1976 (10) TMI 131 - SC - VAT and Sales Tax

Whether carbon paper is paper falling within the purview of the word paper as used in serial No. 2 of Notification No. ST-3124/X-1012(4)-1964 dated July 1, 1966, issued by the Governor of Uttar Pradesh in exercise of the power vested in him under section 3-A of the U.P. Sales Tax Act, 1948 so as to be liable to sales tax at the point and at the rate specified in the schedule to the notification? Whether ribbon is an accessory or a part of the typewriter? Held that - Appeal dismissed. The mere fact that the word paper forms part of the denomination of a specialised article is not decisive of the question whether the article is paper as generally understood. The word paper in the common parlance or in the commercial sense means paper which is used for printing, writing or packing purposes. We are, therefore, clear of the opinion that carbon paper is not paper as envisaged by entry No. 2 of the aforesaid notification. Regarding ribbon also to which the abovementioned rule of construction equally applies, we have no manner of doubt that it is an accessory and not a part of the typewriter (unlike spool) though it may not be possible to use the latter without the former.

Issues:
1. Whether carbon paper falls within the purview of the word "paper" for sales tax purposes.
2. Whether ribbon is considered an accessory or a part of the typewriter.

Analysis:
1. The case involved a dispute regarding the classification of carbon paper for sales tax assessment. The respondent claimed that carbon paper, being a specialized article used for copying purposes, should not be taxed as paper under a specific notification. The Sales Tax Officer disagreed and taxed carbon paper at 6% under the notification. The High Court quashed the levy, leading to this appeal.

2. The Supreme Court analyzed the definition of "paper" in common parlance to determine if carbon paper qualifies as paper for sales tax purposes. The Court referred to various definitions from authoritative sources, emphasizing that paper is typically used for writing, printing, or packing purposes. Carbon paper, used to make replicas or copies, does not align with the common understanding of paper, as it serves a specialized function distinct from traditional paper products.

3. The Court cited precedents from other jurisdictions to support its interpretation. In cases involving items like ammonia paper, ferro paper, and stencil paper, courts had ruled that specialized articles not used for traditional paper purposes were not taxable as paper. The Court applied similar reasoning to carbon paper, concluding that it did not meet the criteria to be classified as paper for sales tax assessment.

4. Regarding the classification of ribbon as part of a typewriter, the Court determined that ribbon is an accessory rather than an essential component of the typewriter. Drawing an analogy with aviation petrol and diesel in vehicles, the Court explained that ribbon, while necessary for typing, is not integral to the typewriter itself. The Court referenced a previous decision from the High Court of Mysore to support this interpretation.

5. In conclusion, the Supreme Court dismissed the appeal, upholding the High Court's decision to quash the tax levy on carbon paper and ribbon. The Court found that carbon paper did not meet the criteria to be classified as paper for sales tax purposes and that ribbon was an accessory, not a part of the typewriter. The appeal was dismissed without costs, affirming the High Court's judgment.

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