1995 (1) TMI 363 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of entry 41 of Schedule A to the Bombay Sales Tax Act, 1959.
2. Applicability of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957.
3. Leviability of additional excise duty on tyre cord fabrics produced and sold by the applicant.
4. Interpretation of the notification dated April 30, 1975, issued under rule 8(1) of the Central Excise Rules, 1944.

Detailed Analysis:

Issue 1: Interpretation of entry 41 of Schedule A to the Bombay Sales Tax Act, 1959
The primary question was whether the sale of nylon tyre cord fabrics under the invoice dated August 28, 1980, was exempt from the levy of tax under entry 41 of Schedule A. The assessee argued that nylon tyre cord fabrics fell under this entry and were thus exempt. However, the Commissioner of Sales Tax rejected this contention, stating that "rayon tyre cord fabrics" were specifically excluded from entry 41 if additional duty of excise was not leviable or levied. The Tribunal upheld this view, stating that since rayon tyre cord fabrics were exempted from additional duty of excise by a notification, they did not fall under entry 41 and were thus taxable under entry 10A of Schedule C at the rate of 3 paise in the rupee.

Issue 2: Applicability of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957
The second issue examined whether the additional duty of excise was levied or leviable on the tyre cord fabrics. The Tribunal and the Court found that rayon tyre cord fabrics were exempt from the whole of the additional duty of excise by a notification issued under rule 8 of the Central Excise Rules. The assessee's argument that the exemption did not affect the "leviability" of the duty was rejected. The Court held that once an item is exempted from duty by a notification, no duty can be said to be leviable under the Additional Duties of Excise Act.

Issue 3: Leviability of additional excise duty on tyre cord fabrics produced and sold by the applicant
The third issue was whether additional excise duty was levied or leviable on the tyre cord fabrics sold by the applicant. The Court found that due to the exemption notification, no additional duty of excise was leviable on rayon tyre cord fabrics. Thus, these fabrics did not fall under entry 41 of Schedule A and were taxable under entry 10A of Schedule C.

Issue 4: Interpretation of the notification dated April 30, 1975, issued under rule 8(1) of the Central Excise Rules, 1944
The fourth issue dealt with whether the Tribunal was correct in holding that no duty was levied or leviable under the Additional Duties of Excise Act due to the notification. The Court affirmed the Tribunal's decision, stating that the notification had statutory force and exempted rayon tyre cord fabrics from the whole of the additional duty of excise. Consequently, these fabrics did not qualify for exemption under entry 41 of Schedule A and were taxable under entry 10A of Schedule C.

Conclusion:
The High Court answered all the questions in favor of the Revenue and against the assessee. The rayon tyre cord fabrics sold by the assessee did not fall under entry 41 of Schedule A and were not exempt from the levy of tax. The Tribunal's interpretation of the notification and the applicability of additional excise duty was upheld. The reference was answered in favor of the Revenue with no order as to costs.