1974 (1) TMI 87 - HC - VAT and Sales Tax

Summary

Issues:
1. Classification of stencil paper under the Orissa Sales Tax Act, 1947.
2. Appropriate tax rate applicable to stencil paper sales.

Analysis:
The judgment involved a reference under section 24(1) of the Orissa Sales Tax Act, 1947, regarding the classification and tax rate applicability of stencil paper. The dispute arose as to whether stencil paper falls under the category of paper as specified in the relevant government notification. The State contended that stencil paper should be taxed at 7%, while the assessee argued for a 5% tax rate under the Act.

The court examined the definition of paper in common parlance, as there was no statutory definition available. Various definitions from authoritative sources were considered, emphasizing that paper is typically used for writing, printing, or wrapping. The court also referred to a Supreme Court decision to interpret similar terms in a sales tax context. Additionally, the court cited decisions from the Allahabad and Kerala High Courts regarding the classification of similar materials like carbon-paper and cellophane, which were held not to fall under the category of paper.

Based on the established principles and precedents, the court concluded that stencil paper does not qualify as paper under the specified category in the notification. Therefore, the higher tax rate of 7% was deemed inapplicable, and the sale of stencil paper was held to be taxable at 5% under the Orissa Sales Tax Act. The judgment affirmed the decision of the Additional Sales Tax Tribunal, ruling in favor of the assessee.

In conclusion, the court answered the reference questions by determining that stencil paper is not classified as paper under the relevant notification and should be taxed at 5% under the Orissa Sales Tax Act. The judgment was delivered jointly by Justices Misra R.N. and Ray B.K., with no costs awarded for the reference.