Skip to content


Laxmi Stores Vs. the Sales Tax Officer and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ No. 566 (Tax) of 1976
Judge
Reported in[1983]53STC244(All)
AppellantLaxmi Stores
RespondentThe Sales Tax Officer and anr.
Appellant AdvocateK.M. Sahai, Adv.
Respondent AdvocateStanding Counsel
DispositionPetition dismissed
Cases ReferredBritish India Corporation Ltd. v. Commissioner of Sales Tax
Excerpt:
- - 17. 19. in our opinion the ratio of the above decision is very clear and it is that knitted fabrics like cardigans or pullovers fall in the category of woollen goods and not of woollen hosiery. of course, it has gone a step further in saying that in addition to 'worn next to skin',in order that a garment may be treated as an article of hosiery, it should be knitted as well. cardigans and pullovers are not worn next to skin and in common parlance and in business terminology as well they are not treated as articles of hosiery but are treated as woollen goods......is as to whether woollen pullovers and cardigans are covered by the entry 'hosiery'' or they are 'woollen goods'. the assessment year involved is 1972-73. the petitioner, m/s. laxmi stores, carried on business in purchase and sale of woollen cardigans, pullovers, topas and mufflers, etc. for the assessment year 1972-73, the assessee's account books were accepted and the net turnover as declared was accepted. but, in respect of sales of woollen pullovers and cardigans the assessing authority applied a rate of 6 per cent treating them to be 'woollen goods' under entry 106 of notification no. st-ii-332/x-1012-1971 dated 15th november, 1971, whereas the claim of the assessee was that woollen cardigans and pullovers were covered by entry 1 'hosiery of all kinds other than that made of pure.....
Judgment:

R.R. Rastogi, J.

1. This is a petition under Article 226 of the Constitution. The question involved is as to whether woollen pullovers and cardigans are covered by the entry 'hosiery'' or they are 'woollen goods'. The assessment year involved is 1972-73. The petitioner, M/s. Laxmi Stores, carried on business in purchase and sale of woollen cardigans, pullovers, topas and mufflers, etc. For the assessment year 1972-73, the assessee's account books were accepted and the net turnover as declared was accepted. But, in respect of sales of woollen pullovers and cardigans the assessing authority applied a rate of 6 per cent treating them to be 'woollen goods' under entry 106 of Notification No. ST-II-332/X-1012-1971 dated 15th November, 1971, whereas the claim of the assessee was that woollen cardigans and pullovers were covered by entry 1 'hosiery of all kinds other than that made of pure cotton' under Notification ' No. ST-II-334/X-1012-1971 dated 15th November, 1971, liable to be taxed at the rate of 31/2 per cent. The petitioner feels aggrieved with this assessment order and has prayed for a writ of certiorari for quashing the same and also for a writ of mandamus directing the respondents not to treat pullovers and cardigans as woollen goods.

2. Before adverting to the submissions made before us on behalf of the petitioner it would be useful to refer to the legislative history of the relevant entries and also the provisions of the U.P. Sales Tax Act. Section 3 of the Act deals with liability to tax while Sections 3-A, 3-B, 3-F and 4 are concerned with payability of tax. Section 3-A as inserted by the Amendment Act of 1948 empowers the Provincial Government by notification in the official Gazette to declare the point and the rate at which the proceeds of sale of any goods or class of goods were to be taxed. It is not necessary to mention the various amendments which this provision has undergone in regard to the point and rates at which and the class of goods which are liable to be taxed. The first notification that was issued under Section 3-A of the Act was No. 117 dated 8th June, 1948, and entries 3 and 4 thereof read us under :

3. Woollen goods and knitting wool.

4. Hosiery of all kinds.

3. In respect of both the items the point of tax was sale by manufacturer and the rate was 6 pies per rupee. The turnover in respect of the same was liable to be included if these items were manufactured in U.P. by Notification No. ST-905 dated 31st March, 1956, which came into effect from 1st April, 1956, the relevant entries read as under :

17. Hosiery of all kinds.

46. Woollen goods excluding carpets but including knitting wool.

4. The rate was increased to one anna per rupee and in regard to goods imported from outside Uttar Pradesh, the point at which tax was attracted was sale by the importer.

5. The entry in respect of hosiery continued except for change of rate and point of tax till 1961. By Notification No. ST-1281 dated 1st October, 1961, the entry was amended as below :

Hosiery of all kinds other than woollen hosiery.

6. The rate of tax was to be 1 per cent. As for woollen hosiery and ready-made garments of woollen cloth, the amendment was made by Notification No. ST-1281-A of even date and it read as under :

Woollen goods excluding carpets but including knitting wool, woollen hosiery and ready-made garments made out of woollen cloth.

7. The rate of tax was fixed at 6 per cent.

8. Both these notifications came to be modified in 1962 by Notifications Nos. ST-4562-I and 4562-11 dated 1st October, 1962. The former was in respect of 'knitting wool and garments of woollen cloth' to be taxable at 6 per cent and the latter of 'cotton and silk hosiery' taxable at 1 per cent. The respective entries read as under :

Woollen goods excluding carpets and hosiery other than pure woollen hosiery, but including knitting wool and ready-made garments made out of woollen cloth.

Hosiery made of pure cotton or silk.

9. Thereafter the amendment was made in 1969 by Notifications Nos. 3612 and 3613 dated 1st July, 1969. The amended entries read :

2. Hosiery made of pure cotton. 1 paisa per rupee.3. Hosiery of all kinds otherthan that made of pure cotton. 3 paise per rupee.

10. As regards ready-made garments the entry substituted was:

Woollen goods excluding carpets and hosiery, but including knitting wool and ready-made garments made out of woollen cloth.

11. Thereafter amendments have been made by Notification No. 332 dated 15th November, 1971, in the schedule to which entry No. 106 reads :

Woollen goods, excluding carpets and hosiery but including knitting wool and ready-made garments made out of woollen cloth.

12. The point of tax being 'M or I' and the rate is '6 per cent'.

13. Notification No. 333 of the same date made 'hosiery made of pure cotton' taxable at 3 per cent, and again Notification No. 334 of the same date provided for a tax at 3 per cent in respect of hosiery of all kinds other than that made of pure cotton.

14. From a brief resume of these entries it would appear that from 1948 to 1961 there was a single entry in respect of both cotton and woollen hosiery and then from 1961 to 1969 woollen hosiery came to be included in woollen goods. After 1969 it was given a separate entry. The question for consideration is as to whether pullovers and cardigans fall in the category of woollen hosiery or of woollen goods. The term 'hosiery' has not been defined in the Act and it is to be understood in its popular sense, meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. A reference to the dictionary meaning can also be useful. In the Oxford English Dictionary the word 'hosier' means 'one who makes or deals in hose (stockings and socks) and frame-knitted or woven underclothing generally' (vide page 405, Vol. V). The word 'hosiery' has been defined with reference to a hosier. It means : 'Hose collectively ; extended to other frame-knitted articles of apparel, and hence to the whole class of goods in which a hosier deals.

15. In Webster's Third New International Dictionary, 'hosiery' has been defined to mean 'hose' which in its turn has been defined as 'a cloth leg covering that reaches down to the ankle and sometimes covers the foot: stockings, socks. In Britain it is applied to additional knitwear.

16. In Encyclopaedia Britannica the history of hosiery has been traced and it is pointed out that 'hosiery is covering for the feet and legs designed to be worn inside the shoes and other outer foot coverings'. Then it is pointed out that 'the term is so understood in most countries particularly United States of America, but in Great Britain it is taken to include machine-knitted garments of all types'.

17. It was submitted before us on behalf of the petitioner that the term 'hosiery' should be understood in its wider sense so as to include all machine-knitted garments and in support reliance was placed on a decision of a learned single Judge of this Court in British India Corporation Ltd. v. Commissioner of Sales Tax, U.P. 1980 UPTC 1078.

18. After hearing counsel and considering the question from all its aspects we find ourselves unable to subscribe to this view. It is neither justified from a consideration of relevant entries which have been noted above nor from the decided cases. The first case in the series is a Division Bench decision of this Court rendered in Ram Lal & Brothers v. Commissioner of Sales Tax 1979 ATJ 41. The question that came up for consideration in that case was as to whether cardigans and pullovers should be treated to be woollen hosiery or woollen goods and that was in the context of entries Nos. 17 and 46 occurring in the list to Notification No. 905 dated 31st March, 1956. We have already reproduced these entries above. After referring to the various dictionary meanings given to the expression 'hosiery' it was observed:

It is therefore indicated that 'hosiery' means underwear or underclothing or socks, etc. The words 'mojeva baniyain addi' in the notification shows that what is covered by entry No. 17 are articles of the nature of underwear or those next to skin. A cardigan is used almost as a coat and so is a pullover. They are not used next to skin. In common parlance and in business terminology cardigans and pullovers are treated as woollen goods and not as hosiery. Their essential nature is different from underwear, socks, banian, etc., and they conform more to entry No. 46 where the Hindi words used are :

Uni seman jiske antargat kalinen nahi hain lekin bunne ka oon hai.

In our opinion, therefore, the pullovers and the cardigans should be treated as woollen goods and not as woollen hosiery. If knitting wool is considered to be woollen goods and not an article of hosiery it is difficult to see as to why knitted articles, i. e., cardigans or pullovers would not more appropriately fall under entry No. 46 as woollen goods rather than as hosiery under entry No. 17.

19. In our opinion the ratio of the above decision is very clear and it is that knitted fabrics like cardigans or pullovers fall in the category of woollen goods and not of woollen hosiery. The test applied was that hosiery refers to such garments which are worn next to skin. In our opinion in British India Corporation Ltd. 1980 UPTC 1078 the point of distinction drawn with a view to distinguish the decision in Ram Lal's case 1979 ATJ 41 was not very correct.

20. Then there is another Division Bench decision of our Court referred in Commissioner of Sales Tax, U.P. v. Verma Hosiery Stores 1972 UPTC 258. In that case the question for consideration was as to whether cotton mufflers and topas are ready-made garments or are hosiery goods. Following the decision in Ram Lal's case 1979 ATJ 41 and further that of the Rajasthan High Court in Jaipur Hosiery Mills v. State of Rajasthan [1967] 19 STC 416, cotton mufflers and topas were held to satisfy the two tests: firstly, that they are garments worn next to skin and secondly, that they are machine-knitted articles and hence were treated as articles of hosiery. In other words, this decision is an authority for the proposition that before a garment can be treated as an article of hosiery, it must satisfy two tests : worn next to skin and machine knitted. Following these two tests woollen mufflers were treated as articles of woollen hosiery in Commissioner of Sales Tax v. Muralidhar Shiv Kumar 1979 UPTC 1234 and woollen cardigans, sweaters and pullovers were held taxable as woollen goods and not as woollen hosiery under Notification No. 3613 dated 1st July, 1969, in Commissioner of Sales Tax v. Dressland, Ready-made Cloth Dealers 1979 ATJ 40. Both these decisions have not been referred in British India Corporation Ltd. 1980 UPTC 1078 and a wider sense has been attributed to the expression 'hosiery' on the basis of the decision of the Rajasthan High Court in Jaipur Hosiery Mills [1967] 19 STC 416 and of this Court in Verma Hosiery Stores 1972 UPTC 258. We have already indicated above that Verma Hosiery 1972 UPTC 258 does not dissent from Ram Lal's case 1979 ATJ 41. It has adopted the test laid down in that case. Of course, it has gone a step further in saying that in addition to 'worn next to skin', in order that a garment may be treated as an article of hosiery, it should be knitted as well. An examination of the decision in Jaipur Hosiery Mills [1967] 19 STC 416 will go to show that the ratio of that case is not that machine-knitted garments of all types are to be treated as articles of hosiery. In that case the commercial Tax Officer had treated 'banians' and 'chaddies' as hosiery products within the meaning of department Notification No. F.5 (99) E and T./60 dated 26th March, 1962. By that notification the sale of garments whether prepared within or imported from outside Rajasthan, the value of which did not exceed Rs. 4 in single piece 'excluding hosiery products and hats of all kinds' were exempted from payment of any tax. The claim of the assessee was that 'banians' and 'chaddies' were not hosiery products. That contention was repelled by the Rajasthan High Court and after a reference to the various dictionary meanings of the expression 'hosiery' it was held that the use of the words 'of all kinds' in the expression 'excluding hosiery products and hats of all kinds' made it abundantly clear that the intention was to cover wider range of hosiery products than socks or stockings. On that view banians and chaddies which have knitted fabrics, were treated as hosiery products within the meaning of the relevant notification. The ratio of that decision was not that knitted fabrics of all kinds are to be treated as articles of hosiery. Otherwise also, it would not be possible to attribute such wider import to this expression because if that is so done then even woollen shawls, chadders farse its (sic) etc., which have knitted fabrics, will have to be treated as hosiery products and for the matter of that if knitting wool is considered to be woollen goods and not an article of hosiery, it is difficult to treat cardigans and pullovers as hosiery products merely because they contain knitted fabrics. In our opinion, therefore, before a garment can be treated as an article of hosiery, it has to satisfy two tests; first, that it should be of the nature of an under clothing worn next to skin and secondly that it should be a knitted fabric. Cardigans and pullovers are not worn next to skin and in common parlance and in business terminology as well they are not treated as articles of hosiery but are treated as woollen goods. On this view we do not agree with the decision given in British India Corporation Ltd. v. Commissioner of Sales Tax 1980 UPTC 1078 and hold that it has not been correctly decided.

21. In the result this writ petition fails and is dismissed with costs to the respondents.


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