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

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

ROYAL HATCHERIES PVT. LTD. Versus. STATE OF AP

The Supreme Court dismissed the appeals and review petition, upholding the High Court's decision that day-old chicks are not considered 'goods' under ... So far as words 'such as' are concerned, there is no dispute that they are meant to be illustrative and not exhaustive. 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.