1971 (2) TMI 77 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of Notification for Tax Exemption on Elastic Dori and Fita

In this judgment delivered by the Allahabad High Court, the main issue revolves around the interpretation of a notification under the U.P. Sales Tax Act regarding the tax exemption of elastic dori and fita. The Additional Revising Authority held that these items were covered under the definition of 'laces' in the notification and, therefore, exempt from tax. The Commissioner of Sales Tax challenged this decision, leading to the reference before the High Court.

Analysis:

The judgment begins with the background of the case, where the assessee, engaged in the manufacture and sale of elastic dori and fita, claimed tax exemption for these items under a specific notification dated 25th November, 1958. The assessing authority initially rejected this claim, but the Revising Authority later ruled in favor of the assessee, considering dori and fita as laces covered by the notification.

The court delves into the notification's language, particularly Category 3, which includes textiles like tapes, niwars, and laces. The court emphasizes that elastic dori and fita, being made of cotton, can be categorized as varieties of laces. The judgment references dictionaries to define 'tape' and 'lace,' highlighting that fita can be classified as a tape, while dori can be considered a lace due to its nature as a piece of cord or band.

The court also references a decision by the Madras High Court regarding braided cords, emphasizing the need to interpret the term 'lace' in the context of the notification. It further clarifies that the notification's intent was to cover coarse types of tapes and laces used for specific purposes, not intricate laces used in garments.

Ultimately, the High Court concludes that dori and fita can be classified as a kind of lace and tape, falling under the broader category of 'cotton fabrics of all varieties' mentioned in the notification. Therefore, the court rules that these items are exempt from tax as per the notification's provisions.

In conclusion, the High Court answers the reference question by affirming that elastic dori and fita qualify as laces and tapes, falling under the category of cotton fabrics, and are hence exempt from tax as per the relevant notification. The judgment also awards costs to the assessee and sets the counsel's fee accordingly.