1970 (2) TMI 121 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "glassware" in a sales tax notification.
Classification of glass rods and glass tubes for tax purposes.

Analysis:
The judgment involves a reference submitted by the Additional judge (Revisions) Sales Tax, Agra, under section 11(1) of the U.P. Sales Tax Act for the assessment years 1962-63 and 1963-64. The dispute pertains to the rate of tax on the turnover of glass tubes and glass rods sold by M/s. Manohar Glass Works. The Sales Tax Officer initially taxed these articles at 7%, treating them as glassware under a specific notification. However, the Assistant Commissioner (Judicial) classified them as unclassified items and levied tax at 2%. The Commissioner of Sales Tax applied for revision, leading to the current case. The main question was whether glass rods and glass tubes should be taxed as "glassware" at 7% or as unclassified items at 2%.

The key legal provisions considered were section 3 and section 3-A of the U.P. Sales Tax Act. Section 3 mandates taxation at all points of sale, while section 3-A empowers the State Government to specify certain articles for taxation at a single point. The dispute centered on whether glass rods and tubes fell under the category of "glassware" as per a specific notification. The court emphasized that the term "glassware" should be interpreted commercially, referring to finished articles sold to consumers. The notification in question listed items like hurricane lantern chimneys and bottles, all of which were finished products for consumers. The court reasoned that semi-manufactured articles like glass rods and tubes, sold to dealers for further processing, did not qualify as glassware.

In a previous case involving glass beads, the court had ruled that "glassware" encompassed all glass articles sold to consumers. However, this case differed as it concerned semi-manufactured glass items used as raw material. The court rejected the argument that the Hindi version of the notification conflicted with the English version, stating that "kanch ka saman" should also be interpreted in a commercial sense. Consequently, the court reframed the question and concluded that glass rods and tubes were not taxable as glassware at 7% but as unclassified items at 2% under section 3 of the Act.

In conclusion, the court answered the reframed question by determining that the turnover of glass rods and tubes should be taxed at 2% under section 3 of the Act, not at 7% as glassware. The assessee was awarded costs and counsel fees.