# HANSRAJ GORDHANDAS v. H. H. DA VE

- **Citation:** [1969] 2 S.C.R. 253
- **Court:** Supreme Court of India
- **Decided:** 1968-09-27
- **Case number:** Civil Appeal No. 1049 of 1965
- **Bench:** J. C. Shah, V. Ramaswami, G. K. Mitter, K. S. Hegde, j. A. N. GROVER
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hansraj-gordhandas-v-h-h-da-ve-4493
- **Pages:** 8

## Headnote

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Central Excises & Salt Act 1944--Rules made under-Rule 8 giving
power to Central Government to exempt excisable goods from dutyExemptions under Notifications dated July 31, 1959 and April 30, 1960
whether apply only to goods produced by a cooperative society for itself
and not for others-Taxing
statutes-Interpretation of-Relevance
oj
object of giving exemption from duty.
The appellant who was a dealer in textiles in Bombay entered into an
agreement with a registered cooperative society for weaving yarn supplied
by him into cotton fabrics on powerlooms owned by its members. The
Society had obtained L-4 licence as requfred by the Central Excises and
Salt Act.
1944. Under Rule 8 of the Rules made under the Act. the
Central Government was empowered to exempt any excisable goods from
the whole or any part of duty payable on such goods. In exercise of the
power under Rule 8, the Central Government by a notification dated
July 31, 1959 granted exemption to "cotton fabrics produced by any
Cooperative Society fOrmed of owners of cotton powerlooms which is
registered or which may be registered on or before March 31, 1961" subject to certain conditions set out in the notification. A subsequent notification dated April 30, 1960 granted exemption to "cotton falirid,<; produced
on powerlooms owned by any Cooperative Society or owned by or allotted
to the members of the Society which is registered on. or before March
31, 1961 ". On the strength of these notifications the appellant sought
exemption from excise duty in respect of the cotton fabrics which were
manufactured for it on powerlooms by the Cooperative Society.
The
excise authorities did not accept the claim for exemption and in a writ
petition filed by the appellant. the High Court gave only partial relief.
In appeal before this Court the question was whether the exemption
granted under .the notifications in question could be claimed only when
the cotton fabrics were manufactured by a Cooperative Society 'for itself.
HELD : On a true construction of the language of the notifications
dated July 31, 1959 and April 30, 1960, it is clear that all that is reqmred for claiming exemption is that the cotton fabrics must be produced on P<!werlooms owned by the Cooperative Society.
There is no
further reqmrement under the two notifications that the cotton fabrics
must be produced by the cooperative society on power!ooms "for itself'.
The appellant was therefore entitled to the exemption claimed. [259 D-E)
.
It is well established that in a trucing statute there is no room for any
mtendment ~ut r~gard must be had to the clear meaning of words. A
statutory nollfication may not be extended so as to meet a casus omissus.
It could be that the object behind the two notifications in question was
to encourage the actual manufacturers of handloom cloth to switch over
to powerlooms by constituting themselves into Cooperative Societies. But
the operation of the notifications had to be judged not by the object which
•
254
SUPREME COURT REPORTS
[1969] 2 S.C.R.
the rule, making authority had in mind but by the words which it had
employed to effectuate the legislative intent.
Applying this principle, the case of the appellant was covered by the
language of the, two notifications and the appellant was entitled to exemption from excise duty for the cotton fabrics. [259 E; 260 A-DJ
Salomon v. Salomon & Co. [1897] A.C. 22,
38 and Crawford v.
Spooner, 6 Moo P.C.C. 8, referred to.
~

## Text

A
HANSRAJ GORDHANDAS
v.
H. H. DA VE,
ASSISTANT COLLECTOR OF CENTRAL
EXCISE & CUSTOMS, SURAT & TWO ORS.
B
September 27, 1968
(J. C. SHAH, V. RAMASWAMI, G. K. MITTER, K. S. HEGDE AND
j.
A. N. GROVER, JJ.]
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E
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G
H
Central Excises & Salt Act 1944--Rules made under-Rule 8 giving
power to Central Government to exempt excisable goods from dutyExemptions under Notifications dated July 31, 1959 and April 30, 1960
whether apply only to goods produced by a cooperative society for itself
and not for others-Taxing
statutes-Interpretation of-Relevance
oj
object of giving exemption from duty.
The appellant who was a dealer in textiles in Bombay entered into an
agreement with a registered cooperative society for weaving yarn supplied
by him into cotton fabrics on powerlooms owned by its members. The
Society had obtained L-4 licence as requfred by the Central Excises and
Salt Act.
1944. Under Rule 8 of the Rules made under the Act. the
Central Government was empowered to exempt any excisable goods from
the whole or any part of duty payable on such goods. In exercise of the
power under Rule 8, the Central Government by a notification dated
July 31, 1959 granted exemption to "cotton fabrics produced by any
Cooperative Society fOrmed of owners of cotton powerlooms which is
registered or which may be registered on or before March 31, 1961" subject to certain conditions set out in the notification. A subsequent notification dated April 30, 1960 granted exemption to "cotton falirid,<; produced
on powerlooms owned by any Cooperative Society or owned by or allotted
to the members of the Society which is registered on. or before March
31, 1961 ". On the strength of these notifications the appellant sought
exemption from excise duty in respect of the cotton fabrics which were
manufactured for it on powerlooms by the Cooperative Society.
The
excise authorities did not accept the claim for exemption and in a writ
petition filed by the appellant. the High Court gave only partial relief.
In appeal before this Court the question was whether the exemption
granted under .the notifications in question could be claimed only when
the cotton fabrics were manufactured by a Cooperative Society 'for itself.
HELD : On a true construction of the language of the notifications
dated July 31, 1959 and April 30, 1960, it is clear that all that is reqmred for claiming exemption is that the cotton fabrics must be produced on P<!werlooms owned by the Cooperative Society.
There is no
further reqmrement under the two notifications that the cotton fabrics
must be produced by the cooperative society on power!ooms "for itself'.
The appellant was therefore entitled to the exemption claimed. [259 D-E)
.
It is well established that in a trucing statute there is no room for any
mtendment ~ut r~gard must be had to the clear meaning of words. A
statutory nollfication may not be extended so as to meet a casus omissus.
It could be that the object behind the two notifications in question was
to encourage the actual manufacturers of handloom cloth to switch over
to powerlooms by constituting themselves into Cooperative Societies. But
the operation of the notifications had to be judged not by the object which
•
254
SUPREME COURT REPORTS
[1969] 2 S.C.R.
the rule, making authority had in mind but by the words which it had
employed to effectuate the legislative intent.
Applying this principle, the case of the appellant was covered by the
language of the, two notifications and the appellant was entitled to exemption from excise duty for the cotton fabrics. [259 E; 260 A-DJ
Salomon v. Salomon & Co. [1897] A.C. 22,
38 and Crawford v.
Spooner, 6 Moo P.C.C. 8, referred to.
~
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1049
of 1965.
Appeal from the judgment and order dated July 31, 1964
of the Gujarat High Court in Special Civil Application No. 1054
of 1963.
Soli Sorabjee, D. M. Damodar, B. Datta and J. B. Dadachanji, for the appellant.
V. A. Seyid Muhammad and S. P. Nayar, for the respondents.
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P. R.', Mridul, Janendra Lal and B. R. Agarwala, for intervener No. 1.
J. B. Dadachanji, for interveners Nos. 2 and 3.
Ramaswam, J.
This appeal is brought by certificate from
the judgment of the High Court of Gujarat, dated July 31, 1964
E
in Special Civil Application No. 1054 of 1963.
The appellant is the sole proprietor of Messrs Gordhandas
and Co. carrying on business as a dealer in textiles in Bombay.
Under an agreement between the appellant on the one hand and
the Gandevi V anat Udhoog Sahkari Mandli Ltd. (hereinafter
referred to as the 'Society') the Society manufactured
cotton
F ·
fabrics during the period between June, 19 5 9 and September
1959 and from October 1, 1959 to January 31, 1961 for the
appellant on certain terms and conditions
which were later
reduced to writing on October 12, 1959.
Under these terms,
the Society agreed to carry out weaving work on behalf of the
appellant on payment of weaving charges fixed at 19 nP. per
G
yard which included expenses the Society would have to incur
in transporting yarn from Bombay and cotton fabrics woven by
the Society to Bombay.
The appellant was to supply yam to
be delivered at Bombay to the Society and the Society was to
made its own arrangement to bring the yam to its factory at
Gandevi.
Clause 11 provided that the yam supplied by the
H
appellant, remaining either in stock or in process or in the form
of ready~made pieces would be in the absolute ownership of the
appellant and the Society, as the bailee of the yarn, undertook to
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HANSRAJ v. H. H. DAVE (Ramaswami, !.)
255
take such care of it as it would normally take if the yarn belonged to it. The Society also undertook .to
~ave . the
y~
insured against fire, theft and all other nsks mclu~g trans~t
risks and further undertook to reimburse the appellant Ill case 1t
failed to do so.
The terms of the agreement though recorded
on October 12 1959 were to be deemed to be effective as from
April 21, 1959, and the agreement was terminable by either party
by giving one month's notice .
The Society was a cooperative society carrying on its work
at Gandevi and was registered on or before May 31, 1961 ~nd
consisted of members who owned powerlooms. The Society
started the weaving work for the appellant some time in May
or June 1959 and supplied to the appellant between June 1, 1959
and January 3, 1961 cotton fabrics measuring 3,19,460 yards.
The Society had obtained L-4 licence as required by the Central
Excises and Salt Act, 1944 (hereinafter referred to as the 'Act').
By letters, dated August 29, 1959 and October 27, .1961 the
Excise Department had granted exemption from
excise duty
payable on cotton fabrics manufactured by the Society under the
notification issued by the Central Government.
On November
10, 1961 the excise authorities issued a notice to the appellant
demanding a sum of Rs. 1,69,263.44 payable as excise duty.
It was alleged that the duty was payable by the appellant as it
had got the goods manufactured through the Society and had
got them removed from the Society's factory at Gandevi without
payment of duty.
On January 10, 1962 the Superintendent of
Central Excise, Bulsar sent another notice to show cause why
penalty should not be imposed upon the appellant for contravention of rule 9 and why duty should not be charged for the cotton
fabrics so removed by the appellant. The appellant showed cause
and on November 26, 1962 the Assistant Collector of Central
Excise and Customs, Surat held that the appellant was liable to
pay excise du~ to the extent of Rs. 2,20,574.74, being the total
amount of basic duty and a penalty of Rs. 250 was levied for
contravention of rule 9. the appellant preferred an appeal to
th~ Collector of Central Excise Baroda but the appeal was dislllls.sed.
Thereafter the appellant moved the High
Court
of
<}
Gujarat for grant of a wnt unirer Art. 226 of the Constitution.
The High Court dismissed the writ petition by its
judgment
dated July 31, 1964 but gave a direction that the respondent wa~
to ~ork out the ex~ise duty on the footing that the appellant was
entitled to exempt10n from duty altogether in respect of goods
H
supplied
for the period from June 1, 1959 to September 30,
1959.
As regards the two other periods i.e., October 1, 1959
to Ap;il 30, 196~ a~d from Ma~ 1, 1?.60 to January 31, 1961,
the High Court d1sm1ssed the wnt petition and directed the respondent to charge duty at the rate of 29.3 nP per square meter.
256
SUPREME COURT REPORTS
[i969] 2 S.C.R.
Clause ( d) of s. 2 of the Act defines "excisable goods" as
meaning goods specified in the First Schedule as being subject
to a duty of excise. Item 19 in the First Schedule provides for
excise duty at different rates depending upon the variety of cotton
fabrics.
Section 3 which is the charging section, provides for
the levy and collection of duties specified in the First Schedule
on all excisable goods which are produced or manufactured in
India. Rule 8 authorises the Central Government to exempt any
excisable goods from the whole or any part of duty payable on
such goods.
Clause ( 1) of rule 9 provides that no excisable
goods shall be removed from any place where they are produced,
cured or manufactured or. any premises
appurtenant thereto,
which may be specified by the Collector in this behalf, whether
for consumption, export or manufacture of any other commodity
in or outside such place, until the excise duty leviable thereon
has been paid at such place and in such manner as is prescribed.
Clause (2) of that rule provides that if any excisable goods are,
in contravention of sub-rule (1), deposited in, or removed from
any place specified therein, the producer or manufacturer thereof
shall pay the duty leviable on such goods upon written demand
made by the proper officer and shall also be liable to a penalty
which may extend to two thousand rupees and such goods shall
be liable to confiscation. In pursuance of the power under rule
8, the Central Government issued notifications from time to time
granting exemptions on cotton fabrics, though such goods were
excisable goods under tariff item 19. The first relevant notification is dated January 5, 1957.
By this notification certain
classes of cotton fabrics were exempt from payment of
excise duty.
Of the items exempted the seventh
item
is
as
follows :
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"Cotton fabrics manufactured by or on behalf of
the same person in one or more factories co=only
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known as power!ooms (without spinning plants)
in
which less than 5 powerlooms in all are installed;"
The next relevant notification is notification No. 74/59, dated
July 31, 1959 which reads as follows:
"G.S.R. 899-In pursuance of sub-rule
( 1)
of
G
rule 8 of the Central Excise Rules, 1944, as in force
in India and as applied to the State of Pondicherry,
the Centr:il Government
hereby
exempted
cotton
fabrics produced by any cooperative society formed of
owners of cotton powerlooms, which is registered or
which may be registered on or before the 31st March,
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1961 under any law refating to co-operative societies
from the whole of the duty Jeviable thereon, subject to
tile following conditions :-·
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HANSRAJ v. H. H. DAVE (Ramaswami, !.)
257
(a) that every member of the co-operative society
has been exempt from excise duty fo! th~e~ years immediately preceding the date of
his
101mng
such
society;
(b) that the total number of cotton powerlooms
owned by the co-operative society is not ~ore than
four· times the number of
members
formrng
such
society;
( c) that a certificate is produced by each member
of the co-operative society from the State Govermnent
concerned or such officer as may be nominated by the
State Government that he is a bona fide member of the
society and that the number of cotton powerlooms in
his ownership and actually operated by h~ does ~ot
exceed four and did not exceed four at any time dunng
the three years immediately preceding the date of his
joining the society, and that he would have been exempt
from excise duty even if he had not joined the co-opera-
.
.
,,
tive society; . . . . . . . . . . . . ............... .
The Central Government issued another notification, dated
April 30, 1960 by which the earlier notification, dated July 31,
1959 was superseded.
By this 'notification the Central Government exempted cotton fabrics produced on power-looms owned
E
by any co-operative society or owned by or allotted to the members of the society from the whole of the duty leviable thereon
subject ,to the four conditions therein set out. The notification,
dated April 30, 1960 is to the following effect :
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"In pursuance of sub rule ( 1) of rule 8 of the
Central Excise Rules, 1944, as in force in India and as
applied to the State of Pondicherry, and in supersession
of the Notification of the Govt. of India Ministry of
Finance (Department of Revenue) No. 74/59 Central
Excise, dated the 31st July 1959, the Central Government hereby exempts cotton fabrics produced on powerlooms owned by any cooperative society or owned by
or allotted to the members of the society which is registered or which may be registered on ~r before the
31~t ¥arch, 1961 under any law relating to cooperative
soc1eties, from the whole of the duty Ieviable thereon
subject to the following conditions :-
(a) that every member of the cooperative society
who has been a manufacturer of cotton fabrics on powerlooms, has ~een exempt from excise duty for three
yea:s immediately preceding the date of his joining such
society.
258
SUPREME COURT REPORTS
[1969]2 S.C. R.
(b) that the total No. of cotton powerlooms owned
by the cooperative society or owned by or allotted to its
members is not more than four times the number of
members forming such society.
( c) that each member of the cooperative society
produces a certificate from the State Government concerned or such officer as may be nominated by the State
Government that he is a bona fide
member of the
society and that the number of cotton power-looms owned
by or allotted to him and actually operated by him does
not exceed four and did not exceed four at any time
during that three years immediately preceding the date
of his joining the society and that he would have been
. exempt from excise duty even if he had not joined the
cooperative society and ........................ "
The main contention on behalf of the appellant is that the
case fell within the language of the two notifications, dated July
31, 1959 and April 30, 1960 and the appellant was entitled to
exemption from payment of excise duty on the cotton fabrics. The
argument was stressed that the exemption applied to all cotton
fabrics which were produced on power-looms owned by the Cooperative Society or on powerlooms allotted to its members and
it was not a relevant consideration as to who produced or manufactured such fabrics, whether it was the Society itself or its members or even outsiders. It was conceded by the appellant that it
was the owner of the cotton fabrics. But even upon that assumption the claim of the appellant is that it was entitled to exemption
from excise duty as it was covered by the language of the two
notifications already referred to. In our opinion, the argument of
the appellant is well-founded and must be accepted as correct. The
notification, dated July· 31, 1959 grants exemption to "cotton
fabrics produced by any 'Co-operative Society formed of owners
of cotton powerlooms which is registered or which may be registered on or before March 31, 1961" subject to four conditions set
out in the notification. In the next notification, dated April 30,
1960 exemption was granted to "cotton fabrics produced on powerIooms owned by any cdoperative society or owned by or allotted
to the members of the society, which is registered or which may
be registered on or before March 31, 1961" subject to the conditions specified in the notification. It was contended on behalf of
the appellant that under the contract between the appellant and thte
Society there was no relationship of master and servant but the
appellant supplied raw material and the contractor i.e., the Society
produced the goods. But even on the assumption that the appellant had manufactured the goods by employing hired labour and
was therefore a manufacturer, still the appellant was entitled to
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HANSRAJ v. H. H. DAVE (Ramaswami, J.)
259
exemption from excise duty since the case fell within the language
of the two notifications, dated July 31, 1959 and April 30, 1960,
·and the cotton fabrics were produced on power-looms owned by
the co-operative society and there is nothing in the notifications
to suggest that the cotton fabrics should be produced by the Cooperative Society "for itself" and not for a third party before it
was entitled to claim exemption from excise duty.
It was contended on behalf of the respondent that the object of granting
exemption was to encourage the formation of co-operative societies
which not only produced cotton fabrics but which also consisted
of members, not only owning but having actually operated not
more than four power-looms during the three years immediately
preceding their having joined the society.
The policy was that
instead of each such member operating his looms on his own, he
should combine with others by forming a society which, through the
cooperative effort should produce cloth.
The intention was that
the goods produced for which exemption could be claimed must
be goods produced on its own behalf by the society. We are
unable to accept the contention put forward on behalf of the
respondents as correct. On a true constructiQllJ of the language of
the notifications, dated July 31, 1959 and April 30, 1960 it is clear
that all that is required for claiming exemption is that the cotton
fabrics must be produced on power-looms owned by the cooperative society. There is no further requirement under the two
notifications that the cotton fabrics must be produced by the Cooperative Society on the powerlooms "for itself'. It is
wellestablished that in a taxing statute there is no room for any,intendment but regard must be had to the clear meaning of the words.
The entire matter is governed wholly by the language of the
notification. If the tax-payer is within the plain terms of the
exemption it cannot be denied its benefit by calling in aid any supF
posed intention of the exempting authority. If such intention can
be gathered from the construction of the words of the notification
or by necessary implication therefrom the matter is different but
that is not the case here. In this con~ection we may refer t~ the
observations of Lord Watson in Salomon v. Salomon & Co.(') :
H
. "Intention of the legislature is a common but very
shppe!'Y phrase, which, popularly understood may signify
anything from intention embodied in positive enactment
to speculative opinion as to what the legislature probably
would have meant, although there has been an omission
to e_nact it. . In a Court of Law or Equity, what the
Legislature mtended to be done or not to be done can
only be legitimately ascertained from that which it has
chosen to enact, either in express words or by reasonable
and necessary implication.".
(1) (18971 A.C. 22, 38.
. SuPREME COURT REPORTS
[1969] 2 S.C.R.
·--~.-,-.~·~-·-~~--~ ·-
•· It is ~n appllcatl~n of this principle th~t a statutory notification
may not be extended so as to meet a casus omissus. As appears
· in the judgment of the Privy Council in Crawford v. Spooner(') •.
. "~ ..•. we cannot aid the legislature's defective
phraSing of the Act, we cannot add, and mend, and, by ·
cons~c_tion, make up deficiencies which are left there." .
Learned Council for ihe respondents is po~bly right in his submission that the object behind the two notifications is to encourage
the . actual manufacturers of handloom cloth .to switch over to
power-looms by constituting themselves into Cooperative Societies.
But the operation of the notifications has to be judged not by the
object which the rule-making authority had in mind but by the
words which it has employed to effectuate the legislative intent.
Applying this principle we are of opinion that the case of the
appellant is covered by the language of the two notifications, dated
A
B.
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July 31, 1959 and April 30, 1960 and the appellant is entitled to
exemption from excise duty for the cotton fabrics produced for
the period betWeen October l, 1959 to April 30, 1960 and from· I>
May 1, 1960 to January 3, 1961. It follows therefore that the
appellant is entitled to the grant of a writ in the nature of certiorari
to quash the order of the Assistant Collector of Central Excise of
Baroda, dated November 26, 1962 and the appellate order of the
Collector of Central Excise, dated November 12, 1963.
For the reasons expressed we hold that the judgment of the
High Court of Gujarat, dated July 31, 1964 should be set aside,
that Special Civil Application No. 1054 of 1963 should be iillowed
and that a writ in the nature of certiorari should be granted to
quash the order of the Assistant Collector of Excise ana Customs
dated November 26, 1962 and the order of the Collector of Excise
dated November 12, 1963· This appeal is accordingly iillowed
with costs.
R.K.P.S.
Appeal allowed .
. (I) 6 Moo. P.C.C. 8.
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