1972 (4) TMI 83 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of terms "ready-made garments" and "hosiery goods" for tax assessment purposes in relation to cotton mufflers and topas for the assessment years 1964-65 and 1961-62.

Analysis:
The case involved a dispute over the tax rate applicable to the turnover of cotton mufflers and topas, manufactured by the assessee, whether they fall under "ready-made garments" or "hosiery goods" categories. The revising authority referred two questions for opinion: (1) Are cotton mufflers and topas covered under "ready-made garments" or taxed as hosiery goods for the year 1964-65 at 2 paise per rupee? (2) If not, are they taxed as 'hosiery made of pure cotton or silk' at 1 paisa per rupee or as unclassified goods at 2 paise per rupee for the year 1961-62? The central issue was whether these items are considered hosiery goods or ready-made garments for tax assessment purposes.

The court analyzed the definitions of "garment" and "hosiery" to determine the classification of cotton mufflers and topas. It was noted that "garment" is a broad term encompassing all articles of clothing, including hosiery goods. The term "hosiery" has evolved to include knitwear, such as socks and stockings, and now refers to machine-knitted garments. Referring to precedents, the court held that hosiery goods are articles worn next to the skin, which includes items like topas and mufflers. Consequently, the court concluded that topas and mufflers qualify as hosiery goods and are taxable at 1 paisa per rupee under the relevant notification.

The court reframed the central question as whether cotton mufflers and topas are "ready-made garments" or "hosiery goods" for tax assessment in the relevant years. By applying the definitions and precedents, the court determined that these items fall under the category of hosiery goods and are not to be taxed as ready-made garments or unclassified goods. Therefore, the court answered the reframed question in favor of the assessee, entitling them to costs assessed at Rs. 100, with only one set of costs awarded. The reference was answered accordingly.