AI Drafter 
TaxTMI 
TaxTMI 
2007 (7) TMI 596
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....ts leading to this writ petition. These facts may be set out as follows: (i) The petitioner, namely, M/s. Sterlite Optical Technologies Ltd., is a company incorporated under the Companies Act, 1956 and engaged in the manufacture of optical fibre and cables. The respondent No. 1, namely, OIL India Ltd. (in short, "OIL") is a Government of India undertaking with respondent Nos. 2 and 3 as its employees. By an order, dated June 2, 2003 issued by respondent No. 3, namely, Deputy General Manager (Pipeline), OIL, the petitioner-company was awarded a contract for supply of optical fibre, cables and accessories for a total value of Rs. 6,62,67,874. In terms of the contract, which the parties concerned had entered into, the petitionercompany submitted to respondent No. 1 a bank guarantee for an amount of Rs. 66,27,788, which was equivalent to 10 per cent of the total contract value and undertook to fulfil its contractual obligations. The terms and conditions of the contract stipulated that the petitioner-company shall supply to the OIL optical fibre, cables and accessories from outside the State of Assam in the course of "inter-State" trade and commerce. By clause 11 of the tender docume....
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...., in partial modification of its earlier notification, dated November 21, 2003 aforementioned (whereby it had granted, to respondent No. 1, exemption from payment of entry tax on the import of optical fibers, cables and accessories into the State of Assam), a notification, dated June 14, 2004, was issued, whereby the Government granted exemption from payment of entry tax on import of optical fiber (and not cables and accessories) from outside the State by respondent No. 1 for its own use provided that the optical fibers, imported into the State of Assam, were exclusive property of respondent No. 1. This notification, dated June 14, 2004, was given retrospective effect by making it clear that the exemption, so granted, would be valid for a period of three years with effect from August 1, 2003 (and not June 14, 2004, which was the date of the modified notification). By a subsequent notification, dated July 7, 2004, issued by the Government of Assam, Finance (Taxation) Department, the Government exempted entry tax on import of not only optical fibre but also cables and accessories from outside the State by respondent No. 1 for its own use provided that such goods were exclusive proper....
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.... in the purchase order, that the price of cables was inclusive of all probable charges. (iii) Thereafter, the Government of Assam, vide notification, dated October 30, 2004, withdrew the exemption from payment of entry tax on import of optical fibre, cables and accessories from outside the State granted earlier to respondent No. 1, the notification having been given retrospective effect from August 1, 2003 meaning thereby that no import of optical fibre, cables and accessories from outside the State of Assam by respondent No. 1 ever stood exempted from payment of entry tax even if such goods were the exclusive property of respondent No. 1 and even if such items were imported by respondent No. 1 for their own use. (iv) Close on the heels of the withdrawal of exemption by notification dated October 30, 2004, aforementioned, respondent No. 1, vide its communication dated November 17, 2004, intimated the petitioner-company that the petitioner-company was liable to pay entry tax of a sum of Rs. 31,00,569 against the supply of optical fibre and cables made by the petitioner-company. The communication dated November 17, 2004, aforementioned was followed by a reminder dated December ....
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....as not disposed of earlier than November, 2005. In terms of the interim direction, so given, the bank guarantee stands extended. I have heard Dr. A.K. Saraf, the learned Senior counsel for the petitioner, and Mr. R. Dubey, the learned counsel, appearing on behalf of respondent Nos. 4, 5, 6 and 7. I have also heard Mr. S. N. Sarma, the learned Senior Counsel, appearing on behalf of respondent Nos. 1, 2 and 3. Taking this court through the provisions of section 2(b), which defines the term "entry of goods into a local area", section 2(c), which defines "local area", and section 2(d), which defines "importer" and also entry 4 of the Schedule to the Act of 2001, Dr. Saraf submits that entry 4 does not include the items in question, namely, optical fibre, cables and accessories. Drawing attention of this court to the contents of entry 4, which reads "sound transmitting equipment including telephones, mobile phones, pagers and components and parts thereof ", Dr. Saraf contends that in the expression "sound transmitting equipment including telephones, mobile phones, pagers and components and parts thereof", the word "including" has not been used as a word of enlargement; rather, ....
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.... and no other item. Support for his submissions is sought to be derived by Dr. Saraf from State of Uttar Pradesh. v. Raja Anand Brahma Shah, reported in [1967] 1 SCR 362, South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat [1977] 50 FJR 51 (SC); [1976] 4 SCC 601, Godfrey Phillips India Ltd. v. State of U.P. [2005] 139 STC 537 (SC) and Subhash Iron & Steel Rolling Industries v. State of Gujarat [1982] 50 STC 305 (Guj). Controverting the submissions made on behalf of the petitioners, Mr. Dubey has submitted that optical fibre, cables and accessories are covered by entry 4 of the Schedule to the Act of 2001 inasmuch as sound transmitting equipment would embrace, within its sweep, the optical fibre, cables, joining box, termination box, joining kits which are nothing but paraphernalia of transmitting/receiving devices of sound telecommunication. The word "including", appearing in entry 4, should be read, contends Mr. Dubey, as a word of extension and not as a word of limitation. In support of his submissions, Mr. Dubey has placed reliance on State of Bombay v. Hospital Mazdoor Sabha reported in [1959-60] 17 FJR 423 (SC); AIR 1960 SC 610, Commissioner of Income-....
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....2001? A search for an answer to the above question brings me to section 3, which contains the charging provisions. This section reads as under: "3. Levy of tax.-(1) There shall be levied and collected an entry tax on the entry of the goods specified in the Schedule into any local area for consumption, use or sale therein at the rates shown against each item in the said Schedule and such tax shall be paid by every importer of such goods "whether he import such goods on his own account or on account of his principal or any other person or takes delivery or is entitled to take delivery of such goods on such entry." "Entry of goods into a local area" is defined in section 2(b) of the Act of 2001. Section 2(b) reads, "Entry of goods into a local area" with all its grammatical variations and cognate expressions means entry of the goods as specified in the Schedule into a local area from any place outside "that local area including a place outside" the State for consumption, use or sale therein. From a combined reading of section 3 and section 2(b) of the Act of 2001, what becomes abundantly clear, and is, in fact, not in dispute, is that entry tax is leviable only on the goods, ....
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....however, do not agree and contend that optical fibre, cables and accessories fall within the expression "sound transmitting equipment". Without entering into the controversy as to whether optical fibre, cables and accessories are or are not sound transmitting equipments, let me, first, determine if telephones, mobile phones, pagers and components and parts thereof are the only sound transmitting equipments, which are exigible to entry tax under the Act of 2001. While considering the above aspect of the case, what needs to be borne in mind is that though the word "including" is, generally, used as a word expressing enlargement, it may have to be, in a given context, construed to have been used in a restricted sense. Where the term "including" is used as an extending force, it adds to the word or phrase a meaning, which naturally does not belong to such word or phrase. The use of the word "including" in the restrictive sense is not wholly unknown in interpretation of the statutes. In fact, Lord Watson, in Dilworth v. Commissioner of Stamps reported in [1899] AC 99, observed, "The word 'include' is very generally used in interpretation clauses in order to enlarge the meanin....
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....r expression unless the inclusion is for the purpose of clarification or illustration indicating exhaustiveness and limitation. There is no dispute that the expression "sound transmitting equipment " includes, within its natural meaning, telephones, mobile phones, pagers and components and parts thereof. In this view of the matter, there is really no purpose in specifically including telephones, mobile phones, pagers and components and parts thereof within the expression "sound transmitting equipment". The only rational purpose, which can be attributed to such a legislation, is that by using the word "including" in entry 4, the Legislature intended to convey that it is only telephones, mobile phones, pagers and components and parts thereof which, as sound transmitting equipments, are exigible to entry tax. Thus, the word "including", which appears in entry 4, cannot but be held to have been used in a restrictive sense and the legislative intention is not to include any sound transmitting equipment except telephones, mobile phones, pagers and components and parts thereof or any derivative thereof within the expression "sound transmitting equipment". If this interpretation is held....
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....'potteries industry'. It hardly makes any sense to say that potteries industry includes the manufacture of articles of pottery, if the intention was to enlarge the meaning of potteries industry in any way. The inclusion in the list of objects which are well-recognised articles of pottery makes it plain that the Explanation was added to the entry not by way of abundant caution. If it had been the Legislature's intention to bring within the entry all possible articles of pottery, it was quite unnecessary to add an Explanation. The word 'includes' has been used here in the sense of 'means'; this is the only construction that the word can bear in the context. In that sense it is not a word of extension, but limitation; it is exhaustive of the meaning which must be given to potteries industry for the purpose of entry 22. The use of the word 'includes' in the restrictive sense is not unknown." Since "pottery", in a wide sense, would mean all objects, which are made of clay and hardened by heat, whether the item is a crude earthen pot or a delicate porcelain, there is no meaning in specifying nine articles of pottery under the Explanation t....
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..... The idea seems to be to remove any doubts on the point whether waste land or forest land could be held to be capable of being held or let for purposes ancillary to agriculture. We must, therefore, hold that forest land or waste land in the area in dispute cannot be deemed to be an estate within clause (a)(iii) unless it was held or let for purposes ancillary to agriculture." From the decision in Raja Anand [1967] 1 SCR 362, it becomes clear that the word "including" can be used, in a given context, for the purpose of clarification or Explanation and it is not necessary that the word "include" would always convey expansiveness. In the present case, when telephones, mobile phones and pagers fall within the term "sound transmitting equipment", there was, if Mr. Dubey's contention is to be accepted, no purpose in specifying these items in entry 4, while defining as to what items would be included within the term "sound transmitting equipment". Had telephones, mobile phones and pagers not been the items, which are, normally, regarded as sound transmitting equipments, then, telephones, mobile phones and pagers, appearing under entry 4, could have been held to have been included,....
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.... Parliament intended to so expand the meaning of prize chit as to take in every scheme involving subscribing and refunding of money. The word 'includes', the context shows, was intended not to expand the meaning of 'prize chit' but to cover all transactions or arrangements of the nature of prize chits but under different names." (emphasis(1) is added) From the above observations made in Peerless General Finance and Investment Co. Ltd. [1987] 1 SCC 424, what becomes clear is that inclusive definition is resorted to by the Legislature (i) to enlarge the meaning of words or phrases by taking in not only such words or terms, which fall within their ordinary, popular and natural sense, but also the sense, which the statute wishes to attribute to it, (ii) to include meanings about which there may be some controversy or dispute or (iii) to bring under one nomenclature, all transactions possessing certain similar features, but going under different names. In Peerless General Finance and Investment Co. Ltd. [1987] 1 SCC 424, the Supreme Court has clearly laid down that the word "include" may not always be used by the Legislature for the purpose of enlargement; rather, ....
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....the purpose of business, profession or vocation. In Taj Mahal Hotel, Secundrabad [1971] 82 ITR 44 (SC); [1971] 3 SCC 550, having found that section 10(5) included within the word "plant", items, such as, vehicles and books, which do not ordinarily fall within the meaning of the word "plant", the apex court held that inference would be that the word "include" has been used for the purpose of enlarging the definition of the word "plant". Thus, the legislative intent, in Taj Mahal Hotel, Secundrabad [1971] 82 ITR 44 (SC); [1971] 3 SCC 550, was to give the word "plant" a wide meaning and that was why the words "books" and "vehicles" were included within the definition of the term "plant", though "plant" does not, ordinarily, include "vehicles" and "books". To the case at hand, therefore, the decision in Taj Mahal Hotel, Secundrabad [1971] 82 ITR 44 (SC); [1971] 3 SCC 550, can be of no help to the respondents. The cases of High Land Coffee Works of P.F.X. [1991] 3 SCC 617 and Municipal Corporation of Greater Bombay v. Indian Oil Corporation (1991) Supp 2 SCC 18; AIR 1991 SC 686 are also cases, wherein the word "include" has been considered and interpreted within the meaning and schem....