1976 (4) TMI 199 - HC - VAT and Sales Tax

Issues Involved:
1. Exemption of sales tax on "rubberised cotton fabrics" under the Bengal Sales Tax Rules, 1941.
2. Applicability of the Gujarat High Court decision in Hind Engineering Co. v. Commissioner of Sales Tax.
3. Maintainability of the writ petition under Article 226 of the Constitution of India.
4. Relief for subsequent assessment periods.

Detailed Analysis:

1. Exemption of sales tax on "rubberised cotton fabrics" under the Bengal Sales Tax Rules, 1941:

The primary issue was whether "rubberised cotton fabrics" qualify for sales tax exemption under rule 3(28) of the Bengal Sales Tax Rules, 1941, which refers to the definition of "cotton fabrics" in item 19 of the First Schedule to the Central Excises and Salt Act, 1944. The definition includes all varieties of fabrics made wholly or partly from cotton but excludes fabrics containing specific percentages of wool, silk, or rayon/artificial silk. The petitioner, a registered dealer, claimed exemption on "rubberised cotton fabrics" for the period from January 1970 to April 6, 1975. The authorities had previously granted such exemptions but later withdrew them, leading to additional tax impositions. The court concluded that "rubberised cotton fabrics" fall within the definition of "cotton fabrics" as per item 19, thereby qualifying for exemption under rule 3(28).

2. Applicability of the Gujarat High Court decision in Hind Engineering Co. v. Commissioner of Sales Tax:

The respondents relied on the Gujarat High Court decision in Hind Engineering Co., which dealt with a similar issue under the Bombay Sales Tax Act, 1959. The court noted significant differences between the Bengal and Bombay Acts, particularly in how "cotton fabrics" were defined and interpreted. The Gujarat case was based on the definition in item 12 of the Central Excises and Salt Act, which was identical to item 19. However, the Bengal Act's definition was clear and unambiguous, making the Gujarat case inapplicable. The court held that the Gujarat decision should not influence the interpretation of the Bengal Sales Tax Rules, 1941.

3. Maintainability of the writ petition under Article 226 of the Constitution of India:

The respondents argued that the petition was not maintainable as the petitioner had not exhausted alternative remedies provided by the statute. The court, however, found sufficient justification for the petitioners to seek relief under Article 226. The petitioners had consistently received exemptions up to 1969 and faced identical legal questions for subsequent periods. The court emphasized the need for a speedy and less expensive remedy, especially given the potential financial impact on the petitioners' business. The court also referenced the Supreme Court's stance in Hirday Narain v. Income-tax Officer, Bareilly, which supported the maintainability of the writ petition despite available alternative remedies.

4. Relief for subsequent assessment periods:

The court considered whether to grant relief for assessment periods beyond December 1970 up to April 6, 1975. Given that the facts and legal points were identical for these periods, the court decided to extend the relief. The court referenced similar cases, such as Dilip Kumar Mukherjee v. Commercial Tax Officer, where relief was granted for subsequent periods under similar circumstances. The court held that "rubberised cotton fabrics" were exempt from sales tax under rule 3(28) of the Bengal Sales Tax Rules, 1941, for the entire period in question.

Conclusion:

The court ruled that "rubberised cotton fabrics" qualify as "cotton fabrics" under the Bengal Sales Tax Rules, 1941, and are exempt from sales tax for the period from January 1970 to April 6, 1975. The Gujarat High Court decision was deemed inapplicable, and the writ petition was maintained. Relief was granted for subsequent assessment periods, and the assessment for the four quarters of 1970 was struck down. The court issued a writ of prohibition and mandamus, preventing further assessments on "rubberised cotton fabrics" for the specified period.

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