M. C. JAIN, J. - (1.) THE revision petitions mentioned in the Schedule annexed with this order raise a common question of law, so, they are being disposed of by this common order.
(2.) THESE revisions are directed against the orders of the Rajasthan Sales-tax Tribunal, Ajmer whereby the order of the Assessing Authority and of the Appellate Authority imposing penalty under Sec. 5c (2) of the Rajasthan Sales-tax Act, 1954 have been set aside and it has been held that the articles purchased by the assessees are the 'raw materials' and the department is estopped to challenge that the articles mentioned in the registration certificates are not the "raw materials" It would be proper to consider the facts of the case of M/s Lodha Fabrics, Pali in S. B. Sales-tax Revisions No 332/87, 333/87 and 334/87. In these cases. The Assessee purchased Caustic Soda and Soda Ash in different accounting periods for varying amounts. The Assessing Authority held that out of the quantity of raw materials; Caustic Soda and Soda ash purchased, the Assessee had used only 25% as raw materials and the remaining 75% had not been so used, so, the penalties were imposed under Sec. 5c (2) of the Rajasthan Sales-tax Act, 1954 (for short 'the Act' ). The assessee was unsuccessful in appeals before the Deputy Commissioner (Appeals ). The assessee also filed the writ petitions but the same were dismissed on the ground of availability of alternative remedy of appeal. The assessee thereafter filed appeals before the Sales-tax Tribunal. The Tribunal by its order dated 5. 2. 87 allowed all the appeals and set aside the orders of the Assessing Authority as well as of the Deputy Commissioner (Appeals ). The learned Tribunal found that caustic soda and soda ash are 'raw materials' for dyeing and printing industry and no part of any of them can be said to be used in it, as not a 'raw material'. The Tribunal considered the various processes to be undergone for preparing the cloth for dyeing and printing and it placed reliance on the observations made in M/s JK. Cotton Spinning & Weaving Cotton Mills v. Sales-tax Officer (1) and also on the observations made in M/s Chhipa Abdul Gani Abdul Gafoor v. Commercial Taxes Officer, Pali (2 ). The learned Tribunal also made mention of the notifications dated 14. 4. 55 and 12 11 58 issued under Sec. 4 (2) of the Rajasthan Sales-tax Act and Sec. 8 (3) (b) of the Cental Sales-tax Act and observed that after withdrawal of the Rajasthan Notification, by introducing of the definition of the expression "raw material" in Clause (mm) of Sec. 2 of the Act, it could never have been the intention of the legislature while defining 'raw material' that the materials, which were being used and recognised, so would cease to be raw materials on the insertion of Sec 2 (mm) of the Act, particularly when, the definition itself included fuel and lubricant as raw materials. The Tribunal also proceeded to decide the appeals placing reliance on a Division Bench decision of this Court in C. T. O. v. Hindustan Radiators (3) wherein, it has been observed that the entry in the registration certificate is conclusive and it is not open to the Assessing Authority to contend that a particular article mentioned in the registration certificate as 'raw material is not in fact a 'raw material' within the meaning of Sec. 2 (mm) of the Act. Unless the entry is cancelled or modified, it is binding on the department and is conclusive proof of the fact that the article is a raw material for the manufactured product of the Assessee. These observations in the case, were also relied upon that when the department itself contends that it is not 'raw material' one fails to understand as to how the provision of Sec. 5c (2) can be attracted The Tribunal also didn't agree with the view taken in M/s. Indian National Hosiery Factory Vs. C. T. O. , Ajmer (4) a larger Bench decision of the Board of Revenue, in view of the observations made by this Court in the writ petition M/s Lodha Fabrics v. State of Rajasthan, decided on 29. 6. 86 and upheld in D. B. Special Appeal No. 854/86 and 855/86 , decided on 4. 7. 86. Thus, it would appear that the Tribunal proceeded to allow the appeals holding that caustic soda and soda ash are the raw materials on the ground that entry in the registration certificate is conclusive and binding on the department and it is not open to the department to contend that the articles mentioned in the registration certificate are not 'raw materials' and penalties were also set aside on the ground that Sec. 5c (2) of the Act would not be attracted when the articles are not 'raw materials' as per the case of department. The most important question, which arises for consideration in these revisions, is as to whether the articles, which are admittedly raw materials to certain extent being necessary for dyeing and printing cease to be raw materials, when they are used in various other processes undertaken till the cloth is made ready for dyeing and printing. In M/s Lodha Fabrics' case, 25% of Caustic Soda and Soda ash purchased by the assessee has been considered as 'raw materials' and the remaining 75% was not so considered and consequently, the penalty was imposed by the Assessing Authority. For the proper appreciation and adjudication of the controversy in question, it is necessary to read some relevant provisions of the Act. The expressions "manufacture" and "raw material have been defined in Sec. 2 (k) and Sec. 2 (mm) respectively as under: "2 (k ). "manufacture" includes any process or manner of producing, collecting, extracting, preparing or making any goods but does not include such manufactures or manufacturing processes as may be notified by the State Government. " "2 (mm ). "raw material" means an article used as an ingredient in any manufactured goods and includes fuel and lubricant required for process of manufacture, but does not include bullion and specie" The definition of the expression "manufacture" was substituted with effect from 26. 3. 62. The definition of the expression "raw material" was introduced by Act No. 13 of the Act, 1963 by Sec. 16 with effect from 2. 3. 1963. 6. The relevant parts of Section 5c are as under. The relevant parts of Section 5c are as under. "sec. 5c. Concessional rate of tax for raw materials: - (1) Notwithstanding anything contained in this Act, but subject to such restrictions and conditions as may be prescribed, the rate of tax pay-able on the sale to or purchase by a registered dealer of any raw materials for the manufacture in the State of goods other than exempted goods for sale by him within the State or in the course of inter-State trade or commerce or in the course of export outside the territory of India shall be at a concessional rate of 2% of the sale or purchase price of such raw material. Explanation - For the purpose of this sub-section "exempted goods" means (1) goods exempted under sub-sec. (1) of Sec 4 and (ii) goods liable to additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and which are exempt from the payment of tax by or under the provisions of this Act. (2) Where any raw material purchased by a registered dealer under sub-sec. (1) is utilised by him for any purpose other than a purpose specified therein, such dealer shall be liable to pay as penalty, such amount not less than the difference between the amount of tax on the sale of such raw material at the full rate applicable thereto under Sec. 5 and the amount of tax payable under sub sec. (!) but not exceeding one and one-quarter times the amount of tax at such full rate as the assessing authority may determine, having regard to the circumstances in which such use was made. " Section 5c was also introduced with effect from 2. 3. 1963. The relevant part of. Sec. 5-CCCC is as under:- "sec. 5-CCCC. Special rate of tax on certain Sales- (1) Notwithstanding anything contained in Sec. 5, and subject to such conditions in restrictions as may be prescribed, sale to or purchase by a registered dealer of goods other than raw material) specified in the certificate of registration of the registered dealer purchasing the goods and required by him for use in the manufacture or processing of goods for sale, or in mining or in (he generation or distribution of electricity shall, unless the goods are taxable at a lower rate, be subject to sub-section (2), leaviable to tax at 3 per cent. (2) The dealer selling the goods shall furnish to the prescribed authority in the manner, a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in the prescribed form obtained from the prescribed authority : and (3) In respect of sale under sub-sec. (1) if the goods purchased are utilized by the purchaser for any purpose other than those specified in that sub-section, or, while purchasing any class of goods represents that the goods of such class are covered by his certificate of registration as specified in sub-section (1), the purchasing dealer shall be liable to pay as penalty such amount, not less than the difference between the amount of tax on the sale or purchase of such goods at the full rate applicable thereto under section 5 or 5a and the amount of tax payable under sub-section (1) but not exceeding one and one quarter times the amount of tax at such full rate, as the assessing authority may determine, having regard to the circumstances in which such use or purchase was made. " This section was introduced with effect from 7. 4. 1979.
(3.) IT would appear that by the introduction of the definition of the expression "'raw materials" and of the provision of Sec. 5-C, a change has been brought about the provision has been made for concessional rate of tax for "raw material". If the conditions of sec. 5c are satisfied, then the rate of tax payable on the sale to or purchase by a registered dealer of any raw material shall be at a concessional rate of 2% of the sale or purchase price of such raw material. IT is true that prior to 2nd March, 1963 under Notification No. F 21 (7) SR/55 dated 14. 4. 55 in respect of an industry - Cloth dyeing and printing : cloth, colours, bleaching materials, paints varnishes and dyes were exempted from the tax and in the heading of Column No. 3 the expression was "goods (raw material etc )' exempted. The exemption would be available on fulfilling of the conditions laid down in the notification. The conditions were that the goods are sold to a bona fide manufacturer of finished products who holds a valid certificate of registration under Sub-sec. (1) of Sec. 6 and the manufacturer gives to the seller, a declaration in writing that the goods would be used in the manufacture of finished products. The question is what change has been brought about with effect from 3. 3. 63. For that, we have to examine the definition of "raw material'. A perusal of the definition would show that in this definition, the legislature has not only given the meaning to expression but has also said what it will include and what it will not include. The definition not only provides the meaning but also includes some articles to fall in that category and also excludes some articles, which would not fall in that category. Apart from the definite inclusions and exclusions, the definition gives meaning of the expression "raw material". The meaning given to the expression is that it shall be an article, which is used as an ingredient in the manufactured goods i. e. in the end product, the article must be used as an ingredient. If the article is not used as an ingredient in the end product, then, such an article would not be a raw material. One of the essential ingredient of the expression 'raw material' is that the article must be an ingredient in the end product. If the article is a constituent or an element of manufactured goods, then such an article would be raw material. The definition does not place any limit that only to the extent it becomes ingredient, it would be raw material and the rest would not be raw material. If in the process of manufacturing goods, only, apart of the article becomes ingredient and the rest goes waste, still the whole of it would be raw material within the meaning of the expression "raw material" as the article has been used as an ingredient of the finished goods. If the article is used in the various processes*, which are essential in the manufacturing of the goods but the same does not become ingredient in the finished product, then, such an article would not be a raw material. But, if the article is used in serious processes and in the finished product, it also becomes an ingredient, then, the conditions provided in the definition would be satisfied and such an article would be raw material. In the definition, the other expression or the words used are 'in any manufactured goods'. These words would mean the end product or the finished goods and in such finished goods, the article must become an ingredient. Mr. R. Balia, learned counsel for the department submitted that where an article is used at two different stages and in one process it becomes an ingredient, it is only that part of the purchase of the article used in that process, can avail the concession. I am unable to agree with this submission. The definition admits the question: Is the article used as an ingredient in the manufactured goods? If the answer is in the affirmative, the article is "raw material" and if it is in the negative it is not raw material. The definition does not admit any other question with respect to the stage of its use in the manufacturing process or to the extent of it. user. The definition does not say that the article is "raw material" only when in a particular manufacturing process, it becomes an ingredient. Such a restrictive meaning, the language does not permit and nothing can be added to the words used by the legislature in the definition. How a taxing statute should be construed; reference may be made to Polestar Electronic (Pvt) Ltd. v. Additional Commissioner, Sales-tax (5 ). It is observed as under:- "a statutory enactment must ordinarily be construed according to the plain natural meaning of its language and no words should be added, altered or modified unless it is plainly necessary to do so in order to prevent a provision from being unintelligible, absurd, unreasonable, unworkable or totally irreconcilable with the rest of the statute. This rule of literal construction is firmly established and it has received judicial recognition in numerous cases. When the court is construing a statutory enactment, the intention of the legislature should be gathered from the language used by it and it is not permissible to the court to speculate about the legislative intent. If the language of a statute is clear and explicit, effect must be given to it, for in such a case the words best declare the intention of the law-giver. It would not be right to refuse to place on the language of the statute the plain and natural meaning which it must bear on the ground that it produces a consequence which could not have been intended by the legislature. It is only from the language of the statute that the intention of the legislature must be gathered, for the legislature means no more and no less than what it says. It is not permissible to the court to speculate as to what the legislature must have intended and then to twist or bend the language of the statute to make it accord with the presumed intention of the legislature. In construing a taxing statute "one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law". If the legislature has failed to clarify its meaning by use of appropriate language, the benefit must go to the tax-payer. Even if there is any doubt as to interpretation, it must be resolved in favour of the subject. " Here, we may consider as to what is the meaning of the word "ingredient". ;