1993 (10) TMI 85 - SC - VAT and Sales Tax

Day-old chicks not taxable as 'goods' under tax rule, Supreme Court clarifies

The Supreme Court dismissed the appeals and review petition, upholding the High Court's decision that day-old chicks are not considered 'goods' under ... Construction of taxing enactments in their popular sense - Words of limitation: 'that is to say' - Illustrative expressions: 'such as' and 'etc.' - Scope of 'livestock' restricted to 'domestic animals' mentioned - Application of ejusdem generis in statutory interpretation - Purchase-point taxation under rule-making provisionScope of 'livestock' restricted to 'domestic animals' mentioned - Construction of taxing enactments in their popular sense - Illustrative expressions: 'such as' and 'etc.' - Purchase-point taxation under rule-making provision - Whether day-old chicks fall within clause (xxvi) of Rule 5(2) of the Andhra Pradesh General Sales Tax Rules so as to render turnover taxable at the purchase point and preclude collection of tax from the sellers - HELD THAT: - The clause begins with the word 'livestock' but immediately qualifies it by the words 'that is to say, all domestic animals such as, oxen, bulls, cows, buffaloes, goats, sheep, horses etc.' The Court treated the phrase 'that is to say' as a word of limitation confining the scope of 'livestock' to the domestic animals exemplified in the clause. In construing taxing provisions the Court applied the settled rule that words of everyday use must be read in their popular or commercial sense rather than in a technical or scientific sense. The illustrations that follow ('such as') and the concluding 'etc.' indicate the type of domestic animals the rule-maker had in mind; read in context the listed examples are quadrupeds and do not include birds. Applying these principles avoids rendering the illustrative words superfluous and accords with the object and structure of the provision. The Court rejected the contention that authorities or texts treating poultry as 'livestock' or 'domestic animals' mandated inclusion here, holding that Bridge v. Parsons and similar authorities which adopt a wider meaning were decided in different statutory contexts (for example, prevention of cruelty) and cannot be mechanically applied to a taxing rule. For these reasons the Court concluded that chicks are not covered by clause (xxvi) and therefore the purchase-point rule in that clause does not apply to day-old chicks sold by the appellants. [Paras 5, 8, 19]Chicks do not fall within clause (xxvi) of Rule 5(2); the purchase-point taxation under that clause does not apply to day-old chicks and tax could be lawfully levied/collected from the sellers.Final Conclusion: The appeals and the review petition fail; the Court affirms the High Court's conclusion that day-old chicks are not included within Rule 5(2)(xxvi) and dismisses the challenges to the levy and collection of sales tax. Issues Involved:1. Whether day-old chicks are considered 'goods' under Entry 54 of List 1 of the Seventh Schedule to the Constitution of India.2. Whether day-old chicks fall within Rule 5(2)(xxvi) of the Andhra Pradesh General Sales Tax Rules and are thus taxable at the purchase point.Issue-wise Detailed Analysis:1. Whether day-old chicks are considered 'goods' under Entry 54 of List 1 of the Seventh Schedule to the Constitution of India:The appellants initially contended before the High Court that chicks are not 'goods' within the meaning of Entry 54 of List 1 of the Seventh Schedule to the Constitution of India, and therefore, no tax can be levied upon their sale or purchase. However, this contention was not pursued before the Supreme Court.2. Whether day-old chicks fall within Rule 5(2)(xxvi) of the Andhra Pradesh General Sales Tax Rules and are thus taxable at the purchase point:Contentions of the Appellants:The appellants argued that day-old chicks should be classified as 'livestock' under Rule 5(2)(xxvi), which reads: 'Livestock, that is to say, all domestic animals such as, oxen, bulls, cows, buffaloes, goats, sheep, horses etc.' They contended that chicks are domestic animals and the list provided in the rule is illustrative, not exhaustive, as indicated by the term 'etc.' They cited various definitions and judgments to support their argument that chicks are domestic animals.Contentions of the Respondents:The respondents, represented by the State of Andhra Pradesh, argued that terms in a sales tax statute should be understood in their popular sense, as understood by common people and traders. They contended that in popular parlance, day-old chicks are not considered domestic animals.Court's Analysis:The Court analyzed Rule 5(2)(xxvi) and noted that it specifically mentions certain domestic animals and ends with 'etc.' However, the Court emphasized that the rule should be interpreted in its popular sense, as understood by people conversant with the subject matter. The Court referred to several precedents, including State of W.B. v. Washi Ahmed, which emphasized that terms in taxing statutes should be understood in their common parlance, not in a technical sense.The Court observed that the term 'livestock' is limited by the phrase 'that is to say,' which confines it to the domestic animals listed in the rule. The Court noted that the rule-making authority did not include any birds in the list of domestic animals, which suggests that birds like chicks were not intended to be covered by the rule.Conclusion:The Court concluded that in popular and common parlance, day-old chicks are not referred to as 'domestic animals.' The term 'domestic animals' in Rule 5(2)(xxvi) includes animals like oxen, bulls, cows, buffaloes, goats, sheep, and horses, all of which are quadrupeds. Including birds like chicks would depart from the ordinary popular connotation of the term 'domestic animals' and make the illustrative list in the rule superfluous. Therefore, the Court held that day-old chicks do not fall within the ambit of Rule 5(2)(xxvi) and are not taxable at the purchase point.Final Judgment:The appeals and review petition were dismissed, and the Court upheld the decision of the High Court, confirming that day-old chicks sold by the appellants are not included within clause (xxvi) of Rule 5(2) of the Andhra Pradesh General Sales Tax Rules. The Court also noted that an exemption notification issued in August 1992, exempting day-old chicks from tax, does not affect the legal interpretation of the rule.