1981 (12) TMI 148 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Appropriate rate of sales tax on copper strips.
2. Interpretation of entry 27 of Schedule II, Part A, of the Gujarat Sales Tax Act, 1969.
3. Applicability of the residuary entry 13 of Schedule III to the Gujarat Sales Tax Act, 1969.

Detailed Analysis:

1. Appropriate Rate of Sales Tax on Copper Strips:
The central issue was determining the correct rate of sales tax for copper strips sold by the assessee-company. The Sales Tax Officer initially taxed these under entry 27 of Schedule II, Part A, at 5%. However, the Assistant Commissioner revised this, categorizing the strips under the residuary entry 13 of Schedule III, thus subjecting them to a higher combined tax rate of 8%.

2. Interpretation of Entry 27 of Schedule II, Part A, of the Gujarat Sales Tax Act, 1969:
The Tribunal's decision was challenged on the grounds that it failed to correctly interpret entry 27, which lists articles manufactured out of non-ferrous metals and alloys, including sheets, rods, bars, slaps, blocks, ingots, and circles. The Tribunal's interpretation excluded copper strips, arguing they were not specifically mentioned. However, the Division Bench in Super Diamond Tools v. State of Gujarat [1980] 46 STC 129 had previously established that entry 27 should be interpreted broadly, covering a wide variety of articles made from non-ferrous metals. The term "rods" was held to include all varieties, including wire rods, indicating a broad legislative intent.

3. Applicability of the Residuary Entry 13 of Schedule III to the Gujarat Sales Tax Act, 1969:
The Assistant Commissioner and the Tribunal had placed copper strips under the residuary entry 13 due to their distinct commercial characteristics and non-inclusion in entry 27. The Tribunal referenced entry 3 of Schedule II, Part A, related to iron and steel, where strips are specifically enumerated, to argue that the absence of a specific mention in entry 27 indicated a legislative intent to exclude copper strips. However, the Court found this reasoning flawed, emphasizing that entry 27 was not intended to be exhaustive. The legislative intent, as interpreted in Super Diamond Tools' case, was to cover a broad range of articles without restricting the scope to only those explicitly listed.

Conclusion:
The Court concluded that the Tribunal erred in its interpretation by not considering the broad legislative intent of entry 27. The copper strips should be included within the term "bars" or "sheets" as specified in entry 27, thus subjecting them to the tax rate applicable under this entry rather than the higher rate under the residuary entry 13. The question referred was answered in the negative, favoring the assessee-company and against the revenue. The State was ordered to pay the costs of the reference to the assessee.