1992 (9) TMI 316 - HC - VAT and Sales Tax

Summary

Issues Involved:
The judgment involves the interpretation of entry 117 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, specifically regarding the classification of "hessian lined paper" manufactured and sold by the respondent-assessee.

Details of the Judgment:

Assessment by the Assessing Officer:
The assessing officer determined the total and taxable turnover of the respondent-assessees for the assessment year 1978-79, including the turnover related to the first sales of hessian rolls. The assessing officer subjected this turnover to levy at 8 per cent under entry 117 of the Act.

Appeal and Tribunal Decision:
The assessees appealed before the Appellate Assistant Commissioner, who upheld the levy at 8 per cent under entry 117. The assessees then approached the Tribunal, arguing that the hessian paper rolls should not be classified under entry 117 as the major part of the commodity was hessian, not paper. The Tribunal agreed with the assessees and held that the turnover should be taxed at the general multi-point rate.

Arguments Before the High Court:
The Additional Government Pleader contended that the hessian paper rolls fell within the scope of entry 117, citing a previous decision. The counsel for the assessee argued that the product should not be classified as wrapping paper solely based on its use by match manufacturers.

High Court's Analysis:
The High Court examined the composition of the commodity, which included paper, bitumen, and hessian. Referring to previous decisions, the Court emphasized the wide scope of entry 117, encompassing various types of paper. The Court rejected the argument that the product ceased to be paper due to the manufacturing process involving bitumen and hessian.

Conclusion:
The High Court held that the hessian paper rolls manufactured and sold by the assessees fell within the description of paper under entry 117. Consequently, the Tribunal's decision to tax the turnover at 8 per cent was set aside, and the revision was allowed. No costs were awarded in this case.