1972 (2) TMI 72 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales tax rates for woollen coats under different notifications.

Analysis:
The High Court of Rajasthan was tasked with determining the applicable sales tax rate for woollen coats in a case referred by the Board of Revenue. The dispute revolved around whether the turnover of the assessee in relation to woollen coats should be taxed at the rate specified in a particular notification or at the general rate prescribed by the Act. The relevant notifications in question were No. F.21(7)SR/55 dated 25th March, 1955, No. F.21(7)SR/55 dated 14th April, 1955, and No. F.5(39) E & T/58/1 dated 1st April, 1958, which set varying rates of sales tax for different categories of goods. The court specifically focused on items 10, 11, 12, and 13 of List II under the notifications, which encompassed silk, textile fabrics with precious metals, woollen goods, and ready-made garments respectively.

Under the notifications, the sales tax rates for the specified items fluctuated. The contention put forth by the department was that item No. 10 encompassed all woollen goods, including ready-made garments of wool, thereby warranting a higher tax rate. However, the court disagreed with this interpretation. It elucidated that the notifications differentiated between various types of fabrics and garments, with distinct tax rates applicable to each category. The court highlighted that item No. 13 specifically included ready-made garments of artificial silk, silk, wool, or other textile fabrics with precious metals, subject to a lower tax rate of 3 1/8 per cent.

In its analysis, the court also addressed a previous decision cited by the department but concluded that it was not applicable to the current scenario. The court emphasized the need to interpret the notifications in a cohesive manner, considering the amendments made by subsequent notifications. Ultimately, the court affirmed that the sales tax on ready-made garments, including those made of wool, should be levied at the rate of 3 1/8 per cent. The judgment underscored that the tax on garments encompassed not only the fabric cost but also the labor charges, warranting a lower tax rate compared to the fabric itself.

In conclusion, the High Court of Rajasthan resolved the issue by ruling that the turnover of the assessee concerning woollen coats should be chargeable at the rate of 3 1/8 per cent, as specified for ready-made garments under the relevant notifications. The court provided a comprehensive interpretation of the notifications and upheld the decision of the Board of Revenue in this regard, thereby settling the dispute over the applicable sales tax rate for woollen coats.