1983 (3) TMI 234 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether rexine-coated cotton fabric is considered a textile under the Pondicherry General Sales Tax Act, 1967.

Analysis:
The judgment of the High Court of Madras dealt with the issue of whether rexine-coated cotton fabric qualifies as a textile under entry 31 of the Third Schedule in the Pondicherry General Sales Tax Act, 1967. The assessees, who were dealers in rexine cloth, claimed exemption on the grounds that the finished product falls under the definition of "textiles." However, the Deputy Commissioner, after reviewing the case, concluded that the finished product did not meet the criteria of item 31 and revised the assessment accordingly. The Sales Tax Appellate Tribunal upheld this decision, citing a previous judgment by the High Court on a similar matter involving waterproof cloth. The court emphasized that the finished product must be considered a textile in common parlance, regardless of its use, to qualify as such under the Act. The judgment highlighted that even if the base material is cotton, the final product must retain its identity as a textile to fall under the specified entry.

The court addressed the contention raised by the assessees' counsel regarding the Supreme Court's decision in Porritts & Spencer (Asia) Ltd. v. State of Haryana, emphasizing that the concept of textiles evolves with advancements in materials and processes. The judgment underscored that the finished product must be commonly understood as a textile, irrespective of its intended use. The court rejected the argument that the finished product, being made partly of cotton, automatically qualifies as a textile under entry 31. It emphasized that the product must align with the definition provided in the Act, and decisions from other statutes should not influence the interpretation of the specific entry in question.

Furthermore, the court discussed a decision by the Allahabad High Court regarding the interpretation of "cotton fabrics of all varieties" under the U.P. Sales Tax Act. However, the Madras High Court declined to follow this decision, reiterating the importance of interpreting the relevant entry in the Act independently. The court also distinguished the present case from a previous decision involving "damping hose cloth," where the product was deemed a textile due to its similarity to cloth used for banians. In contrast, the rexine-coated cotton fabric in question was considered a new commercial product that deviated from being classified as a textile. Ultimately, the court dismissed the revision, affirming the decision that the finished product did not qualify as a textile under the Pondicherry General Sales Tax Act, 1967.