1977 (3) TMI 149 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 36 of Part II of Schedule II of the Madhya Pradesh General Sales Tax Act, 1958 regarding the levy of sales tax on rubber used for retreading of tires.

Analysis:
The judgment delivered by the Madhya Pradesh High Court pertains to three references under section 44(1) of the M.P. General Sales Tax Act, 1958, concerning the same assessee-applicant for the assessment years 1959-60, 1960-61, and 1961-62. The central question in all three references was whether the sales of rubber used for retreading of tires fall under entry 36 of Part II of Schedule II of the Act. The court decided to address all three references collectively due to the identical nature of the legal issue in each year.

The primary contention revolved around the interpretation of the expression "other articles made of rubber" in entry 36 of Schedule II. The court emphasized that the legislative intent behind using such broad language was to encompass all varieties of articles made of rubber, including rubber used for retreading tires. The court highlighted that the term "other articles" in the entry should be construed expansively to include any kind of articles made of rubber, irrespective of the specific form or variety of rubber utilized.

The court also examined the argument put forth by the applicant that rubber used for retreading should not be considered an article of rubber under entry 36. The court referred to various dictionaries to define the terms "rubber" and "article" and concluded that the term "article" has a wide import, encompassing distinct parts or commodities made of rubber. Therefore, rubber used for retreading tires qualifies as an article made of rubber under the ambit of entry 36.

In light of the above analysis, the court affirmed that the sales of rubber used for retreading of tires are indeed covered under entry 36 of Part II of Schedule II of the Act. Consequently, the sales tax authorities were justified in levying a 7 percent tax rate on such sales turnover, rejecting the claim of the assessee to be taxed at a lower rate under the residuary entry. The judgment favored the sales tax department, and the assessee was directed to bear the costs of the references.

In conclusion, the court's decision upheld the applicability of entry 36 to the sales of rubber used for retreading tires, emphasizing the comprehensive interpretation of the term "other articles made of rubber" and rejecting the contention that such rubber should be treated differently for tax purposes.