1973 (6) TMI 51 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of exemption from special sales tax for certain articles under Bihar Sales Tax Act, 1959.
2. Determination of liability for special sales tax on specific articles manufactured from paper under a notification issued by the Governor of Bihar.

Issue 1: Interpretation of exemption from special sales tax
The case involved a reference under section 33(1) of the Bihar Sales Tax Act, 1959, regarding the exemption of certain articles from special sales tax. The assessee, a printing press, claimed exemption for various articles like blank registers, exercise books, letter-pads, etc., under a notification dated 1st July, 1959. The dispute centered around whether these articles could be considered as "books" under the notification's Schedule III, which exempted books and periodicals from tax. The Court analyzed a similar decision by the Allahabad High Court and held that the term "books" in the notification should be interpreted restrictively, excluding items like exercise books and blank registers. The Court concluded that the assessee's claim for exemption was not valid, as the articles in question did not fall under the category of books as intended by the notification.

Issue 2: Determination of liability for special sales tax on specific articles
The second issue revolved around a notification dated 27th August, 1959, which specified the levy of special sales tax on various paper-related articles, including blank registers, exercise books, letter-pads, etc. The question was whether the assessee, who purchased paper and manufactured these articles, was liable to pay special sales tax on the sale of these manufactured items. The Tribunal had held that the assessee was liable for tax on the manufactured articles. However, the Court disagreed with this interpretation, stating that the inclusive definition in the notification encompassed all articles listed, regardless of their form. The Court emphasized that since the articles sold were included in the term "paper" in the notification, the assessee was not liable to pay additional special sales tax on the sale of these items. Citing precedents from the Gujarat High Court and the Supreme Court, the Court ruled in favor of the assessee on this issue, holding that the manufactured articles were covered under the term "paper" in the notification.

In conclusion, the Court answered the first issue in favor of the Commercial Taxes Department, denying the exemption claim for certain articles, and ruled in favor of the assessee on the second issue, stating that no additional special sales tax was payable on the manufactured articles. The judgment was delivered by the High Court of Punjab, with Justices Untwalia N.L. and Jha S.K. presiding over the case.