1970 (2) TMI 117 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether handprinted mill-made saris, after a second processing through manual labor, are exempt from sales tax as mill-made cloth.
2. Whether durries are taxable under the Orissa Sales Tax Act as carpets.

Analysis:

Issue 1: Handprinted mill-made saris exemption from sales tax
The court examined whether handprinted mill-made saris, after manual labor processing, qualify as mill-made cloth under Notification No. C.T.A. 56/57-32518-F. The court referenced serial No. 35 of the notification, which exempts mill-made cotton, woollen, or silken cloth from tax. The question was whether dyeing or printing post-mill processing changes the nature of the cloth. The revenue argued that such cloth loses its mill-made status after dyeing or printing, citing legal precedents. However, the court relied on the Supreme Court decision in Kailash Nath v. State of Uttar Pradesh, where it was held that processing like dyeing or printing does not change the fundamental nature of the cloth. The court concluded that handprinted mill-made saris, even after a second processing, remain mill-made cloth exempt from tax.

Issue 2: Taxability of durries under the Orissa Sales Tax Act
The court referred to Notification No. 33927-C.T.A. 130/57-F to determine if durries are taxable as carpets. Citing the decision in State of Orissa v. Modi Stores, the court affirmed that durries fall under the definition of "carpets" and are taxable. The court did not delve into detailed analysis on this issue due to the precedent set by the earlier decision.

In conclusion, the court answered the first issue in the affirmative, stating that handprinted mill-made saris are exempt from sales tax. The references were discharged with no order as to costs. Judge Acharya concurred with the decision, and the references were answered accordingly.