1995 (2) TMI 370 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Classification of "surfane packing paper" under the Bombay Sales Tax Act, 1959.
2. Interpretation of the scope and ambit of relevant entries in the Schedules appended to the Act.

Detailed Analysis:

1. Classification of "surfane packing paper":

The primary issue is whether "surfane packing paper" falls under entry 24(2) of Schedule C or entry 19A(c) of Schedule E of the Bombay Sales Tax Act, 1959. The assessee, engaged in the manufacture and sale of "surfane packing paper," initially received a determination from the Commissioner of Sales Tax that the product fell under entry 24(2) of Schedule C, making it liable to sales tax at the rate of 5 paise in a rupee. However, upon reconsideration, the Commissioner later classified it under entry 19A of Schedule E, considering it as goods made primarily of plastic.

The Tribunal, upon appeal, held that "surfane packing paper" is indeed a kind of paper used for packing and thus falls under entry 24(2) of Schedule C. The High Court was called upon to determine the correctness of this classification.

2. Interpretation of Relevant Entries:

To resolve the classification issue, the Court examined the relevant entries as they stood at the material time. Entry 24(2) of Schedule C includes "Paper of all other kinds including sand paper, straw-board, cardboard and duplex and triplex boards," while entry 19A of Schedule E pertains to "Goods made primarily from any kind of plastics."

The Court emphasized the need to interpret the term "paper" in common parlance. According to various dictionary definitions and previous Supreme Court rulings, "paper" is understood as a substance used for writing, printing, packing, drawing, or decorating. The Court noted that "surfane packing paper" is known and used as packing paper, thus fitting the common parlance definition of "paper."

The Revenue's argument that "surfane packing paper" is not made of traditional paper materials (such as rags, straw, wood, pulp, bamboo) was dismissed. The Court highlighted the advancements in science and technology, which have introduced new materials for paper manufacturing. The material composition is not as critical as the product's common usage and recognition as paper.

Supporting their conclusion, the Court referred to the Supreme Court's decision in Porritts & Spencer (Asia) Ltd. v. State of Haryana, which expanded the definition of "textiles" to include fabrics made from various materials and techniques. Similarly, the term "paper" should encompass new materials and methods, provided the product is recognized and used as paper.

Conclusion:

The Court concluded that "surfane packing paper" falls under entry 24(2) of Schedule C, as it is recognized and used as paper in common parlance. The Tribunal's decision was upheld, and the question referred was answered in the affirmative, favoring the assessee.

Order:

The reference was answered in the affirmative, with no order as to costs.