1990 (3) TMI 328 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of entry 24(2) of Schedule C of the Bombay Sales Tax Act, 1959.
2. Classification of "mill board" under the relevant sales tax entries.
3. Applicability of trade and common parlance in defining "paper" and "mill board."

Detailed Analysis:

1. Interpretation of entry 24(2) of Schedule C of the Bombay Sales Tax Act, 1959:
The Tribunal had to determine whether "mill board" is covered by entry 24(2) of Schedule C or by the residuary entry 22 of Schedule E. Entry 24 was modified over time, and from October 1, 1972, it was subdivided into sub-entry (1) and sub-entry (2). The Tribunal concluded that "mill board" falls under entry 24(2) because the term "paper" in common parlance includes "board," and there was no significant difference between the manufacturing processes of various types of boards like strawboard, grey board, and mill board.

2. Classification of "mill board" under the relevant sales tax entries:
The Tribunal's decision relied on the interpretation that "mill board" is a type of paper. The Tribunal referenced previous decisions, including the case of Commissioner of Sales Tax v. Sultan Shev Co., which suggested that entry 24 included all types of paper and board. The Tribunal observed that the legislative intent was not to restrict the scope of entry 24(2), as indicated by the absence of the word "and" before "different kinds of board."

3. Applicability of trade and common parlance in defining "paper" and "mill board":
The assessee argued that the raw material and manufacturing process for making paper and board, including "mill board," were the same, and that "mill board" is used similarly to other papers. The department contended that since "paper" was not defined in the Sales Tax Act, it should be understood in common parlance and trade. The Supreme Court's decisions in Collector of Central Excise v. Krishna Carbon Paper Co. and State of U.P. v. Kores (India) Ltd. were cited, emphasizing that terms not defined in the statute should be construed in their popular sense.

Additional Considerations:
The judgment also referenced the Allahabad High Court's decision in Commissioner of Sales Tax v. Adarsh Paper and Board Manufacturing Company, which held that "mill board" is covered by the expression "all kinds of paper." The Supreme Court in Maharaja Book Depot v. State of Gujarat also supported the view that items like exercise books, which are essentially collections of paper, fall under the category of "paper."

Conclusion:
The Court agreed with the Tribunal that "mill board" is a type of paper falling under entry 24 and/or 24(2). The term "paper" in entry 24(2) should be interpreted broadly to include "mill board," which is essentially thick and rough paper used for packing and as covers for exercise books and paperback publications. The question was answered in the affirmative, in favor of the assessee, confirming that "mill board" falls under entry 24(2) of Schedule C of the Bombay Sales Tax Act, 1959. No order as to costs was made.