JUDGMENT M. Katju, J.
1. This writ petition has been filed for a writ of certiorari to quash the circular dated June 20, 2000, annexure 3 to the writ petition, in so far as it relates to the deletion of diesel oil from the recognition certificate and registration certificate of the petitioner. The petitioner has also prayed for a mandamus restraining the respondents from taking any proceedings in pursuance of the notices dated June 29, 2000 and July 5, 2000, annexures 4 and 5 to the writ petition. The petitioner has also prayed for a mandamus directing the respondents to issue forms III-B and forms C regularly for the purchase of diesel to be used in diesel generating sets for running the factory of the petitioner.
2. We have heard learned counsel for the parties.
3. The petitioner is a public limited company incorporated under the Indian Companies Act having its registered office at Bhartiagram, district Jyotiba Phula Nagar (Amroha). The petitioner has established a continuous process chemical industry for the manufacture of vinyl pyridine, picoline, etc. The petitioner is registered both under the U.P. Trade Tax Act as well as under the Central Sales Tax Act as a dealer.
4. The petitioner has been granted a registration certificate under Section 7 of the Central Sales Tax Act, 1956. True copy of the registration certificate under Section 7 including the list of materials which the petitioner is entitled to purchase under the Central Sales Tax Act is annexure 1 to the writ petition.
5. The petitioner has also been granted a recognition certificate under Section 4-B of the U.P. Trade Tax Act, 1948 authorising the petitioner to purchase various goods on concessional rate from May 14, 1980. The recognition certificate was granted on June 20, 1980 but was made effective from May 14, 1980. True copy of the recognition certificate is annexure 2 to the writ petition.
6. Section 4-B(2) of the U.P. Trade Tax Act reads as follows :
"Where a dealer requires any goods, referred to in Sub-section (1), for use in the manufacture by him, in the State of any notified goods, or in the packing of such notified goods manufactured or processed by him, and such notified goods are intended to be sold by him in the State or in the course of inter-State trade or commerce or in the course of export out of India, he may apply to the assessing authority in such form and manner and within such period as may be prescribed, for the grant of a recognition certificate in respect thereof; and if the applicant satisfies such requirements including requirement of depositing late fee and conditions as may be prescribed, the assessing authority shall grant to him in respect of such goods a recognition certificate in such form, and subject to such conditions, as may be prescribed.
Explanation.--For the purposes of this sub-section,--
(a) goods required for use in manufacture shall mean raw materials, processing materials, machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub-assemblies, fuels or lubricants ; and..........."
7. On the basis of the recognition certificate granted, the petitioner became entitled to purchase the various goods against form III-B which was issued by the assessing authority on payment of concessional rate of tax. Since the petitioner was granted registration certificate under Section 7 of the Central Sales Tax Act, the petitioner purchased diesel oil against form C from the Indian Oil Corporation Limited. The petitioner has also purchased diesel oil against form III-B from Indian Oil Corporation Ltd., and the Indian Oil Corporation charged tax at the rate of 2 per cent against form III-B.
8. It is alleged in paragraph 8 of the writ petition that a meeting was organised by the Principal Secretary, Institutional Finance, U.P. on June 12, 2000 in which a decision was taken that the benefit of form III-B for the purchase of diesel oil to be used in diesel generating set in the factory should not be given since this diesel oil is not directly used in the manufacture of notified goods, rather it was used for generating electricity in the generating set which electricity was then consumed by the factory. On the basis of the said decision the Additional Commissioner, Trade Tax, Meerut issued a circular on June 20, 2000 to ail the subordinate officers for its implementation vide annexure 3 to the writ petition. Accordingly, all the trade tax authorities of the State who are under the administrative control of respondents 1 and 2 have issued notices for cancellation of the recognition certificates under Section 4-B of the U.P. Trade Tax Act and also for cancellation of registration certificates under the Central Sales Tax Act. The respondent No. 3 consequently issued notices on June 29, 2000 for cancellation of recognition certificate under Section 4-B of the U.P. Trade Tax Act and notice dated July 5, 2000 was issued for cancellation of registration certificate under the Central Sales Tax Act, i.e., for deleting the diesel oil from the said certificate. True copies of the notices are annexures 4 and 5 to the writ petition.
9. In paragraph 17 of the writ petition it is alleged that diesel oil is a fuel which is absolutely essential for operating the machineries in the petitioner's factory which is a continuous process industry, and in the absence of diesel oil the diesel generating set cannot function and hence electricity cannot be generated for operating the machines. Aggrieved this writ petition has been filed.
10. A counter-affidavit has been filed by the respondents. In paragraph 3 of the same it is alleged that the notice issued by the Assistant Commissioner (Assessment), Trade Tax, Hasanpur dated June 29, 2000 is merely directing the petitioner to explain as to why high speed diesel be not deleted from the recognition certificate. It is stated that there is no mention of high speed diesel to be used as fuel in the industries specified in the Government notification under Section 8(3)(b) of the Central Sales Tax Act and there is nothing illegal in it. In paragraph 3(b) it is alleged that high speed diesel is neither fuel nor raw material as it is not being used in the manufacture of chemical for which recognition was granted to the petitioner. The diesel oil is used in the generating set for generating electric energy which is not only used for chemical industry but also used for electrical appliances in the office, factory and to supply electricity light, fans, etc. In paragraph 3(e) of the counter-affidavit it is alleged that diesel oil is being used in the generating set for production of electricity and the unit of the petitioner is not registered/ recognised for production of electricity and hence it is alleged that the raw material/fuel used for production of electricity is not entitled for concessional rate of tax under Section 4-B.
11. In paragraph 5 of the counter-affidavit it is alleged that the petitioner was granted recognition certificate for purchase of diesel at concessional rate due to mistake, and when the mistake was detected the petitioner was asked to show cause why diesel be not deleted from the recognition certificate. In paragraph 9 of the counter-affidavit it is alleged that the recognition certificate can be issued only for production of notified goods which are used as raw material or fuel. Diesel oil is not used in the process of production, directly hence diesel cannot be included in the recognition certificate. The diesel oil is used in generating electricity and not directly for producing the goods. In paragraph 18 it is stated that the petitioner has alternative remedy to file an appeal under Section 9 of the U.P. Trade Tax Act.
12. A rejoinder-affidavit has been filed and we have perused the same. In paragraph 6 it is stated that the petitioner has his own source of power/energy and has installed six generating sets having total capacity of about 18 mega watts and a good amount of diesel oil is being used for the same. The electricity generated by these generating sets is only used for manufacture of notified goods, namely, various chemicals at its factory and a certificate has been issued by the statutory auditors to the same effect vide annexure R.A. 1. In paragraph 7 it is alleged that Clause (a) of the explanation to Section 4-E(2) is not confined to those goods which are directly used as raw materials or processing material but it also includes consumable spare parts, fuel, lubricants, stores, etc. Hence the diesel generating set installed in the petitioner-factory is part and parcel of the machinery used by the petitioner. The diesel oil is fuel for running the diesel generating sets. In paragraph 8 it is stated that the petitioner has established a continuous process industry and if there is a disruption for the manufacture of power/electricity supply, it will block the entire production, and machinery will be Damaged causing heavy losses. Hence diesel oil is clearly covered under Clause (a) of the explanation to Section 4-B(2) of the U.P. Trade Tax Act. It is denied that the electric energy generated from the diesel generating sets is also used for electric appliances and for running light, fan and other electrical appliances. The petitioner has an electric connection of 400 KVA from the U.P. State Electricity Board now (U.P. Power Corporation) from a separate feeder mainly for the use in running of office equipment and light in the office as well as for the residential colony of the company. True copy of the certificate of the statutory auditor dated September 6, 2000 in this connection is annexure R.A. 2.
13. As regards the allegation that the petitioner has an alternative remedy and that the notice dated June 29, 2000 is only a show cause notice it may be mentioned that this notice has only been issued in pursuance of the decision of the Government on June 12, 2000 in pursuance of which the circular dated June 20, 2000, annexure 3 to the writ petition, was issued. Hence the subordinate authorities are bound by the circular dated June 20, 2000 and they have to comply with the same. Hence we cannot see what purpose would be served by asking the petitioner to appear before the assessing authority who is bound by the circular dated June 20, 2000.
14. In our opinion the stand taken by the respondent is over technical. In our opinion, the diesel oil used by the petitioner is used for the manufacture of notified goods as mentioned in Section 4-B(2) of the U.P. Trade Tax Act. It may be noted that Section 4-B(2) does not mention that the goods referred to in Sub-section (1) should be used directly for the manufacture of the notified goods. It is a settled principle of interpretation that ordinarily words should not be added or deleted in a statute, and instead the statute should be read as it is. This is the literal or grammatical principle of interpretation, which is applied with greater force in taxing statutes than in other statutes.
15. In Hemraj Gordhandas v. H.H. Dave, Asstt. Collector (1978) 2 ELT 350, the Supreme Court of India considered the language of a notification under the Central Excise Tariff and held that all was required for claiming an exemption was that the cotton fabric must be produced on power looms owned by the co-operative society. There was no further requirement in the language of the notification that the cotton fabric must be produced by the society for itself. The Supreme Court refused to go into the question of the intention behind the exemption since the language of the notification was clear.
16. In Assessing Authority-Cum-Excise and Taxation Officer v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239 (SC) the concessional rate under the Punjab General Sales Tax Act was payable if certain raw materials were used in the manufacture of goods for sale. The contention of the assessee was that the words used in the Act were "for sale" and not "for sale by him" and hence the goods sold by a third party were also covered by the provision. The contention was accepted by the Supreme Court which followed the literal rule of interpretation.
17. In Steel Authority of India Ltd, v. Collector of Central Excise AIR 1996 SC 2544 the question was whether raw naphtha intended for use in the manufacture of fertilisers was exempted although it was not actually used. It was held that the exemption notification only required proof that the raw naphtha was intended for use in the manufacture of fertiliser, and there was no further requirement that it was actually so used. Since it was purchased with the intention to be used for the manufacture of fertiliser, it was exempt, even though it could not be so used for some reason subsequently.
18. The principle of strict interpretation of taxing statutes was best enunciated by Rowlatt, J. in his classic statement in Cape Brandy Syndicate v. Commissioner of Inland Revenue (1921) 1 KB 64 [cited with approval in Income-tax Officer v. T.S. Devinatka Nadar [1968] 68 ITR 252 (SC); AIR 1968 SC 623] as follows :
".....,...in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
19. In A.V. Fernandez v. State of Kerala [1957] 8 STC 561 ; AIR 1957 SC 657 the Supreme Court of India stated the principle as follows :
"If the Revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter."
20. In Innamuri Gopalam and Maddala Nagendrudu v. State of A.P. [1963] 14 STC 742 ; [1964] 2 SCR 888 the exemption was denied to the assessee on the ground that the intention of the notification was to avoid double taxation, and as this was not a case of double taxation no exemption could be granted. The Supreme Court held that on the plain language of the notification that the assessee was entitled to exemption, and since the intention was not reflected in plain words, it could not be taken into consideration.
21. Where the language of a provision is plain, courts cannot ordinarily concern themselves with the policy behind the provision vide Baidyanath Ayurved Bhawan (Pvt.) Ltd. v. Excise Commissioner AIR 1971 SC 378 or the intention of the Legislature vide Income-tax Officer v. T.S. Devinatha Nadar [1968] 68 ITR 252 (SC); AIR 1968 SC 623. As Lord Watson said in Saloman v. Salomon & Co. intention of the Legislature is a common but slippery phrase vide (1897) AC 22. In Income-tax Officer v. T.S. Devinatha Nadar [1968] 68 ITR 252 (SC); AIR 1968 SC 623 the Supreme Court of India observed that the rule that ".......we must look to the general scope and purview of the statute, and at the remedy sought to be applied, and consider what was the former state of the law, and what it was that the Legislature contemplated" [vide Lord Hatherley in Pardo v. Bingham (1869) 4 Ch App 735] was made while construing a non-taxing statute. It follows from this decision that the mischief rule laid down in Heydon's case [1584] 3 Co Rep 7a(v) has only a limited application to taxing statutes.
22. In Bank of Chettinad Ltd. v. Commissioner of Income-tax [1940] 8 ITR 522 (PC); AIR 1940 PC 183 the Privy Council protested against the suggestion that in revenue cases "the substance of the matter" may be considered as against the strict legal position.
23. It is a corollary to the literal rule of interpretation that omissions in a statute are not to be inferred. If there is any defect or omission in the phraseology used by the Legislature it is not for the Court to make good the deficiency [Vide Smt. Tarulata Shyam v. Commissioner of Income-tax [1977] 108 ITR 345 (SC)] as it would then be taking on the role of the Legislature vide Gupta (S.P.) v. Union of India AIR 1982 SC 149. This rule applies with greater force to taxing statutes, and the general rule of interpretation that words can be supplied where "there are adequate grounds to justify the inference that the Legislature intended something which it omitted to express" [Maxwell (12th edn.) p 33] should not be taken to apply to taxing statutes.
24. Where Section 10(3-B) of the U.P. Sales Tax Act, 1948 permitted the filing of revisions within one year of the date of service of the order, but the revising authority could, on proof of sufficient cause, entertain a revision within a further period of six months, it was held by the Supreme Court that the period could not be further extended by virtue of Section 14(2) of the Limitation Act, and the Court was not competent to supply the omission in the statute vide Commissioner of Sales Tax v. Parson Tools and Plants [1975] 35 STC 413 (SC); AIR 1975 SC 1039. Similarly, where the validating Act does not remove the defect in the statute which had earlier been declared invalid, it too will be invalid vide Janapada Sabha v. Central Provinces Syndicate Ltd. AIR 1971 SC 57. Where an additional income-tax was imposed on "total income", and the assessee had no income in the relevant year, it was held that the tax could not be imposed vide Commissioner of Income-tax v. Elphinstone Spinning and Weaving Mills Co. Ltd. [1960] 40 ITR 142 (SC) ; AIR 1960 SC 1016. Where a Finance Act in Britain referred to "gifts made in consideration of marriage", the House of Lords refused to interpret these words as meaning "gifts made on the occasion of marriage to parties within the marriage" consideration vide Inland Revenue Commissioner v. Rennel (1964) AC 173. Where the (British) Income-tax Act, 1952 defined an "industrial building" as including one "used for the purpose to trade", the House of Lords rejected the argument of the crown that these words should be interpreted to mean wholly or mainly used for trade vide Inland Revenue Commissioner v. Saxone (1967) 1 WLR 501. Where Section 8(3)(b) of the Central Sales Tax Act, 1956 used the words "for use.....in manufacture .... of goods for sale" it was held that the words "by him" could not be added after the word "sale" vide Assessing Authority-cum-Excise and Taxation Officer v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239 (SC); (1981) UPTC 1319 (SC).
25. In Commissioner of Income-tax v. Elphinstone Spinning and Weaving Mills Co. Ltd. [1960] 40 ITR 42 (SC); AIR 1960 SC 1016 the company did not have any total income for the relevant assessment year though dividends were declared. The Revenue wanted to impose additional income-tax on the dividends, but the Supreme Court held that that could only be done if there was total income, and in this case there was no income. The court held that though the interpretation might lead to some anomalies it was for the Legislature to remove them. A similar view was taken in Collector of Customs v. Western India Plywood Mfg. Co. Ltd. (1989) 2 SCC 515.
26. In Commissioner of Sales Tax, U.P. v. Mangal Sen Shyam Lal [1975] 35 STC 621 (SC) ; (1975) 4 SCC 35 the question was whether the limitation for filing a revision against the assessing order started from the date of the order or from the time the assessment officer apprised the department about the order. The Supreme Court held that since the language of the provision was imperfect, imprecise and deficient, the remedy lay in a legislative amendment, as the court was unable to provide an adequate solution.
27. Where the question was whether certain provisions of the Limitation Act, 1963 could be applied in a case under the U.P. Sales Tax Act, the Supreme Court held that the Legislature did not apply the provisions of the Limitation Act to the Sales Tax Act, and hence they could not be imported into the Sales Tax Act by analogy, and the court could not supply the omission by inserting it in the guise of interpretation vide Commissioner of Sales Tax v. Parson Tools and Plants [1975] 35 STC 413 (SC) ; AIR 1975 SC 1039.
28. In State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326 ; AIR 1966 SC 1295 the Supreme Court held that where there was a lacuna in the Act that could not be filled up by the court, and the benefit would go to the assessee.
29. Thus, the term "payment" in Section 7 of the British Exchange Control Act, 1947 was held to be not limited to payments made in pursuance of an obligation [Shaw v. Shaw (1965) 1 WLR 537]. A provision which makes it an offence to drive a motor vehicle without reasonable consideration for other persons using the road, was held to include the conduct of the driver who drove in a manner which alarmed the passengers vide Pawley v. Wharldall (1966) 1 QB 373. The word "transfer" was held to include both voluntary and involuntary transfers [Mangalore Electric Supply Co. Ltd. v. Commissioner of Income-tax [1978] 113 ITR 655 (SC) ; AIR 1978 SC 1272].
30. While the literal rule prevents the undue restriction of wide language, so also it precludes the undue extension of narrow language [Maxwell (12th Edn.) P. 32]. Thus Section 32 of the Income-tax Act, 1961, which permits allowances of depreciation on "building, machinery, plant or furniture", does not permit depreciation allowance on the cost of the land on which the building is erected vide Commissioner of Income-tax v. Alps Theatre [1967] 65 ITR 377 (SC) and Vijay Shree (Private) Ltd. v. Commissioner of Income-tax [1968] 67 ITR 420 (Delhi).
31. If the stand of the respondent is accepted then we will be adding the word "directly" in Section 4-B(2) before the words "for use in the manufacture". This would be against the settled principle of interpretation referred to above. In our opinion, diesel oil is certainly fuel which is essential for operating the machinery in a continuous process industry like that of the petitioner. Hence in our opinion, diesel is clearly covered by Clause (a) of the explanation to Section 4-B(2) of the U.P. Trade Tax Act. In the event of breakdown of power supply to the generating sets of the petitioner the production in the factory will come to a halt as there will be no electricity for use by the factory and there will be damage to the machinery. Hence diesel oil is certainly goods used by the petitioner for the manufacture in-
his factory. ;
32. Taking a realistic view of the matter, in our opinion, the diesel generating sets installed in the factory are part and parcel of the machinery as held by the Supreme Court in Commissioner of Income-tax v. Mir Mohammad Ali [1964] 53 ITR 165 (vide pages 171 and 172).
33. The word require has been interpreted in 21st Century Reference Dictionary, Volume II, page 701 as follows :
"to depend on for success, fulfilment growth"
34. We can take judicial notice of the fact that in U.P. supply of electricity to industries is often erratic leading to power shedding and power cuts which affects the industry vide Mohavir Prasad Jain v. State of Orissa [1987] 67 STC 376 (Orissa) in which it was observed : -
"Judicial notice can be taken of the fact that supply of electricity in the State is erratic. In summer, very often, there is load-shedding and power cut-off. At other times, there is discontinuance of supply due to tripping. It is needless to emphasise its effect on an industry depending on supply of electricity."
In this connection we may refer to explanation 4-A which states :
"'Fixed capital investment' means value of land and building and such plant including captive power plant, machinery, equipment, apparatus, components, moulds, dyes, jigs and fixtures as have not been used in any other factory or workshop in India."
35. Thus it appears that the Legislature itself has recognised that captive power plants are also part and parcel of the industry.
36. In the Central Excise Act also fuel oil used for production of electricity for the ultimate production and manufacture of finished goods is treated as fuel in the manufacture or production of the finished goods vide Indian Oil Corporation v. Collector, Central Excise 1985 (19) ELT 145 (Trib).
37. In Indian Farmers Fertiliser Co-operative Ltd. v. Collector of Central Excise AIR 1996 SC 2542; 1996 (86) ELT 177, the ammonia used in the effluent treatment was held to be required for use in the manufacture of urea. In Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes [1965] 16 STC 259 the Supreme Court held that the locomotives and motor vehicles which are used by the Indian Copper Corporation for transporting the ore and other materials from the mine to the factory and for transporting the processed goods from the factory to the places of storage are "goods required for use in the manufacture or processing of goods".
38. In Commercial Taxes Officer, Jaipur v. Rajasthan Electricity Board [1997] 104 STC 89, the Supreme Court held that rain coats, battery cells, motor vehicles, soaps, etc., are required for use for the generation, distribution and transmission of electrical energy.
39. In Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax [1978] 41 STC 409 (SC); AIR 1978 SC 897 the question was whether sale outside Delhi would also be included in the taxable income. The Supreme Court held that word resale could not be limited to resale in Delhi alone. The Supreme Court went by the plain language of the statute and did not speculate about the intention of the Legislature.
40. From the above decisions it follows that words cannot be added to a statute and this principle will apply even with greater force to tax laws than to other statutes. Hence we cannot accept the interpretation of the respondent that the word "directly" should be added in Section 4-B(2) before the words "for use in the manufacture by him".
41. In our opinion, the word "fuel" will include all kinds of fuel whether in gaseous, liquid or solid form and hence it will include diesel oil, fuel, RFO, natural gas, naphtha, etc.
42. In view of the above this writ petition deserves to be allowed. Hence the circulars dated June 20, 2000, July 25, 2000 and August 5, 2000 issued by the Commissioner, Trade Tax, U.P., being contrary to the statutory provisions of Section 4-B(2) (explanation) and the consequential notices as well as consequential orders (in some writ petitions) for deleting diesel oil, furnace oil or other liquid fuels or gaseous fuel are hereby set aside. The impugned circular dated June 20, 2000 and notice dated June 29, 2000 are hereby quashed. The respondents are directed to treat the diesel oil which is used by the petitioner in its generators as goods required for use in the manufacture by the petitioner as notified goods. Accordingly a mandamus is issued to the respondents to issue form III-B and form C regularly to the petitioner for the purpose of diesel oil to be used in its diesel generating sets.
43. The petition is allowed. No order as to costs.