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A.K. Shah and Co. Vs. the State of Bombay - Court Judgment

LegalCrystal Citation
CourtSales Tax Tribunal STT Mumbai
Decided On
Judge
Reported in196011STC29Tribunal
AppellantA.K. Shah and Co.
RespondentThe State of Bombay
Excerpt:
.....division, ahmedabad, upon an application made by the appellants under section 27(d) of the bombay sales tax act, 1953 (amended) and the short question is whether "hessian" comes within the classes of goods mentioned in schedule i to the bombay sales tax laws (special exemptions) act, 1957.2. section 27, so far as material, provides that if any question arises otherwise than in a proceeding before a court or a proceeding under section 14 or 15, whether or not, for the purposes of this act,-(d) any tax is payable in respect of any particular sale or purchase, the collector shall make an order determining such question and the learned additional collector of sales tax held that a tax is payable under the bombay sales tax act, 1953, on the sale of hessian. it is the correctness of.....
Judgment:
1. This appeal arises from an order passed by the Additional Collector of Sales Tax, Northern Division, Ahmedabad, upon an application made by the appellants under Section 27(d) of the Bombay Sales Tax Act, 1953 (amended) and the short question is whether "hessian" comes within the classes of goods mentioned in Schedule I to the Bombay Sales Tax Laws (Special Exemptions) Act, 1957.

2. Section 27, so far as material, provides that if any question arises otherwise than in a proceeding before a court or a proceeding under Section 14 or 15, whether or not, for the purposes of this Act,-(d) any tax is payable in respect of any particular sale or purchase, the Collector shall make an order determining such question and the learned Additional Collector of Sales Tax held that a tax is payable under the Bombay Sales Tax Act, 1953, on the sale of hessian. It is the correctness of this conclusion which Mr. Mehta for the appellants challenges on this appeal.

3. Before I refer to the Bombay Sales Tax Laws (Special Exemptions) Act, 1957, it would be convenient to refer to Schedule B to the Bombay Sales Tax Act, 1953. Five entries mentioned in that schedule may be referred to. The entry which deals with hessian is entry 24-A and the entry relates to gunny bags and hessian and in respect of hessian a rate of sales tax and a rate of general sales tax has been set out in the appropriate columns. Now, if the matter had rested with entry 24-A, there can be no doubt that hessian is subject to the payment of sales tax under the Bombay Sales Tax Act, 1953, but the contention on behalf of the appellants is that the sale of hessian is saved by virtue of Bombay Act XL of 1957, i.e., the Bombay Sales Tax Laws (Special Exemptions) Act, 1957. Before I refer to the relevant provisions of that Act it would be necessary to go back to four other entries set out in Schedule B to the Bombay Sales Tax Act. Entry 10 relates to cloth woven on handlooms. Entry 11 relates to coarse and medium cotton cloth made in mills or woven on powerlooms. Entry 31 relates to cloth including saris, dhotis, sheets, chaddars, blankets and other similar articles and entry 79 relates to textile fabrics of any kind including saris, dhotis, sheets, chaddars, blankets and other similar articles.

One strong indication against the acceptance of the contention raised on behalf of the appellants is that if hessian were cloth, it would have reasonably been referred to in one of the four entries, viz., entries 10, 11, 31 and 79, but hessian has been referred to in entry 24A as a distinct subject divorced from the classes of goods set out in entries 10, 11, 31 and 79. It is reasonable to suppose that hessian is something different from what is connoted by entries 10, 11, 31 and 79.

Mr. Mehta, however strongly relies upon entry 1 in Schedule I to the Bombay Sales Tax Laws (Special Exemptions) Act, 1957, which, for the sake of convenience, will be referred to in this judgment as the Exemptions Act. This Act received the assent of the Governor on the 14th December, 1957. It deals with two classes of goods one of which is what is called designated goods and the other is what is called scheduled goods. Section 2 (3) defines designated goods as meaning the goods specified in Schedule II and scheduled goods is defined in Section 2(7) as meaning the goods specified in Schedule I. When one turns to Schedule I, it refers broadly to three categories of goods: (1) All varieties of cloth, (2) sugar and (3) tobacco and Schedule II which deals with designated goods relates to any variety of handloom cloth, excluding pure silk cloth. Mr. Mehta's contention is that hessian would fall within item No. 1 in Schedule I to the Act and item No. 1 relates to all varieties of cloth manufactured in mills or on powerlooms, excluding pure silk cloth. It is apparent that the Exemptions Act would apply to two classes of goods, that is to say, the designated goods and the scheduled goods and to no other goods. This is made clear in the preamble to the Act which sets out the object of the Act as being one to exempt the sales or purchases of certain goods which become assessable to an additional duty of excise and of certain handloom textiles and other goods from the Sales Tax Laws in force in the State of Bombay. Therefore, there are two classes of goods to which the Exemptions Act applies, (1) certain goods which become assessable to an additional duty of excise and (2) certain handloom textiles and other goods and it is these which are saved from the operation of the sales tax laws in force in the State of Bombay. It would seem that when this Act became law on 14th December, 1957, the Central Government contemplated to levy an additional duty of excise on certain goods and having taken into account the contemplated action of the Central Government, the Bombay Legislature considered it expedient to exempt the sales and purchases of certain goods covered by the Exemptions Act.

Now, the Act which was passed in order to give effect to the contemplated action of the Central Government is the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and that relates to the imposition of additional duties of excise in respect of certain goods as mentioned in the Act.

4. At the outset, it may be pointed out that Mr. Mehta has conceded that hessian is not subject to the payment of an additional duty of excise. His contention, however, is that even so, hessian would still fall within item 1 of Schedule 1 to the Exemptions Act of 1957. It is difficult to accept this argument for various reasons, the most important of which is that the Exemptions Act clearly contemplated two classes of goods with which it was dealing and the one class was the class in relation to which an additional duty of excise was leviable and the other class of goods was one in relation to which there was no such duty of excise to be levied but which was still within the operation of the Exemptions Act. Now, the whole idea was to save certain classes of goods in relation to which an additional duty of excise was leviable. It is a somewhat startling argument to suggest that even though hessian was not subject to the payment of additional duty of excise still it would fall within the operation of item 1 of Schedule 1 to the Exemptions Act. Evidently, there are three classes of goods contemplated by Schedule I, which, for the sake of brevity, may be referred to as (1) varieties of cloth, (2) sugar and (3) tobacco. It would seem that in relation to each one of the three items excise duty is leviable, but still Mr. Mehta's argument is that even so, hessian may be one of the classes of cloth which even if it is not subject to the payment of additional duty of excise is still falling within item No. 1 of Schedule 1 to the Act. With all respect to the learned Advocate it would seem clear that this contention cannot be supported.

When once it is realised that the Act primarily, intends to deal with two classes of goods in relation to one of which additional duty of excise was leviable and such classes of goods only were excluded from the operation of the Bombay Sales Tax Act, it is difficult to understand the argument that hessian which is not admittedly subject to the payment of additional duty is still a class of goods falling within item No. 1 of Schedule I to the Exemptions Act. Section 4(1) of the Bombay Sales Tax Laws (Special Exemptions) Act, 1957, provides that notwithstanding anything contained in the relevant sales tax law or any rules, notifications or orders made or issued thereunder, no tax shall be payable under the relevant sales tax law on the sale or purchase of any scheduled goods effected on and after the appointed day and the expression "scheduled goods" is defined in Section 2(7) as meaning goods specified in Schedule 1. It is obvious that the operation of the Bombay Sales Tax Act was to be saved in those classes of goods in relation to which an additional duty of excise was leviable and that is perfectly clear when one turns to the Additional Duty of Excise (Goods of Special Importance) Act, 1957. It is impossible to conceive that having set out the varieties of cloth given as being within the operation of the Exemptions Act hessian which is not admittedly subject to the payment of additional duty of excise would still fall within the expression of varieties of cloth manufactured in mills or on powerlooms, excluding pure silk cloth.

5. In considering the validity of the argument it would be necessary to remember the principles which govern the determination of a question like the one which arises in the present case. In Poppatlal Shah v. The State of Madras, [1953] 4 S.T.C. 188, their Lordships of the Supreme Court observed at page 193 : "It is a settled rule of construction that to ascertain the legislative intent, all the constituent parts of a statute are to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself...the title and preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intent and design of the legislature and indicate the scope and purpose of the legislation itself." Keeping these principles in view, one has to see whether hessian can properly fall within the Exemptions Act, 1957 and on the concession which has been made by Mr. Mehta that hessian is not subject to the payment of additional duty of excise, it is impossible to accept the argument that hessian is not subject to the payment of sales tax. Apart from that, it is not possible to accept the argument of Mr. Mehta that notwithstanding the fact that hessian is not subject to the payment of the additional duty of excise it still falls within item 1 of Schedule I to the Exemptions Act. It is obvious that the Exemptions Act deals as stated already with two classes of goods and two only, one of them being scheduled goods and the other designated goods. We are not concerned here with the latter class of goods and this case is concerned with the scheduled goods and the scheduled goods are defined in Section 2(7) and described in Schedule I and it is those goods which are saved from the operation of the Bombay Sales Tax Act which are subject to the payment of the additional duty of excise. As admittedly hessian is not subject to the payment of the additional duty of excise, it is impossible to accept the argument that hessian is still saved from the operation of the Bombay Sales Tax Act, 1953. On this ground, we think the view taken by the Additional Collector of Sales Tax is right. This appeal must fail and will be dismissed.


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