Skip to content


The Commissioner, Sales Tax Vs. Arora Material Store - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberSales Tax Revision No. 259 of 1981
Judge
Reported in[1982]51STC235(All)
AppellantThe Commissioner, Sales Tax
RespondentArora Material Store
DispositionApplication dismissed
Cases ReferredU.P. v. Alankar Traders
Excerpt:
- - that was the basis on which the controversy was decided by the sales tax tribunal as well. in the memorandum of revision filed in this court as well, the grievance of the petitioner is that the tribunal was not justified in holding that cotton-coated fabrics were included in the category of cotton fabrics. 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......the sales tax tribunal, affirming that of the assistant commissioner (judicial), sales tax, that cotton-coated fabric is unconditionally exempt from the levy of sales tax under the u. p. sales tax act (for brief, the act) on account of notification no. st-4064/ x-960(4)58 dated 25th november, 1958, issued under section 4 of the act. the assessing authority has assessed the turnover of the dealer-opposite party of the commodity in question as an unclassified item on its view that it fell outside the scope of that notification.2. the year is 1971-72. there is no dispute that the commodity, which is in issue, has as its base cotton fabric. according to the dealer, it is nothing but cotton fabric which has been impregnated with preparations of cellulose derivatives or other artificial.....
Judgment:

V.K. Mehrotra, J.

1. The Commissioner of Sales Tax has approached this Court in the present revision on account of the decision by the Sales Tax Tribunal, affirming that of the Assistant Commissioner (Judicial), Sales Tax, that cotton-coated fabric is unconditionally exempt from the levy of sales tax under the U. P. Sales Tax Act (for brief, the Act) on account of Notification No. ST-4064/ X-960(4)58 dated 25th November, 1958, issued under Section 4 of the Act. The assessing authority has assessed the turnover of the dealer-opposite party of the commodity in question as an unclassified item on its view that it fell outside the scope of that notification.

2. The year is 1971-72. There is no dispute that the commodity, which is in issue, has as its base cotton fabric. According to the dealer, it is nothing but cotton fabric which has been impregnated with preparations of cellulose derivatives or other artificial plastic materials. The assessing authority noticed in its order that even though the commodity had been described as coated fabric in the document relating to its purchase by the dealer, it was in reality leather cloth. The Assistant Commissioner (J.), Sales Tax, however, proceeded upon the assumption that it was cotton-coated cloth. That was the basis on which the controversy was decided by the Sales Tax Tribunal as well. In fact, before the Tribuaal it was conceded by the learned counsel appearing for the Commissioner that cotton-coated fabric was one such variety of the fabrics which was exempt. In the memorandum of revision filed in this Court as well, the grievance of the petitioner is that the Tribunal was not justified in holding that cotton-coated fabrics were included in the category of cotton fabrics.

3. Under the notification dated 25th November, 1958, an unconditional exemption from payment of tax under the Act was given to the commodities mentioned therein with some exceptions. Entry No. 3 of the list of items mentioned in the notification is as follows:

3. Textiles of the following varieties manufactured on powerlooms, excluding durries, carpets, druggets, hosiery goods and ready-made garments, but including the goods specified in the annexure hereunder:

(a) Cotton fabrics of all varieties.

(b) Rayon or artificial silk fabrics, including staple fibre fabrics of all varieties.

(c) Woollen fabrics of all varieties.

(d) Fabrics made of a mixture of any two or more of the above fibres, viz., cotton, rayon or artificial silk or staple fibre, or wool,

(e) Canvas cloth, tarpaulins and waterproof cloth :

Annexure.

4.'Cotton fabrics of all varieties' has not been defined in this notification.

5. Section 14 of the Central Sales Tax Act declares some goods to be of special importance in inter-State trade or commerce. It includes at entry No. (ii-a) cotton fabrics as defined in item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944. The result of this declaration is that levy of sales tax in regard to them would be regulated by the provisions of the Central Sales Tax Act in terms of Article 286(3) of the Constitution.

6. The First Schedule to the Central Excises and Salt Act, 1944, referred to in Section 14 of the Central Sales Tax Act defines 'cotton fabrics' in item No. 19 and its relevant part is this :

19. Cotton fabrics-

'Cotton fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton and includes..., fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials and fabrics covered partially or fully with textile flocks or with preparations containing textile flocks, ...

7. The entry (cotton fabrics of all varieties) as occurring in the aforesaid notification dated 25th November, 1958, came to be considered by this Court in Commissioner of Sales Tax v. Ashok Elastic Works, Patthegali, Varanasi [1971] 28 STC 743. The Bench which decided the case observed thus :

A cotton fabric is a fabrication of cotton yarn. It is not disputed that the articles in question are manufactured out of cotton yarn. The addition of elastic material, the nature of which has not been specified in the statement of the case, will not alter its nature. By the addition of the elastic material, the product can be called as elastic cotton fabric, but it remains a cotton fabric nevertheless.

8. The Bench was considering the question as to whether dori and fita fell within the definition aforesaid. It held that they did.

9. In Porritts and Spencer (Asia) Limited v. State of Haryana AIR 1979 SC 300 the question was whether 'dryer felts' fell in the category of 'all varieties of cotton, woollen or silken textiles' specified in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948. The Supreme Court held that the word 'textile' in item No. 30 must be interpreted according to its popular sense, meaning 'that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it'. It observed (in paragraph 5 of the Reports), inter alia, as follows :.There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques invented for making fabric 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 bit 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....A textile may have diverse uses and it is not the use which determines its character as textile.

and later (in paragraph 6) that,.It is true that our minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard 'dryer felts' as 'textiles'. But it must be remembered that the concept of 'textiles' is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as 'textiles'....The character of the 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, '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 ordindary 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.

10. In Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan AIR 1980 SC 1552, the Supreme Court was called upon to decide whether 'rayon tyre cord fabric' was rayon fabric covered by item 18 of the Schedule to the Rajasthan Sales Tax Act, 1954 and therefore, exempt from sales tax under the Central Sales Tax Act. It was urged before the Supreme Court that the question whether the rayon tyre cord fabric fell within the expression 'rayon fabric' or not was a question of fact and the High Court should not go into it. Negativing this submission, it was observed by the Supreme Court (paragraph 21 of the Reports) thus :

We are unable to agree that the question is one of fact. It is a question which concerns the construction of item 22 of the Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. If the rayon tyre cord fabric manufactured by the appellant is covered by that item it is exempt from sales tax and there is no jurisdiction in the sales tax authorities to assess the appellant on its turnover.

11. It then proceeded to examine the question with reference to the material brought to its notice including the interpretation put by the Government of India itself in its various departments upon tyre cord fabrics. It referred, inter alia, to the Revised Indian Trade Classification (1965) published by the Central Government in the Department of Commercial Intelligence and Statistics and the Indian Customs Tariff Guide apart from the table appended to the exemptions in the Central Excise Duties Drawback Rules. It recorded thereafter its conclusion (in paragraph 12 of the Reports) in these words :

On a comprehensive consideration of the material before us, there is no eacape from the conclusion that by and large a tyre cord fabric is regarded as a textile fabric....

and later that,.item 22 of the First Schedule to the Central Excises and Salt Act speaks of 'all varieties of fabrics' language wide enough to include the rayon tyre cord fabric manufactured by the appellant.

12. The Commissioner of Sales Tax himself was of the opinion that cotton-coated fabrics were covered by the notification dated 25th November, 1958. That is clear from the circular [No. Vidhi-l-(l)-C-3-(77-78)-2773/Mukhyalaya dated 27th June, 1977] which is as follows :

Samastha Bikrikar Adhikari evam

Sahayak Bikrikar Adhikari,

Uttar Pradesh.

Cotton-coated fabrics ki kar deyata ke sambandh mein sasan ne patra sankhya S.T.-2-2223/das-77-9-178/76 dinank 18-6-1977 dubara nyaya vibhag se paraamarsh ke uparanth yah suchit kiya hai ki vigyapthi sankhya S.T.-4064/das-960 (4)-58 dinank 25-11-1958 mein cotton fabrics of all varieties fabrics samil hai. Sbariged aur synthetic waterproof ko cotton fabrics ki bhanthi nahi mana gaya hai aur unhein alag se vigyapthi sankhya S.T.-1087/das-960-61 dinank 13-7-1961 mein kathi paya shartome ke sath karmukth kiya gaya tha. Cotton-coated fabrics ke sambandh me vigyapthi sankhya S. T. 4064/das/960(4)-58 dinank 25-11-1958 hi lagu hai.

2. Krupaya uparyukt adeshaanusar karyavahi kare.

S. Venkataramani

Ayukt, bikrikar, Uttar Pradesh.1

13. The case of the dealer that cotton-coated fabric was being treated as falling within the relevant entry 'cotton fabrics of all varieties' by the respondents themselves in the past years in his own case is also fully corroborated by the fact that the Commissioner himself was of the opinion that they are so included. It is difficult, therefore, to appreciate the submission of the learned standing counsel that, in common parlance, cotton-coated fabric is not treated to be a cotton fabric so as to merit exemption from tax. To borrow the words of the Supreme Court again, the test of common parlance signifies the meaning given to an article according to the sense of ordinary traders and merchants, who deal with it.

14. In Commissioner of Sales Tax, U.P. v. Alankar Traders 1979 UPTC 612, this Court was called upon to decide whether P.V.C. rexine manufactured by the dealer was exempt from levy of sales tax under the entry 'cotton fabrics of all varieties' as occurring in the notification dated 25th November, 1958. This Court found that the exact manufacturing process and the composition of P.V.C. rexine had not been. set out in the order of the revising authority. It held that the revising authority should have addressed its attention to the question as to whether P.V.C. rexine manufactured by the dealer was cotton fabric in the popular sense of the word or not. It directed the revising authority to do so and for that purpose, remanded the matter to it. It was observed by C. S. P. Singh, J., who decided that case that the definition of a particular word given in a particular statute had to be confined to that Act alone and could not be used for interpreting the word when used in a different statute. This observation was made in the context of the view taken by the revising authority that P.V.C. rexine was cotton fabric having regard to the definition of that word as contained in item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944. The learned standing counsel has contended that the view to which this Court is committed appears to be that no reference could be made to the definition of 'cotton fabrics' as contained in item No. 19 for determining the scope of the entry 'cotton fabrics of all varieties' in the notification dated 25th November, 1958. This submission overlooks that the observation made by this Court was not a concluded opinion in the sense that as a matter of law it was laid down that a reference could never be made to the definition contained in any of the enactment for purposes of determining the scope of a word used in a statute. The learned Judge who decided the case of Alankar Traders 1979 UPTC 612 himself made a reference in the judgment to the decision of the Supreme Court in Porritts' case AIR 1979 SC 300 as furnishing a guidance for deciding the question whether a commodity could be said to answer the description of cotton textile or not. It has been noticed earlier that in that case, the Supreme Court itself made a refernce to the Customs Tariff Act, 1975 and the meaning given therein to textile fabrics for recording its conclusion that dryer felts were textile felts. ?

15. The principles which stand almost settled by the decision of the Supreme Court in Porritts' case AIR 1979 SC 300 and the one in Delhi Cloth and General Mills' case AIR 1980 SC 1552 is that aid could be taken for interpreting the scope of an entry from the meaning given to an article mentioned therein in a cognate statute dealing with it. The Central Sales Tax Act is an Act which deals with levy of sales tax, inter alia, upon goods declared to be of special importance. Parliament itself held that the meaning given to cotton fabrics in Section 14 of the Central Sales Tax Act should be the same as was given by it to the commodity in the Central Excises and Salt Act, 1944. In the absence of any words of limitation or extension, the same meaning should appropriately be attributed to the words 'cotton fabrics' for purposes of the U. P. Sales Tax Act. More so, when the Commissioner of Sales Tax himself feels that cotton-coated fabric is comprised within the entry in that regard in the notification dated 25th November, 1958.

16. In conclusion, it must be held that the view taken by the Tribunal that cotton-coated fabrics were exempt from the levy of sales tax on account of the notification dated 25th November, 1958, does not suffer from any legal infirmity. The application in revision has to be held to be bereft of merits and as deserving rejection. It is dismissed as such. In the circumstances, the parties shall bear their own costs.

1. Words in Devanagari script are transliterated here.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //