1996 (2) TMI 486 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether purchases made by the petitioner are liable to tax under entry No. 32 of the notification dated September 7, 1981.
2. Whether old PVC shoes and chappals purchased by the petitioner constitute waste products.
3. Interpretation of the term "waste products" in the context of the notification.
4. Applicability of previous judicial decisions to the current case.
5. Validity of the impugned notices issued by the assessing authority.

Analysis:
1. The primary issue in this case is whether the purchases made by the petitioner are subject to tax under entry No. 32 of the notification dated September 7, 1981. The petitioner, engaged in the manufacture of footwears, contends that the old PVC shoes and chappals purchased do not qualify as waste products and, therefore, should not be taxed under the said entry. The court delves into the definition of "waste products" to determine the applicability of the notification.

2. The court examines whether the old PVC shoes and chappals purchased by the petitioner can be classified as waste products. Various dictionary definitions of "waste products" are considered, emphasizing that waste products are materials discarded during a manufacturing process. Since the petitioner acquires these items from kabaris and hawkers for further processing into raw materials, they do not inherently constitute waste products of the petitioner's manufacturing activities.

3. The interpretation of the term "waste products" is crucial in this case. The court establishes that for an item to be considered a waste product, it must be discarded during the manufacturing process. As the old PVC shoes and chappals purchased by the petitioner are not discarded by the petitioner during manufacturing but are acquired from external sources, they do not fall under the purview of waste products as defined in the notification.

4. The court distinguishes the current case from a previous judgment involving Tribeni Tissues Ltd., highlighting that the facts and circumstances are dissimilar. It is emphasized that the purchases in the present case do not involve transactions of waste products between manufacturers but rather the procurement of old items for conversion into raw materials.

5. Lastly, the court addresses the validity of the impugned notices issued by the assessing authority. Relying on Section 35 of the Act, the court concludes that the notices, which considered the purchases as waste products based on a previous Supreme Court decision, are not legally sound. Consequently, the court quashes the impugned notices for the assessment years in question, ruling in favor of the petitioner.

In conclusion, the court rules in favor of the petitioner, holding that the purchases of old PVC shoes and chappals do not qualify as waste products under the notification, thereby rendering them exempt from taxation under entry No. 32.