M/S. PAPPU SWEETS AND BISCUITS ETC. versus COMMISSIONER OF TRADE TAX U.P. LUCKNOW

Citation: [1998] SUPP. 2 S.C.R. 119 · Decided: 06-10-1998 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

MIS. PAPPU SWEETS AND BISCUITS ETC. 
A 
v. 
COMMISSIONER OF TRADE TAX U.P. LUCKNOW 
OCTOBER 6, 1998 
(S.P. BHARUCHA, M.K. MUKHERJEE AND G.T. NANA VA TI, JI.] 
B 
Sales Tat 
Uttar Pradesh Sales Tat Act, 1948 : Section 4A 
Notification dated 27. 7. 91 granting exemption from payment of sales C 
lat-Industrial units engaged in manufacturing of 'toffees '-Application for 
eligibility certificate-Rejected on the ground that 'toffee' is a 'sweetmeat' 
falling under Entry 18 of the Notification-Not entitled to exemption-On 
appeal, held : High Court has not correctly interpreted and construed Entry 
18 of the Notification-The words 'sweetmeat' and 'commodities of like D 
nature' used in the Notification did not include within their sweep 'toffees'-
Popular parlance test not correctly applied to find out how 'toffee' is 
understood by people in the State-Entitled to exemption Notification. 
Words & Phrases 
'Sweetmeat' and 'commodities of like nature '-Meaning of in the context E 
of Notification issued under section 4A of U.P. Sales Tat Act, 1948. 
The State Government with the intention to promote industrial growth 
in the State, issued a Notification dated 27.7.1991 granting exemption from 
payment of sales tax to new Industrial Units and to Units undertaking 
expansion, diversification or modernisation. Under Annexure II, Entry 18 to F 
the Notification, units making sweetmeat, namkin, reori, gazak and 
commodities of like nature and restaurants were excluded from the benefit 
of exemption notification. The appellants, new Industrial Units established 
for manufacturing 'toffees' applied for eligibility certificate. The Joint 
Director rejected the application on the ground that 'toffet' was a 'sweetmeat' G 
and therefore being a type of unit mentioned in Annexure II to the NotiflC8tion, 
was not entitled to the exemption. The appellant appeal to the Trade Tax 
Tribunal and its revision application before the High Court were dismissed. 
Hence the present appeal. 
The contention of the appellants was that the High Court has not H 
119 
120 
SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R 
A correctly interpreted the word 'sweetmeat' as used in Entry 18 and that 
instead or being influenced by the dictionary meanings or the words 'sweetmeat' 
and 'toffee' it should have decided the question whether 'toffee' was 
'sweetmeat' by considering how those commodities are understood by the 
people in the State. 
B 
Allowing the appeals, this Court 
HELD : 1. The High Court has not correctly interpreted and construed 
Entry 18 of the Notif1C&tion. The word 'sweetmeat' and the words 'commodities 
or like nature' as used in the Notification dated 27.7.91 did not include 
within their sweep "toffees" manufactured by Industrial Units as contemplated 
C by the Notification. Thus appellant Industrial Units are entitled to the benefit 
or sales tax exemption under the Notification. [129-E-F] 
2. The object ofthe Notification was to increase industrial activity in 
the State by encouraging setting up or new industrial units or expansion, 
D diversification or modernisation by existing units. At the same time the State 
did not desire to·extend that benefit to all such industries. It was, therefore, 
specifically stated in the notification that industries mentioned in Annexure 
II shall not be entitled to the benefit of exemption from payment ortax or 
reduction in the rate of tax. It is however necessary to note that Annexure 
. II is an exclusionary part of the exemption notification. High Court failed to 
E appreciate that exclusionary part of an exemption notification has to be 
construed rather strictly. Even though the word used in exclusionary part of 
an exemption notification has a wide dictionary meaning or connotation, only 
that meaning should be given to it which would achieve rather than frustrate 
the object of granting exemption and which does not lead to uncertainty or 
F unintended results. (127-C; D & E] 
3. High Court has not correctly applied the popular parlance test for 
finding out how "toffee" is understood in the country and more particularly 
in the State of Uttar Pradesh. Instead it preferred to decide the issue by 
relying upon how toffee is understood by the people of the country where it 
G originated. (127-H) 
Collector of Excise v. Mis Parle Exports (P) Ltd., (1989) 1 SCC 345, 
referred to. 
4. The words 'commodities of like nature' in Entry 18 were meant to 
H include commodities other than those specifically me

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