1972 (12) TMI 70 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sales of Hind rubber beltings and Cooper rubber beltings are covered by entry 15 of Schedule A to the Bombay Sales Tax Act, 1959.
2. Whether the Tribunal was justified in holding that the appellants were not entitled to the benefit of sub-section (2) of section 52 of the Bombay Sales Tax Act, 1959.

Issue-Wise Detailed Analysis:

Issue 1: Whether the sales of Hind rubber beltings and Cooper rubber beltings are covered by entry 15 of Schedule A to the Bombay Sales Tax Act, 1959.

The primary question was whether rubber beltings marketed by the assessee could be classified as "cotton fabrics" under entry 15 of Schedule A to the Bombay Sales Tax Act, 1959. Entry 15 defines "cotton fabrics" by reference to item 19 of the First Schedule to the Central Excises and Salt Act, 1944.

The definition of "cotton fabrics" includes all varieties of fabrics manufactured either wholly or partly from cotton, but excludes fabrics with specific percentages of wool, silk, rayon, or those manufactured on handlooms. The Tribunal and the Deputy Commissioner of Sales Tax both concluded that rubber beltings did not qualify as "cotton fabrics" because the process of manufacturing rubber beltings involved superimposing rubber on canvas, fundamentally altering the character of the canvas.

The court examined the legislative history, noting that "cotton fabrics" were not initially exempt from sales tax in the Bombay Sales Tax Act, 1953. The exemption was introduced to align with the Central Government's designation of certain goods as of special importance in inter-State trade or commerce, subject to uniform tax rates. The Additional Duties of Excise (Goods of Special Importance) Act, 1957, further emphasized the importance of these goods, including "cotton fabrics," by levying additional excise duties and distributing part of the proceeds to the States.

The court found that rubber beltings, despite containing canvas, could not be classified as "cotton fabrics" because:
- The manufacturing process involved a significant transformation, turning canvas into a new commercial product.
- The process of superimposing rubber on canvas was not incidental or ancillary to the manufacture of canvas.
- The resultant product, rubber beltings, had a different commercial identity and use compared to canvas.

The court also referred to the decision in Pravin Brothers v. The State of Gujarat, which held that superimposing additional elements on a manufactured cotton fabric, such as embroidery, changed its classification. The court concluded that rubber beltings, having undergone a similar transformation, could not be classified as "cotton fabrics."

Issue 2: Whether the Tribunal was justified in holding that the appellants were not entitled to the benefit of sub-section (2) of section 52 of the Bombay Sales Tax Act, 1959.

The second issue was not pressed by the counsel for the assessee during the hearing, and therefore, the court did not provide an opinion on this matter.

Conclusion:

The court concluded that "Hind rubber beltings" and "Cooper rubber beltings" are not covered by entry 15 of Schedule A to the Bombay Sales Tax Act, 1959. The answer to the first question was in the negative, and the second question was not addressed. The assessee was ordered to pay the costs of the reference to the Commissioner.