How inclusive is 'includes'

EXPERT EYE

Definition has always been a very absorbing and fascinating subject for discussion in judicial parlance. Statutory definition, market parlance definition, scientific definition, artificial definition, inclusive definition and exhaustive definition "" these are enough to exhaust any reader, but they do not exhaust the subject.

When there is a statutory definition, it can be exhaustive as well as inclusive. Exhaustive definition means that all the items are enumerated and none is left for imagination. Inclusive definition, on the other hand, gives a general description or the name of what is covered by the definition and thereafter by a specific inclusion mentions certain items that may not be strictly inside the scope of the general description.

This has generated a number of interesting judicial pronouncements and the latest one is by the Supreme Court in the case of Commercial Taxation Officer, Udaipur vs Rajasthan Taxchem Ltd.

This was a sales tax case where the issue arose in respect of Rajasthan Sales Tax Act, 1994, where Section 2(34) defines raw material as "goods used as an ingredient in the manufacture of other goods and includes preservatives, fuel and lubricant required for the purpose of manufacture."

In this case, diesel was used as fuel for making electricity, which was used for making the end product, polyester yarn. The revenue contended that diesel was not a raw material at all for polyester yarn. The Supreme Court, however, held that the manufacturer purchased diesel as raw material and utilised the same, though it was used for the generator needed for production of the ultimate product.

The Supreme Court held that the word 'includes' gives a wider meaning to the words or phrases in the Statutes. It further held that "the word 'includes' is usually used in the interpretation clause in order to enlarge the meaning of the words in the Statute. When the word 'include' is used in the words or phrases, it must be construed as comprehending not only such things as they signify according to their nature and impact but also those things which the interpretation clause declares they shall include."

One other example is the definition of manufacture in Section 2(f) of the Central Excise Act. It does not say precisely what manufacture is and leaves it to the courts to decide. The definition only includes any process, which is incidental or ancillary to the completion of the manufactured product, and also includes specific definitions given in the chapter notes.

Even if a definition is given in a chapter note of a particular product as manufacture which is strictly speaking not manufacture, judging by the definition given by the Supreme Court, the moot question would still remain whether it will be manufacture or not. Just because it has been defined in the chapter note as manufacture, if we treat it as manufacture in all cases, it might be a travesty of the judgements of the Supreme Court defining manufacture.

The basic test of a product confirming to the Supreme Court definition still needs to be adhered to. In this judgement in the case of Commercial Taxation Officer, Supra, the Supreme Court went in length to establish that the fuel is at least used in the manufacture of polyester yarn, though indirectly.

The conclusion is, therefore, that an item included in an inclusive definition has to be prima facie taken to be included in the definition but it cannot be widely different from the basic concept of goods, which are being defined. The nexus still remains justiceable.