1962 (12) TMI 50 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether 'hessian' is covered by entry 1 of Schedule I of the Bombay Sales Tax Laws (Special Exemptions) Act, 1957.
2. Whether the sale of hessian is taxable under the Bombay Sales Tax Act, 1953.

Issue-wise Detailed Analysis:

1. Whether 'hessian' is covered by entry 1 of Schedule I of the Bombay Sales Tax Laws (Special Exemptions) Act, 1957:

The primary question addressed is whether 'hessian' falls under the definition of "all varieties of cloth manufactured in mills or on powerlooms excluding pure silk cloth" as specified in entry 1 of Schedule I of the Bombay Sales Tax Laws (Special Exemptions) Act, 1957. The term "cloth" was examined through various dictionary definitions to determine its scope. According to Webster's New International Dictionary, cloth is defined as "a pliable fabric woven felted or knitted from any filament; commonly fabric of woven cotton, woollen, silk, rayon, or linen fibre." The Shorter Oxford English Dictionary defines cloth as "a fabric woven, felted or otherwise formed, of filaments, as of wool, hair, silk, the fibres of hemp, flex, cotton, asbestos, spun glass, wire." Hessian, on the other hand, is defined as "a coarse sacking of hemp or jute" and "a strong coarse cloth, used for packing bales."

The court concluded that hessian, being a fabric made from fibres of hemp or jute, falls within the broad definition of cloth. The argument that the term "cloth" should be interpreted narrowly to exclude hessian, based on the legislative intent of the exempting Act, was considered but ultimately rejected. The exempting Act aimed to exempt certain goods from sales tax, including "all varieties of cloth manufactured in mills," which was deemed sufficiently broad to include hessian.

2. Whether the sale of hessian is taxable under the Bombay Sales Tax Act, 1953:

The court examined whether the sale of hessian is taxable under the Bombay Sales Tax Act, 1953, in light of its classification under the exempting Act. The Additional Collector of Sales Tax had initially ruled that the sale of hessian was taxable at a rate of two naye paise per rupee for both sales tax and general sales tax. However, the Sales Tax Tribunal, by a majority decision, held that hessian was exempt from sales tax under the exempting Act.

The court analyzed the provisions of the Bombay Sales Tax Act, 1953, particularly Schedule B, which lists taxable goods. Entry 24-A specifically covers "gunny bags and hessian" with a tax rate of two naye paise per rupee. The court noted that before the insertion of entry 24-A, hessian was taxed under the residuary item 80, not under item 31, which covers "cloth including sarees, dhotis, sheets, chaddars, blankets and other similar articles."

Despite this, the court emphasized that the dictionary definition of "cloth" is broad enough to encompass hessian. The Supreme Court's reasoning in Ramavatar Budhaiprasad v. The Assistant Sales Tax Officer, Akola, was cited, where the term "vegetables" was interpreted in its popular sense. Similarly, the term "cloth" in the exempting Act should be understood in its common parlance, which includes hessian.

Conclusion:

The court concluded that hessian is covered by entry 1 of Schedule I of the Bombay Sales Tax Laws (Special Exemptions) Act, 1957. Consequently, the sale of hessian in question is not taxable under the Bombay Sales Tax Act, 1953. The Commissioner of Sales Tax was directed to pay the costs of the reference to the opponents.

Reference answered accordingly.