1975 (10) TMI 85 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the Additional Sales Tax Tribunal misdirected itself in law in reducing the assessments to the returned figures.
2. Whether nylon yarn is taxable at the rate of seven per cent as per serial No. 7-C of the schedule of taxable goods or at the rate of five per cent as unclassified goods.
3. Whether nylon and filament twine required for preparing fishing nets are taxable at seven per cent as per serial No. 7-C or as unclassified items taxable at the general rate of five per cent.
4. Whether nylon yarn is artificial silk yarn and thus taxable at the rate of five per cent as unclassified goods.
5. Whether the Tribunal was justified in holding that nylon, not being understood as plastic in the popular and commercial sense, is liable to be taxed only at the rate of five per cent or whether it should be taxed at the rate of seven per cent as per serial No. 7-C of the schedule of taxable goods.

Detailed Analysis:

1. Misdirection by the Additional Sales Tax Tribunal:
The court examined whether the Additional Sales Tax Tribunal had misdirected itself in law by reducing the assessments to the returned figures. The judgment did not provide specific details on this issue, but it implies that the Tribunal's decision was questioned by the State of Orissa.

2. Taxability of Nylon Yarn:
The central issue was whether nylon yarn should be taxed at seven per cent under serial No. 7-C of the schedule of taxable goods or at five per cent as unclassified goods. The court analyzed the definitions and commercial understanding of "plastic" and "nylon." It concluded that in the commercial field, nylon is distinct from plastic and is considered part of the textile group, whereas plastic is associated with non-textile goods. Therefore, nylon yarn is not covered by entry No. 7-C and should be taxed at the general rate of five per cent.

3. Taxability of Nylon and Filament Twine for Fishing Nets:
Similarly, the court considered whether nylon and filament twine used for preparing fishing nets should be taxed at seven per cent or five per cent. Applying the same reasoning as for nylon yarn, the court held that nylon twine is not covered by entry No. 7-C and should be taxed at the general rate of five per cent.

4. Nylon Yarn as Artificial Silk Yarn:
The court addressed whether nylon yarn could be classified as artificial silk yarn, which would make it taxable at five per cent as unclassified goods. The court did not explicitly resolve this issue but focused on the broader distinction between nylon and plastic.

5. Justification of Tribunal's Decision on Nylon Taxability:
The court evaluated whether the Tribunal was justified in holding that nylon, not being understood as plastic in the popular and commercial sense, should be taxed at five per cent. The court affirmed this view, emphasizing that in common parlance and commercial understanding, nylon is distinct from plastic. Therefore, nylon goods should be taxed at the general rate of five per cent and not at the higher rate of seven per cent under entry No. 7-C.

Conclusion:
The court concluded that nylon-ware and nylon twines are not covered by entry No. 7-C of the notification dated 30th December 1957, and thus should be taxed at the general rate of five per cent under section 5(1) of the Orissa Sales Tax Act. The assessees in these references were entitled to costs, except for the first batch of cases where the assessee went ex parte. Hearing fees were assessed at rupees one hundred for each of the assessees.