1995 (1) TMI 337 - 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. Determination of whether "filter paper" falls under entry 24(2) of Schedule C or the residuary entry 22 of Schedule E.

Issue-wise Detailed Analysis:

1. Interpretation of entry 24(2) of Schedule C of the Bombay Sales Tax Act, 1959:

The core issue was the proper interpretation of entry 24(2) of Schedule C, which covers "paper of all other kinds including sand paper, straw board, card board, and duplex and triplex boards." The Tribunal had previously held that "filter paper" was included under this entry. The Commissioner of Sales Tax disputed this interpretation, arguing that "filter paper" was not "paper" as commonly understood.

The High Court examined the language of entry 24(2), noting that it was broad and inclusive. The term "paper of all kinds" was deemed to encompass various types of paper, regardless of their specific use. The Court emphasized that the user of the paper was irrelevant for its classification under entry 24(2). This interpretation was supported by the inclusion of items like sand paper and card board, which are not used for writing or printing.

The Court also reviewed the historical amendments to entry 24, noting that earlier versions were more restrictive but had since been broadened to include "paper of all kinds."

2. Determination of whether "filter paper" falls under entry 24(2) of Schedule C or the residuary entry 22 of Schedule E:

The High Court considered the arguments from both the Commissioner and the assessee. The Commissioner relied on the Supreme Court's decision in State of Uttar Pradesh v. Kores (India) Ltd., which held that carbon paper was not "paper" as commonly understood. However, the High Court distinguished this case, noting that the language of the notification in Kores was different from entry 24(2).

The assessee argued that the language of entry 24(2) was clear and inclusive of all types of paper, including filter paper. The Court supported this view, citing various Supreme Court decisions that emphasized a broad interpretation of similar terms. For instance, in Porritts & Spencer (Asia) Ltd. v. State of Haryana, the Supreme Court held that the use of an item does not determine its classification if it otherwise fits within the defined category.

The Court also referred to a book titled "Paper Industry in India," which classified filter paper as a variety of paper. This supported the view that filter paper is recognized in trade parlance as "paper."

In conclusion, the High Court found that "filter paper" indeed falls under entry 24(2) of Schedule C due to its broad and inclusive language. The Court rejected the argument that the specific use of filter paper could exclude it from this entry.

Conclusion:
The High Court answered the reference in the affirmative, holding that "filter paper" is covered by entry 24(2) of Schedule C and not by the residuary entry 22 of Schedule E. The decision was in favor of the assessee, with no order as to costs.