1963 (11) TMI 64 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether shetranji (cotton carpets) manufactured on handloom qualify as "handloom cloth" under entry 29 of Schedule A to the Bombay Sales Tax Act, 1959.

Detailed Analysis:

Issue 1: Definition and Interpretation of "Handloom Cloth"
The primary issue was whether shetranji, a type of cotton carpet manufactured on handloom, falls under the definition of "handloom cloth" as per entry 29 of Schedule A to the Bombay Sales Tax Act, 1959. The petitioners, who are registered dealers under the Act, contended that the shetranji should be considered as "handloom cloth" and thus be exempt from sales tax.

Petitioners' Argument:
The petitioners argued that since the carpet in question was made from cotton yarn and manufactured on a handloom, it should be classified as "handloom cloth" under entry 29. They contended that the word "cloth" should be interpreted broadly to include all kinds of fabrics woven from cotton yarn. They relied on various dictionary definitions which describe "cloth" as a pliable fabric woven from any filament, including cotton, and argued that the carpet met these characteristics.

Deputy Commissioner and Tribunal's Findings:
The Deputy Commissioner of Sales Tax initially held that the carpet did not qualify as "cloth" and thus did not fall under entry 29. This decision was upheld by the Sales Tax Tribunal, which dismissed the appeal filed by the petitioners.

Reference to Higher Authorities:
The Tribunal referred the question to the High Court: "Whether on the facts and circumstances of the case sales of shetranjis woven on handloom out of cotton yarn are covered by entry 29 of Schedule A to the Bombay Sales Tax Act, 1959?"

Analysis of Legislative Intent:
The High Court analyzed whether the Legislature intended the term "handloom cloth" to include carpets. The Court referred to the Supreme Court's decision in Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola, which emphasized that terms in taxing statutes should be understood in their common parlance rather than their technical or dictionary meanings.

Common Parlance Interpretation:
The Court concluded that the term "cloth" in common parlance refers to fabrics used for garments or coverings, not carpets. They noted that a merchant dealing in handloom cloth would not consider a carpet as "handloom cloth." The Court also referenced the Andhra High Court's decision in Kosuri Subba Raju v. The State of Andhra, which held that "cloth" in common parlance does not include items like nawar tape, even though they are woven on handlooms.

Distinguishing Other Cases:
The Court distinguished the present case from other cases cited by the petitioners, such as the Andhra High Court's decision in The Government of Andhra Pradesh v. Pachipulsu Venkata Subba Rao Vallamkonda Venkateswarlu and Others, which dealt with the broader interpretation of "cotton cloth" to include saris and dhotis, emphasizing that the context and common usage were critical in interpreting statutory terms.

Conclusion:
The High Court held that the term "handloom cloth" as used in entry 29 of Schedule A to the Bombay Sales Tax Act, 1959, should be understood in its common parlance meaning, which does not include carpets. Therefore, the sales of shetranjis (cotton carpets) woven on handloom are not covered by entry 29 and are not exempt from sales tax.

Final Judgment:
The reference was answered in the negative, affirming that shetranji does not qualify as "handloom cloth" under the relevant entry. The petitioners were ordered to pay the costs of the reference.

Reference answered in the negative.