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Commissioner, Sales Tax Vs. Agra Belting Works - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberSales Tax Revision No. 146 of 1983
Judge
Reported in[1985]59STC118(All)
AppellantCommissioner, Sales Tax
RespondentAgra Belting Works
Appellant AdvocateStanding Counsel
Respondent AdvocateBharatji Agrawal, Adv.
DispositionPetition dismissed
Excerpt:
.....of several decisions of this court, of which we may mention only a few, namely, ramavatar budhaiprasad v. it may be in small pieces or in big rolls :it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. ..this reference in a statute which is intended to apply to imports made by the trading community clearly shows that 'dryer felts' which are 'woven textile felts. this court while deciding the matter remarked as follows :a fiscal statute like the one before me has to be interpreted strictly. so long as the exemption continues, the dealer can certainly urge and with justification that the mere specification of the goods under section 3-a or declaring the point of sale at such turnover liable to tax would not take away the exemption..........by the sales tax tribunal, u. p., bench allahabad, allahabad. the dealer who is a manufacturer of cotton fabric known as patta used in oil mills, dal mills and rice mills moved an application under section 25 of the u. p. sales tax act for deciding following questions:(1) whether or not the product of the assessee is covered within the term 'cotton fabrics'?(2) whether or not the assessee is entitled to get exemption under notification no. 4064/x-960(4)/58 dated 25th november, 1958 ?(3) whether or not the assessee is entitled to get the exemption of inter-state sales under notification no. st-4486/x dated 14th december, 1957 2. so far as questions nos. (2) and (3) were concerned the commissioner, sales tax, held that the patta manufactured by the assessee was covered by the notification.....
Judgment:

V.N. Khare, J.

1. By means of this revision the Commissioner of Sales Tax, U. P., Lucknow, has challenged the order passed by the Sales Tax Tribunal, U. P., Bench Allahabad, Allahabad. The dealer who is a manufacturer of cotton fabric known as patta used in oil mills, dal mills and rice mills moved an application under Section 25 of the U. P. Sales Tax Act for deciding following questions:

(1) Whether or not the product of the assessee is covered within the term 'cotton fabrics'?

(2) Whether or not the assessee is entitled to get exemption under Notification No. 4064/X-960(4)/58 dated 25th November, 1958 ?

(3) Whether or not the assessee is entitled to get the exemption of inter-State sales under Notification No. ST-4486/X dated 14th December, 1957

2. So far as questions Nos. (2) and (3) were concerned the Commissioner, Sales Tax, held that the patta manufactured by the assessee was covered by the notification dated 1st December, 1973 'beltings of all kinds' and could not be regarded as 'cotton fabrics of all varieties' and as such the dealer was not entitled to any exemption. Against that the respondent went up in appeal before the Sales Tax Tribunal. The Tribunal held that the product manufactured by the respondent was cotton fabric and exempted under the U. P. Sales Tax Act.

3. The questions that arise for consideration are as to whether on the facts and circumstances of the case 'patta' manufactured by the dealer is cotton fabric and that the dealer is entitled to general exemption of tax on U. P. sales and inter-State sales. Learned Standing Counsel on behalf of the Commissioner urged that patta manufactured by the dealer is not cotton fabric and further that since out of the general 'cotton fabrics of all kinds' the 'beltings of all kinds' was separately specified by the notification dated 1st December, 1973 the specific entry was to prevail over the general one. According to him the patta manufactured by the assessee was taxable under the entry 'beltings of all kinds' and the exemption granted by the notifications dated 25th November, 1958 and 14th December, 1957 could not be available to the dealer on the sale of patta.

4. Learned Counsel for the respondent urged that the Tribunal has recorded a finding that the patta manufactured by the dealer is manufactured out of 100 per cent cotton yarn and is cotton fabric.

5. Cotton fabric has not been defined anywhere under the U.P. Sales Tax Act. The Tribunal has recorded a finding that the assessee manufactures and sells cotton weaved roll known as patta which is used in oil mills, etc. After taking the product off the loom the dealer does not further process it to make it suitable for any particular machinery. In Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433 (SC), the Supreme Court had occasion to consider as to whether 'dryer felts' made out of cotton or woollen yarn by process of weaving and commonly used as absorbents of moisture in paper manufacturing units was covered by the word 'textiles' or not.

6. Dealing with the question of textiles the Supreme Court remarked as follows :

Now, the word 'textiles' is not defined in the Act, but it is well-settled as a result of several decisions of this Court, of which we may mention only a few, namely, Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286 (SC); Motipur Zamindary Co. Ltd, v. State of Bihar [1962] 13 STC 1 (SC) and State of West Bengal v. Washi Ahmed [1977] 39 STC 378 (SC), that in a taxing statute words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance.

The Court further remarked :

The word 'textiles' is derived from the Latin 'texere', which means 'to weave' and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material is woven into a fabric, what comes into being is a 'textile' and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other kind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown of unthought of and so many are the new techniques invented for making fabrics out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be 'textiles'. What is necessary is no more than weaving' of yarn and weaving would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls : it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear in its character as a textile. It may be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel' for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that 'dryer felts' are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against 'dryer felts' falling within the category of 'textiles', if otherwise they satisfy the description of 'textiles'.

The Court further held :

The character of a fabric or material as textile does not depend upon the use to which it may be put. The uses of textiles in a fast developing economy are manifold and it is quite common now to find 'textiles' being used even for industrial purposes. If we look at the Customs Tariff Act, 1975 we find in Chapter 59 occurring in Section XI of the First Schedule that there is a reference to 'textile fabrics' and textile articles, 'of a kind commonly used in machinery or plant' and Clause (4) of that chapter provides that this expression shall be taken to apply inter alia to 'woven textile felts...of a kind commonly used in paper-making or other machinery...'. This reference in a statute which is intended to apply to imports made by the trading community clearly shows that 'dryer felts' which are 'woven textile felts...of a kind commonly used in paper-making machinery' are regarded in common parlance, according to the sense of ordinary traders and merchants, textile fabrics. We have, therefore, no doubt that 'dryer felts' are 'textiles' within the meaning of that expression in item 30 of Schedule B,

7. In Commissioner of Sales Tax v. Ashok Elastic Works, Varanasi 1971 UPTC 237 this Court held that dori and fita were covered in the category of 'cotton fabrics of all varieties' under the notification dated 25th November, 1958.

8. In State of Tamil Nadu v. Navinchandra & Co. [1981] 48 STC 118 the Madras High Court held that cotton beltings are covered by all varieties of textiles in item 4 of the Third Schedule to the Tamil Nadu General Sales Tax Act which is in pari materia with the notification issued under the U. P. Sales Tax Act.

9. In view of the finding recorded by the Tribunal and also in view of the above decisions, it is clear that the patta manufactured by the petitioner is covered by 'cotton fabrics of all varieties'.

10. The next question that arises for consideration is that the patta, which is covered by 'cotton fabrics of all varieties' is taxable under the notification dated 1st December, 1973, viz., 'beltings of all kinds'.

11. In Commissioner of Sales Tax v. Dayal Singh Kulfiwala, Lucknow 1980 UPTC 350 a question arose whether the general exemption granted under Section 4 in respect of milk and milk products would be sufficient to exempt kulfi and lassi regarding whose taxability a separate notification was issued. This Court while deciding the matter remarked as follows :

A fiscal statute like the one before me has to be interpreted strictly. If there is any ambiguity or doubt, it should be resolved in favour of the subject. There is no equity about tax. The taxing liability must be express and absolute. In the present case, the specification of the goods for purposes of Section 3-A(2) is one thing, but whether or not such goods would be exempt from tax is the power conferred upon the State Government under Section 4 of the Act. So long as the exemption continues, the dealer can certainly urge and with justification that the mere specification of the goods under Section 3-A or declaring the point of sale at such turnover liable to tax would not take away the exemption from payment of tax which the goods enjoyed by virtue of the exercise of power by the State Government under Section 4 of the Act. The operating fields of the two sections, namely, Sections 3-A and 4, are distinct and separate. Section 3-A by itself cannot override the power under Section 4. On the other hand, if certain goods have been classified for purposes of Section 3-A and the point of tax has also been declared by the State Government, if such goods had been exempted from sale, the department cannot contend that the exemption should not be construed in favour of the assessee.

12. In Commissioner of Sales Tax v. Rita Ice Cream Co., Gorakhpur 1981 UPTC 1239 a question arose as to whether notifications under Section 4 prevail over the notifications issued under Section 3-A. This Court held that so long as the exemption under Section 4 continues ice-cream cannot be taxed by notifications under Section 3-A of the Act.

13. In Deep Chand Goyal v. Sales Tax Officer 1982 UPTC 1058 a question arose about cotton seeds being taxable. In that case exemption was granted by an earlier notification but was not withdrawn while issuing the subsequent notification, It was held that since the exemption which has been granted has not been withdrawn, cotton seed cannot be taxed by a separate notification. Thus the consistent view of this Court throughout had been that by issuing a separate notification under Section 3-A the earlier exemption granted under Section 4 of the Act cannot be negatived. If the State wanted to tax 'beltings of all kinds' it has to amend the general notification issued under Section 4 by deleting cotton fabric belts from the notification issued under Section 4 of the Act.

14. In view of the above there is no merit in the revision. The revision is accordingly dismissed with costs.


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