1980 (9) TMI 246 - HC - VAT and Sales Tax

Summary

Issues:
- Exemption from sales tax for turnover related to sales of hair-beltings and cotton-beltings
- Interpretation of whether hair-belting and cotton-belting fall under "all varieties of textiles" or as "parts and accessories of machinery"
- Comparison with similar judgments by the Supreme Court on the interpretation of textiles and fabrics

Analysis:
The assessee-company, a dealer in rice-huller and flourmill machineries, claimed exemption from sales tax for a turnover related to sales of hair-beltings and cotton-beltings for the assessment year 1973-74. The issue at hand was whether these items would be considered as "all varieties of textiles" or as "parts and accessories of machinery" for taxation purposes. The claim was initially overruled based on the classification of the items under the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The Third Schedule, which exempted certain textiles from tax, was a crucial point of reference in this case.

In a previous judgment, the Supreme Court had emphasized interpreting such entries based on their popular sense rather than a scientific or technical meaning. The definition of "textiles" was broadly construed to include any woven fabric, regardless of its size, strength, or use. The Court also highlighted that the concept of textiles evolves with new materials and processes, expanding its content continuously. This interpretation was crucial in determining whether items like dryer felts constituted textiles, based on the weaving process and materials used.

The Court also referred to a previous case where the interpretation of "fabric" and "textile" was discussed. The Supreme Court's ruling clarified that "textiles" encompass a wider range of products manufactured from fibers, maintaining their characteristic properties. This distinction between textiles and fabrics was essential in determining the scope of exemption under the Third Schedule of the Tamil Nadu General Sales Tax Act, especially concerning cotton-belting and hair-belting.

Considering the broader interpretation of textiles and fabrics provided by the Supreme Court, the High Court concluded that hair-belting and cotton-belting would indeed fall under the category of "cotton fabrics, woollen fabrics" as per the Third Schedule. The Court upheld the Tribunal's decision that the turnover related to these items was exempt from tax under the relevant entry. Therefore, the tax revision case was dismissed, affirming the exemption and ordering costs to be paid.