1997 (8) TMI 472 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of exemption for handloom cloth under the Madhya Pradesh General Sales Tax Act.

Analysis:
The case involved a reference made by the Tribunal under section 44(1) of the M.P. General Sales Tax Act, 1958, regarding the exemption of handloom cloth from entry tax. The specific question referred to the High Court was whether handloom cloth falls under the exemption for khadi as per entry No. 51 of Schedule I of the Act and the relevant notification dated March 8, 1982. The assessee, a handloom cloth dealer, was initially assessed entry tax liability and penalties by the assessing officer, which was partially upheld by the CST(A) on appeal.

Subsequently, the assessee appealed to the Board of Revenue, which concluded that the handloom cloth purchased by the assessee was indeed exempt from entry tax based on the notification dated March 8, 1982, and entry No. 51 of Schedule I of the Act. The Revenue challenged this decision, leading to the reference before the High Court.

Upon hearing arguments from both parties and examining the relevant notification, the High Court observed that the notification clearly exempted cotton and woollen khadi cloth entirely from entry tax. The Board of Revenue had considered the certificate provided by the seller, confirming the handloom nature of the cloth, and concluded that the khadi cloth purchased by the assessee was exempt from entry tax. Consequently, the High Court upheld the decision of the Board of Revenue, ruling in favor of the assessee and against the Revenue.

In conclusion, the High Court answered the reference question in the affirmative, affirming the exemption of handloom cloth from entry tax under the Madhya Pradesh General Sales Tax Act based on the specific provisions and notification cited in the case.