1963 (2) TMI 40 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption of sales of old newspapers from tax under section 4(1)(a) of the Act.
2. Exemption of sales of old newspapers under the head of paper and newsprint under Notification No. ST-199-X/928, dated 1st April, 1948, item No. 10 issued under section 4(1)(a) of the Act.

Analysis:

The case involved the assessment of a dealer in Kirana and medicine for sales tax on the proceeds of sale of bundles of old newspapers, which were sold as waste paper. The assessee claimed exemption under section 4 of the Sales Tax Act and did not rely on a specific notification initially. The exemption was denied by the Sales Tax Officer, the Judge (Appeals), and the Judge (Revisions) on the grounds that the items sold were considered "waste paper" and not "newspapers." Subsequently, the assessee, in an application under section 11(1), also claimed exemption under a specific notification, which led to the referral of question No. (2) by the Judge (Revisions) to the High Court. However, the High Court found that the question regarding exemption under the notification could not be referred as it was not raised during the revision process.

Regarding question No. (1) on the exemption of sales of old newspapers under section 4(1)(a) of the Act, the High Court clarified that the provision for exemption was under section 4 and not sub-section 4(1)(a) as mentioned. The court emphasized that while the newspapers may have been considered newspapers at the time of printing and publication, they no longer retained that status once the content became outdated. The court held that an article can change its nature, and in this case, the old newspapers sold as waste paper could not be classified as newspapers anymore. The court referenced a previous case to support the view that items exempted under section 4 are those of daily necessity and use, which did not include old newspapers that had lost their utility. Therefore, the High Court concluded that the sales of old newspapers by the assessee were not exempt from tax under section 4.

The High Court directed the judgment to be sent to the Judge (Revisions), Sales Tax, and the Commissioner of Sales Tax, U.P., as required by the U.P. Sales Tax Act. Additionally, the Commissioner of Sales Tax was awarded costs for the reference. The High Court answered the reference accordingly, denying the exemption for sales of old newspapers under section 4 of the Act.