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1990 (1) TMI 267 - AT - VAT and Sales Tax
Issues Involved:
1. Whether "non-cotton yarn waste" is included in the term "non-cotton yarn" under the relevant notification issued under section 25 of the West Bengal Sales Tax Act, 1954. Issue-wise Detailed Analysis: 1. Inclusion of Non-Cotton Yarn Waste in Non-Cotton Yarn: The primary issue for consideration is whether "non-cotton yarn waste" falls under the term "non-cotton yarn" as per the notification under section 25 of the West Bengal Sales Tax Act, 1954 ("the 1954 Act"). The applicant-company, which manufactures non-cotton yarn, filed an application under section 8 of the West Bengal Taxation Tribunal Act, 1987, challenging the assessment order dated June 29, 1984, by the Commercial Tax Officer. This order disallowed a claim of Rs. 1,25,682.93 representing sales of non-cotton yarn waste and imposed sales tax at 8% under the Bengal Finance (Sales Tax) Act, 1941 ("the 1941 Act"). The Assistant Commissioner of Commercial Taxes and the West Bengal Commercial Taxes Tribunal upheld this assessment. The applicant contends that non-cotton yarn waste should be included within the term "non-cotton yarn" as per the notification under section 25 of the 1954 Act. They argue that non-cotton yarn waste, being short lengths of fibres collected during the manufacturing process, does not constitute a new commercial commodity and should be treated as non-cotton yarn. They reference section 14(iib) of the Central Sales Tax Act, 1956, which excludes cotton yarn waste from "cotton yarn," suggesting that the absence of such exclusion in the 1954 Act implies inclusion of non-cotton yarn waste within non-cotton yarn. The respondents argue that non-cotton yarn waste is distinct from non-cotton yarn and is not covered by the notification under section 25 of the 1954 Act. They assert that non-cotton yarn waste cannot be used for manufacturing textiles, unlike non-cotton yarn, and is understood differently in trade and commerce. 2. Interpretation of "Non-Cotton Yarn" in Trade Parlance: The Tribunal examined the meaning of "non-cotton yarn" in trade parlance, noting that non-cotton yarn waste is derived from non-cotton yarn and consists of left-over short lengths collected from the mill floor. The Tribunal emphasized that the popular or commercial meaning of terms in sales tax statutes should be considered, rather than scientific or technical definitions. The Tribunal reviewed various judicial decisions cited by both parties. The applicant relied on cases where waste products were included within the primary product category, while the respondents cited decisions emphasizing the distinct commercial identity of waste products. The Tribunal found that the commercial understanding of non-cotton yarn waste as a commodity distinct from non-cotton yarn was crucial. 3. Commercial Understanding and Market Treatment: The Tribunal noted that non-cotton yarn waste is priced lower than non-cotton yarn and is treated as a separate commodity in the market. The applicant's own submissions acknowledged that non-cotton yarn waste is sold as a different commodity, fetching much less value and being understood as non-cotton yarn sweepings. Conclusion: The Tribunal concluded that non-cotton yarn waste is treated and understood in the trade circle as a commodity different from non-cotton yarn. Consequently, the Tribunal upheld the finding of the West Bengal Commercial Taxes Tribunal and dismissed the application, holding that non-cotton yarn waste is not included in the term "non-cotton yarn" within the meaning of the notifications issued under section 25 of the 1954 Act. The application was dismissed with no order as to costs. Separate Judgments: - B.C. Chakrabarti (Chairman) and P.C. Banerji (Technical Member) concurred with the judgment. Application dismissed.
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