Punjab High Court, delivered by Justice Dua, revolves around the interpretation of item No. 7 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, concerning the exemption of flower plants. The key issue is whether the term "vegetable" in the item qualifies only the word "seeds" or extends to qualify the word "plants" as well. The assessee, engaged in selling flower and other plants, argued that the term "plants" should be considered an independent category of exempted goods, not limited to vegetable plants. However, it was acknowledged that the Supreme Court's decision in Ramavatar Budhaiprasad case established that "vegetables" should be construed in its popular sense, referring to vegetables grown for consumption. This precedent was deemed applicable to the present case.

The court analyzed the language of item No. 7 and the legislative intent behind it. Justice Dua concluded that the term "plants" in the item should not be interpreted as a distinct category unrelated to "vegetables, green or dried, and vegetable seeds." The inclusion of phrases like "other than medicinal preparations" and "except when sold in sealed containers" after the term "plants" indicated that these qualifiers applied to all preceding categories. The court emphasized that the term "vegetables" at the beginning of the entry provided insight into the legislative intent regarding the scope of the exemption.

Regarding the interpretation of taxing statutes, the court highlighted that strict or liberal constructions are tools to convey legislative intent clearly. While tax laws should be reasonably interpreted, there is no room for equity in taxing statutes. The primary objective of tax measures is to maintain social order, and overly generous interpretations may lead to revenue loss. The court emphasized that when an assessee seeks exemption, they must clearly meet the exemption criteria outlined in the law.

In conclusion, the court ruled in favor of the revenue, stating that flower plants are not exempted under item No. 7 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941. Justice Khosla agreed with this decision, and the reference was answered accordingly, with no order as to costs.