1986 (1) TMI 363 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 6 of Schedule C to the Bombay Sales Tax Act, 1959 regarding the classification of polythene lined and paper lined hessian bags.

Detailed Analysis:

1. Background and Assessment: The case involves a reference by the department under section 61(1) of the Bombay Sales Tax Act, 1959, concerning the classification of polythene lined and paper lined hessian bags for sales tax assessment. The Sales Tax Officer initially taxed these bags under the residuary entry 22 of Schedule E instead of entry 6 of Schedule C.

2. Remand and Evidence: Upon appeal, the Tribunal remanded the case for additional evidence to determine if these bags fall under entry 6 of Schedule C. The respondents submitted certificates from bag manufacturers and dealers, along with testimonies and newspaper cuttings. The Assistant Commissioner's report supported the classification under entry 6.

3. Key Question: The central question referred to the Court was whether polythene lined and paper lined hessian bags should be classified under entry 6 of Schedule C based on the evidence and interpretation of the Bombay Sales Tax Act, 1959.

4. Evidence and Interpretation: Manufacturers and dealers testified that these bags are a variety of gunny bags or hessian bags used for specialized packing. The Tribunal analyzed the evidence, including newspaper cuttings, and concluded that these bags are known in trade parlance as a variety of gunny bags, thus falling under entry 6.

5. Trade Parlance and Classification: The Tribunal's decision was based on the evidence presented and the understanding in trade parlance. The Court emphasized that the classification under the Sales Tax Act is determined by how the commodity is perceived in the trade, not whether it is a new commercial commodity.

6. Legal Precedents: Citing previous judgments, the Court reiterated that the general term in an entry covers all forms and varieties of the commodity unless specified otherwise. The term "gunny bags" was deemed inclusive of polythene and paper lined variations.

7. Judicial Restraint: The Court declined to reevaluate the evidence or act as an appellate authority over the Tribunal's decision. It emphasized that the Tribunal's conclusion was based on the evidence before it and could not be reassessed in a reference proceeding.

8. Final Decision: Ultimately, the Court upheld the Tribunal's classification of polythene lined and paper lined hessian bags under entry 6 of Schedule C. The question was answered in favor of the assessee, and the applicants were directed to pay the costs of the reference.

In conclusion, the judgment clarifies the importance of trade parlance and evidence in determining the classification of commodities under sales tax entries, emphasizing that the perception within the trade community plays a crucial role in such assessments.