TMI Blog1978 (12) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... section 49(2) of the Act and (3) that, in any case, the sales of the goods in question were liable to tax at 3 per cent because they were declared goods and not at the rate specified in residuary entry 13 of Schedule III. The Sales Tax Officer rejected all the contentions advanced on behalf of the assessee and sales tax and general sales tax were levied at the rate specified in entry 13 of Schedule III. The assessee carried the matter in appeal before the Assistant Commissioner of Sales Tax, but the appeal failed. The assessee thereupon carried the matter in further appeal before the Gujarat Sales Tax Tribunal (hereinafter called "the Tribunal") and, in that proceeding also, the assessee failed. At the instance of the assessee, however, the Tribunal has referred the following three questions for the opinion of this Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that entry 40 of Schedule I to the Gujarat Sales Tax Act, 1969, would apply to those fabrics which have been manufactured in India and not otherwise? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that entry 67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of defining rayon or artificial silk fabrics in entry 40 of Schedule I has adopted the definition of the said goods, as given in item 22 of the Excise Act. It is this legislative device adopted by the legislature which has given rise to the controversy which centres round question No. (1). To pinpoint the controversy and to resolve it against its proper background, it would be necessary at this stage to refer to the nature of the controversy and to the view of the taxing authorities on the point. The contention of the assessee was that the goods sold by it were artificial silk fabrics as defined in item 22 of the First Schedule to the Excise Act and that, therefore, no tax was leviable on the sales of those goods. The Sales Tax Officer rejected this contention on the ground that, in order to get the benefit of exemption, it was necessary for the assessee to establish that artificial silk cloth, which was the subject-matter of the concerned sales, was manufactured in India, because artificial silk fabrics as defined in item 22 of the First Schedule to the Excise Act alone are eligible to exemption under entry 40 of Schedule I of the Act and the said item 22 covered only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be exempted under entry 40 of Schedule I. The Tribunal rightly rejected this argument relying upon the decision of the Supreme Court in Innamuri Gopalam and Maddala Nagendrudu v. State of Andhra Pradesh[1963] 14 S.T.C. 742 (S.C.)., and the decisions of this Court in Pravin Brothers v. The State of Gujarat[1964] 15 S.T.C. 478. and in Hind Engineering Co. v. Commissioner of Sales Tax[1973] 31 S.T.C. 115. This contention was not pressed on behalf of the revenue at the hearing of the reference and, therefore, the only question which survives for consideration is whether the Tribunal correctly approached the question in issue and whether its ultimate view founded on the reasoning, the substance of which has been extracted above, is correct in law. As earlier stated, entry 40 of Schedule I is, broadly speaking, an instance of legislation by adoption. It is not necessary for the purposes of this case to enter into the consideration of the interesting question as to whether this is a case of legislation by reference or citation, or of legislation by incorporation, properly so-called. Whatever may be the fine distinction between these concepts and whatever may be the category in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of the material words must be given that meaning which would be ascribed to it under the Excise Act and that since under the Excise Act only those goods which are manufactured in India would be covered by an entry in Schedule I, having regard to the provisions of section 3 of the Excise Act, it would be legitimate to hold that even for the purposes of entry 40 of Schedule I, the word "manufactured" should bear the same meaning and, accordingly, it should be read as covering goods manufactured in India. We are afraid, in adopting this approach, the Tribunal has lost sight of the basic fact that what is adopted in entry 40 of Schedule I is merely the definition of "rayon or artificial silk fabrics" as given in item 22 of the First Schedule to the Excise Act and not the law generally which governs the levy of excise duty on those goods. All that can be looked at, therefore, is the definition on its plain terms and not the other provisions of the Excise Act, which have not been made part of entry 40 of Schedule I. Since the word "manufactured" is not qualified by the use of the expression "in India" in the definition clause itself or in the independent definition of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endently defined in the earlier Act, then the definition of such words or expressions, no more than that, in our opinion, would be permissible in such circumstances. It is significant to note in this connection that there appears to be conflict of authority even on the question as to whether other parts of the earlier statute, which are not incorporated in the later statute, can be referred to in construing the sections which are incorporated. In Halsbury's Laws of England, Third Edition, Volume 36, paragraph 611, at pages 404405, the following pertinent observations are to be found, which throw light on this subject: "Where particular sections of an earlier statute are expressly incorporated into a later statute, there is a conflict of authority as to whether other parts of the earlier statute which are not incorporated may or may not be referred to in construing the sections which are incorporated; it seems probable that, on the principles already referred to in connection with earlier statutes in pari materia, they may be referred to, but only where there is an ambiguity or obscurity in the incorporated sections which cannot otherwise be resolved." It would thus appear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a". It is significant to note that the word "manufactured" in the said definition is used in connection with the raw materials from which rayon or artificial silk fabrics are manufactured and not the place where they are manufactured. The relevant words are:..........manufactured.....from rayon or artificial silk.........." This context and collocation also highlight the fact that the word "manufactured" in its grammatical variation is used in the relevant definition in its plain and natural meaning without any qualification except the qualification relating to the basic material from which the manufactured article is produced. On the basis of the foregoing discussion, we hold that the Tribunal was in error in holding that entry 40 of Schedule I covers only those fabrics which are manufactured in India and that, therefore, the goods in question, which had been imported in India, would not be covered by the said entry. Question No. (2) turns upon the interpretation of entry 67 of the Schedule to the Government notification issued under section 49(2) of the Act. The said entry reads as under: "Sales or purchases of cotton, rayon, artificial silk Whole of tax. " or woollen fabrics ..... X X X X Extracts X X X X X X X X Extracts X X X X
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