Case Note & Summary
The case concerned a claim for sales tax exemption on a product known as Gole Papad under the Rajasthan Sales Tax Act, 1954. The appellant, a manufacturer/dealer, sought exemption under a notification issued by the State Government under Section 4(2) of that Act. The respondent was the Assistant Commissioner, Commercial Taxes, Jaipur. By notification dated March 9, 1970, the State exempted "Papad and Badi i.e. Mangori" from sales tax. The appellant made an application for exemption of Gole Papad manufactured out of Maida, Salt Starch, Papad Soda, Alum and Food colour. The Additional Commissioner, by proceeding dated August 27, 1982, held that Gole Papad was not covered by the notification. On appeal, the Sales Tax Tribunal by order dated March 17, 1986 allowed the appeal and held that the notification would govern all varieties of Papad, whether circular or flat in shape, consisting of all ingredients whether pulses, rice, maida etc. The State carried the matter in revision, and the High Court of Rajasthan allowed the revision on April 18, 1991, holding that the appellant was not entitled to the exemption. The appellant then appealed to the Supreme Court by special leave. The core question was whether Gole Papad manufactured from maida and other ingredients fell within the meaning of "Papad" in the exemption notification, or whether the word "Papad" had to be restricted to papad made exclusively from pulses or certain traditional ingredients. The appellant contended that the notification exempting "Papad and Badi i.e. Mangori" did not differentiate between gole or flat papad or between ingredients and must cover all varieties of papad. The State contended that the Gole Papad was not covered by the notification, relying on the High Court's interpretation. The Supreme Court observed that the notification clearly mentioned that the word "Papad" had been used as a genus and its species are made from pulses, rice, maida, potato, sago etc. It noted that in the notification the words "Papad and Badi i.e. Mangori" had been used, and by analogy with entry No.3 which included "other stationery articles made of handmade paper", the entries were not restricted to only specific items but encompassed the general category. The Court posed the question whether the ingredients of papad are exclusively composed of pulses or maida or rice etc. It held that when the notification mentioned papad and Badi i.e. Mangori, it did not intend to differentiate between gole or flat papad made of any ingredient. The High Court's interpretation was therefore incorrect and the Tribunal's interpretation was correct. The appeal was allowed. The Court directed no costs. It further observed that if there was any difficulty, it would be open to the Government to make necessary declaration in the exemption notification itself by way of amendment.
Headnote
A) Sales Tax - Exemption Notification Interpretation - Word 'Papad' as Genus - Rajasthan Sales Tax Act, 1954, Section 4(2) - The notification dated 09.03.1970 exempted 'Papad and Badi i.e. Mangori' from sales tax and used 'Papad' as a genus whose species are made from pulses, rice, maida, potato, sago etc. The assessing authority denied exemption to 'Gole Papad' made from maida, salt starch, papad soda, alum and food colour on the ground it was not covered. The Supreme Court held that the notification did not intend to differentiate between gole or flat papad based on shape or ingredient, and all varieties of papad including gole papad made from maida were exempt; the High Court's interpretation was incorrect and the Tribunal's correct.
Issue of Consideration
Whether 'Gole Papad' manufactured out of maida, salt starch, papad soda, alum and food colour is covered by the exemption notification dated March 9, 1970 issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954.
Final Decision
Appeal allowed. The Supreme Court held that the word 'Papad' in the notification is a genus and no differentiation between gole or flat papad or ingredient was intended. The High Court's interpretation was incorrect and the Tribunal's was correct. No costs. The Government may amend the exemption notification if any difficulty arises.
Law Points
- The word 'Papad' in the exemption notification is used as a genus with species made from pulses
- rice
- maida
- potato
- sago etc.
- the notification does not differentiate between gole or flat papad based on shape or ingredient
- all varieties of papad including gole papad made from maida are exempt from sales tax under the notification.
