1985 (3) TMI 238 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Competency of the writ petition due to existence of alternative remedies.
2. Interpretation of tax rates applicable to woollen carpet yarn under various notifications.
3. Validity and applicability of the notifications dated October 21, 1975, and February 27, 1978.

Detailed Analysis:

1. Competency of the Writ Petition Due to Existence of Alternative Remedies:
The respondents argued that the writ petition was incompetent because the petitioner had alternative remedies available under the Central Sales Tax Act and the local Act, citing the Supreme Court's decision in *Titaghur Paper Mills Co. Ltd. v. State of Orissa* [1983] 53 STC 315 (SC); AIR 1983 SC 603. The court, however, decided to hear the petition on merits, stating that the existence of an alternative remedy is not an absolute bar to issuing a writ. The discretion lies with the court, especially in cases where the taxing authority acts without jurisdiction or where fundamental rights are infringed. The court referenced *Shivram Poddar v. Income-tax Officer* [1964] 51 ITR 823 (SC); AIR 1964 SC 1095 and *State of U.P. v. Mohammad Nooh* AIR 1958 SC 86 to support this view. The court ultimately rejected the preliminary objection, allowing the writ petition to proceed.

2. Interpretation of Tax Rates Applicable to Woollen Carpet Yarn Under Various Notifications:
The petitioner contended that the woollen carpet yarn should be taxed at 2% as per the notification dated February 27, 1978, which specified the rate of tax for "all varieties of yarn other than cotton yarn and knitting wool." The Tax Assessment Officer had levied a 10% tax on the petitioner's woollen carpet yarn sales for the assessment year 1979-80, citing the absence of a C form. The court examined the language of the notification and concluded that "all varieties of yarn" included woollen carpet yarn. The court found no merit in the respondents' argument that the notification dated February 27, 1978, was a residuary entry and did not cover woollen carpet yarn, which was specifically mentioned in the earlier notification dated October 21, 1975, at 5%.

3. Validity and Applicability of the Notifications Dated October 21, 1975, and February 27, 1978:
The court analyzed both notifications. The notification dated October 21, 1975, specified a 5% tax rate for woollen carpet yarn. However, the subsequent notification dated February 27, 1978, prescribed a 2% tax rate for "all varieties of yarn" excluding cotton yarn and knitting wool. The court held that the latter notification impliedly superseded the former concerning woollen carpet yarn, as it did not explicitly exclude it. The court emphasized that the generality of the term "all varieties of yarn" should be given its full import unless expressly limited. The court referenced *Jaimets Private Ltd. v. State of U.P.* [1984] 55 STC 119 to support the principle that a subsequent notification with broader language can supersede an earlier specific one unless explicitly stated otherwise.

The court concluded that the woollen carpet yarn should be taxed at 2% under the notification dated February 27, 1978. The court quashed the impugned order that computed the taxable turnover of woollen carpet yarn at the rate of 10% and imposed penalties, ruling in favor of the petitioner. The court made no orders as to costs.