1980 (2) TMI 252 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of canteen sales made by the assessee.
2. Taxability of cardigans and pullovers sold by the assessee.

Analysis:
1. The revision under Section 11 of the Sales Tax Act raised questions regarding the taxability of canteen sales and the sale of cardigans and pullovers by the assessee. The Additional Judge (Revisions) held that canteen sales are taxable, relying on a previous case, but this was challenged. The Full Bench in Fertilizer Corporation of India Ltd. v. Commissioner of Sales Tax ruled that canteen sales are exempt from tax, overturning the previous decision.

2. Regarding the sale of cardigans and pullovers, the counsel argued that they should be taxed as hosiery under a specific notification. The counsel urged a reconsideration of the classification based on the manufacturing process and the popular understanding of hosiery. Reference was made to legal precedents and dictionary definitions to support the argument that cardigans and pullovers should be considered hosiery.

3. The court analyzed various definitions of "hosiery" from dictionaries and encyclopedias to determine the scope of the term. It was noted that hosiery encompasses a wide range of knitted goods, including upper clothing, not just undergarments. The court also reviewed past notifications related to the taxation of hosiery and woollen goods to understand the legislative intent behind these classifications.

4. The court compared different notifications issued over the years regarding the taxation of hosiery and woollen goods. It was observed that hosiery has consistently been treated as a separate category for taxation purposes. The court inferred that the term "hosiery" should be understood in a broader sense to include all knitted garments, not just underclothing. Based on this interpretation, the court concluded that sweaters, cardigans, and pullovers should be classified as hosiery for tax purposes.

5. In the final judgment, the court ruled in favor of the assessee, deciding that canteen sales were not taxable, and cardigans and sweaters should be classified as hosiery, not woollen goods. The assessee was awarded costs, and the revision was allowed based on the interpretation of the law and relevant notifications.