1976 (6) TMI 66 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of tax rate for polythene goods under the Orissa Sales Tax Act.

Analysis:
The case involved a dispute regarding the appropriate tax rate applicable to polythene goods under the Orissa Sales Tax Act. The assessee, a registered dealer in polythene bags and plastic goods, calculated the tax liability at five percent, while the Sales Tax Officer demanded tax at seven percent. The crux of the matter was whether polythene bags fell under the category of plastic goods, which were subject to a higher tax rate of seven percent as per a specific notification. The Tribunal had to determine if polythene bags constituted plastic articles or goods made of similar substance, thereby attracting the higher tax rate.

The Tribunal considered the definition and commercial understanding of plastic and nylon in a previous judgment to determine the classification of polythene goods. While nylon was distinct from plastic, polythene was established as a plastic-based product. The Tribunal referred to an encyclopedia to establish that polythene was fundamentally a plastic product. It noted that polythene bags, being pliable commodities manufactured using various chemical compositions, fell under the broader category of plastic goods. Consequently, the Tribunal held that polythene bags should be taxed at the higher rate of seven percent, as per the notification.

Upon thorough analysis, the High Court concluded that polythene goods, including polythene bags, were indeed plastic articles and fell within the ambit of goods made of similar substance as per the notification. Therefore, the Tribunal's decision to assess tax at five percent instead of seven percent on the turnover of polythene goods was deemed unjustified. The Court upheld the higher tax rate of seven percent for polythene goods, in line with the notification. The judgment was delivered unanimously by the judges, with no costs imposed on either party.