1975 (11) TMI 138 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry No. 6 and entry No. 24 of Schedule C to the Bombay Sales Tax Act, 1959 regarding butter paper's classification for set-off eligibility.

Analysis:
The judgment by the Bombay High Court involved a reference under section 61(1) of the Bombay Sales Tax Act, 1959, concerning the classification of butter paper for set-off eligibility. The main issue was whether the butter paper adapted for use as printing material by the respondents falls under entry No. 24 of Schedule C to the Act. The respondents, engaged in litho and transfer printing, used butter paper for gold leaf transfers sold to textile mills. The Tribunal had held that the butter paper falls under entry No. 24, allowing the assessees to claim a set-off. The department disputed this finding, contending that the normal use of the butter paper at the time of purchase should determine its classification under entry No. 6 or entry No. 24. However, the Court emphasized that the crucial factor is establishing the normal use of the butter paper at the time of purchase, not the intended use by the purchasing dealer. Since there was no finding that butter paper's normal use is for packing goods and it has various other applications, the Court upheld the Tribunal's decision that the butter paper purchased by the assessees was covered by entry No. 24.

In the judgment, the Court examined the descriptions of goods in entry No. 6 and entry No. 24 of Schedule C to the Act. Entry No. 6 included goods like gunny bags, hessian, jute twine, and paper for packing goods, while entry No. 24 encompassed paper excluding those specified in entry No. 6. The department argued that the word "adapted" in entry No. 6 should be based on the paper's normal use at the time of purchase. However, the Court found it unnecessary to delve into this argument as the key factor was establishing the butter paper's normal use at the time of purchase. Since there was no proof that butter paper's primary use was for packing goods and it had versatile applications beyond packing, the Court supported the Tribunal's decision that the butter paper fell under entry No. 24.

Ultimately, the Court answered the reference in the affirmative, affirming the Tribunal's decision that the butter paper purchased by the assessees was covered by entry No. 24 of Schedule C to the Bombay Sales Tax Act, 1959. The applicant was directed to pay the respondents the costs of the reference, fixed at Rs. 250.