1961 (8) TMI 22 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Rate of sales tax applicable to silk choli bits and saris under the Madras General Sales Tax Act.
2. Definition and classification of "cloth" versus "garments" under the Act.

Detailed Analysis:

1. Rate of Sales Tax Applicable to Silk Choli Bits and Saris:
The primary issue in this case was whether the petitioner, a dealer in textiles, was liable to pay sales tax at an enhanced rate of Re. 0-1-6 per rupee for silk choli bits and saris, as opposed to the normal rate of three pies per rupee. The petitioner argued that this enhanced levy was improper and not in conformity with the provisions of the Madras General Sales Tax Act.

Section 3(1) of the Act imposes a tax of 2% on the total turnover of every dealer. Section 3(2) prescribes an enhanced levy for specific goods, stating that the dealer shall pay a tax at the rate specified for the first sale of any goods mentioned therein. The relevant clause (i) for the year 1955-56 described the goods subject to the enhanced levy as "cloth (other than cloth woven on handlooms whether of silk, artificial silk, wool, flax, or any other material) which is not made wholly of cotton-rate of tax on the turnover: eight per cent."

The court found that the silk choli bits and saris fell within the ambit of "cloth" under this section, thus attracting the enhanced levy. The petitioner's contention that these items should be classified as garments and not cloth was rejected.

2. Definition and Classification of "Cloth" Versus "Garments":
The court examined whether silk choli bits and saris should be classified as "cloth" or "garments" under the Act. The petitioner's argument was that "cloth" should be understood in its popular sense as woven stuff in its pristine condition and not as embellished or processed goods.

The court referred to various dictionary definitions to understand the ordinary meaning of "cloth" and "clothes." It concluded that "cloth" includes any woven fabric or stuff until it is transformed into a finished article like a dress or garment. The court found that choli bits, being mere pieces of cloth with some embroidery, and saris, being long pieces of cloth draped around the body, still retained their character as "cloth" and not as finished garments.

The court cited multiple precedents to support its interpretation:
- In Ishwardas Kapoor v. Board of Revenue, Bengal, the Calcutta High Court held that Banarsi shawls and saris did not qualify for exemption as handloom woven cloth.
- In Commissioner of Sales Tax, Bangalore, In re, the Mysore High Court held that ready-made garments were not textiles manufactured by mills.
- The Andhra Pradesh High Court in The Government of Andhra Pradesh v. Venkateswarlu and Rai Saheb Chedra Durvasulu v. Sales Tax Officer held that "cloth" in its ordinary sense includes fabrics used for any purpose, including wearing apparel.

The court concluded that the term "cloth" under the Madras General Sales Tax Act should be understood in its broadest sense, encompassing silk choli bits and saris.

Conclusion:
The court held that the silk choli bits and saris sold by the petitioner fall within the definition of "cloth" as per section 3(2) of the Madras General Sales Tax Act, thereby attracting the enhanced levy of eight per cent. The petitioner's revision petition was dismissed with costs, affirming the decisions of the lower authorities. The court emphasized that a taxing statute must be interpreted according to the plain meaning of its language, without any scope for equitable construction.