1984 (8) TMI 309 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 86 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 regarding taxation of gloves made of hosiery or cotton cloth. Challenge to the Tribunal's decision by legal representatives. Determination of whether gloves sold by the assessee fall under the category of "hosiery goods" under entry 86 or as "ready-made goods" under a notification prescribing a lower tax rate.

Analysis:
The case involved a dispute over the tax treatment of gloves made of hosiery or cotton cloth sold by the assessee under entry 86 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The legal representatives challenged the Tribunal's decision that classified the gloves as taxable at 5 percent. The Appellate Assistant Commissioner held that the gloves should be considered hosiery goods falling under entry 86 and subject to a single-point tax. The Tribunal upheld this view, considering the gloves as falling under the category of "hosiery goods" based on a decision from the Allahabad High Court.

The legal representatives argued that the gloves should be treated as "ready-made goods" under a notification prescribing a lower tax rate, rather than falling under entry 86. However, the Court disagreed, stating that once the gloves are knit and become saleable without further labor, they cannot be classified as "ready-made goods." The Court rejected the argument that gloves made of cloth should be considered ready-made goods, as this would lead to an expansive interpretation encompassing various taxable goods like sarees and dhotis.

The Court analyzed the term "hosiery" to include all knit-wears such as socks, banians, and mufflers, expanding its meaning beyond just items for feet or legs. Referring to precedents, the Court determined that "hosiery" covers machine-knitted garments and items used next to the skin. Consequently, the Court upheld the Tribunal's decision, concluding that the gloves sold by the assessee should be treated as "hosiery" goods under entry 86 of the Act. Therefore, the tax cases were dismissed based on the Court's interpretation and application of the relevant legal provisions and precedents.