2010 (8) TMI 721 - HC - VAT and Sales Tax

Court exempts religious pictures from tax under DVAT Act, rejects appeal, emphasizes popular interpretation.

The court held that the religious pictures imported by the respondent fell within Entry 45 of the DVAT Act, exempt from tax. The Department's appeal was ... Religious pictures not for use as Calendars - popular and commercial meaning - classification of goods by nature and use - accessories do not alter essential character - ejusdem generisReligious pictures not for use as Calendars - popular and commercial meaning - classification of goods by nature and use - Framed or mounted religious pictures fall within Entry No. 45 of the First Schedule and are exempt from tax provided they are not for use as calendars. - HELD THAT: - The Court held that the expression 'religious pictures' and the qualification 'not for use as Calendars' are unambiguous in popular and commercial sense and mean pictures used for religious worship or propagation which do not display days, weeks or months of a year. Applying the common parlance/commercial usage test adopted by the Supreme Court in earlier authorities, the Tribunal rightly characterized the goods as religious pictures. The framing or mounting of the pictures and the presence of gold plated nickel foil as an aesthetic enhancement or accessory do not change the intrinsic character of the pictures; accessories for safe keeping or aesthetic enhancement cannot displace the primary nature and use of the goods. The Court rejected the Revenue's contention that mounting or value of materials takes the goods outside Entry 45, observing that classification must be according to nature and use and not by the value or presence of accessories. [Paras 8, 12, 14, 15]Religious pictures, whether mounted or framed and irrespective of value of foil or accessories, satisfy Entry 45 and are exempt when not for use as calendars.Ejusdem generis - popular and commercial meaning - The principle of ejusdem generis is inapplicable to restrict the plain meaning of Entry No. 45. - HELD THAT: - The Court observed that the rule of ejusdem generis is not an inviolable canon and applies only where context requires restricting the general words by preceding specific words. Entry No. 45 is clear and unambiguous; therefore the ejusdem generis rule cannot be invoked to exclude mounted or framed religious pictures. The Court endorsed the cautionary approach of the Supreme Court that the rule be applied with care and not where the statutory language admits a clear popular meaning. [Paras 16]Ejusdem generis cannot be applied to narrow Entry 45; the Entry must be given its ordinary meaning.Final Conclusion: The appeal is dismissed: the Tribunal and Court held that the goods are exempt as 'religious pictures not for use as Calendars' under Entry 45, mounting/framing and value of materials do not alter their classification, and the rule of ejusdem generis is inapplicable. Issues Involved:1. Classification of religious pictures under Entry No. 45 of the First Schedule of the DVAT Act.2. Applicability of the principle of ejusdem generis.3. Interpretation of terms in a taxing statute based on popular and commercial parlance.4. Impact of mounting or framing on the classification of religious pictures.5. Relevance of the value of materials used in religious pictures for tax classification.Detailed Analysis:1. Classification of Religious Pictures under Entry No. 45:The respondent, engaged in importing and selling pictures of various deities on gold-plated nickel foils, argued that these items are religious pictures not for use as calendars, thus falling under Entry No. 45 of the First Schedule and exempt from tax. The Commissioner, VAT, rejected this contention, classifying the pictures as 'General Unclassified Goods' subject to a 12.5% tax under Section 4(1)(e) of the DVAT Act, 2004. The Appellate Tribunal, however, after detailed discussion and dictionary references, held that the religious pictures dealt with by the respondent, which cannot be used as calendars, fell under Entry 45 and were exempt from tax.2. Applicability of the Principle of Ejusdem Generis:The respondent's counsel argued that the principle of ejusdem generis was not applicable in this case. The Tribunal agreed, stating that the words and phrases used in a taxing statute but not specifically defined must be understood in their popular and commercial parlance. The Department's counsel contended that the principle should apply, relying on Supreme Court judgments. However, the court concluded that the principle of ejusdem generis was inapplicable as Entry No. 45 was clear and unambiguous.3. Interpretation of Terms in a Taxing Statute Based on Popular and Commercial Parlance:The court emphasized that terms in a taxing statute should be interpreted based on their popular and commercial meaning, not their scientific or technical meaning. This approach was supported by Supreme Court judgments, including Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, and Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola. The court held that 'religious pictures' should be understood in their common parlance, meaning pictures used for religious worship and propagation.4. Impact of Mounting or Framing on the Classification of Religious Pictures:The Department argued that mounting or framing the religious pictures disqualified them from being classified under Entry No. 45. The court disagreed, stating that mounting or framing did not change the intrinsic character of the religious pictures. The frames were considered accessories for the safe-keeping of the pictures and did not alter their classification as religious pictures.5. Relevance of the Value of Materials Used in Religious Pictures for Tax Classification:The Department contended that the value of the gold-plated nickel foils indicated that the pictures were not religious pictures stricto senso. The court rejected this argument, citing Supreme Court judgments that an item's classification should be based on its nature and use, not the value of its accessories. The use of gold in religious pictures was deemed consistent with the concept of the divine, enhancing their aesthetic value for religious sentiments.Conclusion:The court concluded that the religious pictures imported by the respondent fell within Entry 45, exempt from tax. The appeal by the Department was dismissed, affirming the Tribunal's decision. The court reiterated that the principle of ejusdem generis was inapplicable and that terms in a taxing statute should be interpreted based on their popular and commercial meaning. The mounting or framing of the pictures and the value of the materials used were deemed irrelevant to their classification as religious pictures.