1996 (4) TMI 457 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of whether mill board or paper boards qualify as packing material for sales tax purposes under entry 15, Part IV, Schedule II, taxable at 5% or as other goods taxable at 10%.

Detailed Analysis:

The judgment by the High Court of Madhya Pradesh pertains to a sales tax reference concerning the classification of mill board and paper boards as packing material for taxation purposes. The assessee, a manufacturer of paper board and mill board, contended that these items should be considered packing materials and taxed at 5%. However, the assessing officer deemed them taxable at 10%, a decision upheld by the Commissioner and the Board of Revenue, leading to the reference to the High Court.

The Court considered the arguments put forth by both parties. The Government Advocate highlighted that mill board is utilized as raw material for packing purposes, supported by expert opinions from the Small Industries Service Institute. On the other hand, the assessee's counsel argued that since mill board serves as a packing material, it should be taxed at 5% under the relevant entry in Schedule II of the Act.

The Court examined item 15 of Part IV of Schedule II, which lists various goods for use as containers and packing material. While specific packing materials are mentioned in the entry, mill board is not included. The Commissioner's clarification that mill board is used in preparing packing material was acknowledged, but the absence of mill board in the enumerated list led the Court to uphold the Tribunal's decision.

Additionally, reference was made to a previous case where mill board was classified as "paper" for taxation purposes under a different entry. However, in the present case, the absence of mill board from the specified packing materials list in the relevant entry supported the Tribunal's decision. Consequently, the Court ruled in favor of the Revenue and against the assessee, affirming the taxation of mill board and paper boards at 10%.

In conclusion, the High Court of Madhya Pradesh decided in favor of the Revenue, upholding the taxation of mill board and paper boards at 10% rather than 5%, as they were not explicitly listed as packing materials in the relevant entry of Schedule II.