1976 (12) TMI 166 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether transmission beltings are textiles within the meaning of entry 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act.
2. Whether the instructions issued by the Board of Revenue, Government of Andhra Pradesh, are binding on the sales tax authorities.
3. Whether the interpretation placed by the Tribunal on the decision reported in G. Ramaswamy v. State of Andhra Pradesh is correct.

Issue-wise Detailed Analysis:

Issue 1: Transmission Beltings as Textiles
The main question was whether transmission beltings qualify as textiles under entry 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act. The assessee argued that rubber beltings are cotton fabrics as defined in entry 5 and therefore entitled to exemption. The Court examined the definitions and interpretations of textiles and fabrics. According to the strict dictionary meaning and various judicial interpretations, a fabric is a substance that is woven. The Court referenced the manufacturing process of rubber beltings and concluded that rubberised belting would not ordinarily be considered a textile fabric. However, the Court noted that the Board of Revenue's circular dated 8th December 1969, which adopted the Government of India's clarification, stated that if the fabric content is not less than 40%, the product would be considered a fabric for all purposes. Therefore, the Court held that the rubber beltings in question, with a fabric content of not less than 40%, were exempt from sales tax under entry 5 of the Fourth Schedule.

Issue 2: Binding Nature of Board of Revenue Instructions
The second issue was whether the instructions issued by the Board of Revenue were binding on the sales tax authorities. The Court referred to the circular dated 8th December 1969, which was issued by the Board of Revenue based on the Government of Andhra Pradesh's acceptance of the Government of India's clarification. The Court held that the instructions were binding on the sales tax authorities as they were issued under the authority of the State Government. The Court emphasized that the State Government's acceptance of the clarification and the subsequent instructions by the Board of Revenue were not inconsistent with the purposes of the Act and were necessary for removing difficulties under section 42(2) of the Act.

Issue 3: Interpretation of G. Ramaswamy v. State of Andhra Pradesh
The third issue was whether the Tribunal's interpretation of the decision in G. Ramaswamy v. State of Andhra Pradesh was correct. The Court did not directly answer this question, as it found that the interpretation placed by the Government of Andhra Pradesh and the Board of Revenue, following the Government of India's clarification, was sufficient to resolve the issue. The Court noted that the interpretation given by the administrative agency responsible for the enforcement of the tax laws carries considerable weight.

Conclusion:
The Court allowed the revision petitions, holding that the rubber beltings in question were exempt from sales tax for the assessment years 1968-69 and 1969-70. The Court rejected the contention that the circular of 8th December 1969 should apply only from that date, stating that the circular interpreted the meaning of "all varieties of textiles" for all relevant periods. The questions of law raised were answered in favor of the assessee. The respondent was ordered to pay the costs of the petitioner.