2000 (1) TMI 952 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of tarpaulin.
2. Classification of tarpaulin under the Kerala General Sales Tax Act.
3. Exemption of tarpaulin as "cotton fabrics."
4. Tarpaulin as a declared good under the Central Sales Tax Act.
5. Legislative competence and rate of tax on tarpaulin.

Summary:

1. Taxability of Tarpaulin:
The primary issue is whether the sale of tarpaulin is exigible to tax. The Revenue contends that tarpaulin is taxable as an unclassified item at multi-point up to 1983-84, and thereafter as a classified item under the First Schedule at the first point inside the State. From July 1, 1987, to March 31, 1992, it was covered by item No. 152, and from April 1, 1992, by item No. 106.

2. Classification of Tarpaulin:
The legislative history indicates that tarpaulin was classified as a separate item under item No. 100C of the First Schedule, taxable at 8% at the point of first sale in the State from April 1, 1984, to March 31, 1992. From April 1, 1992, it falls under item No. 106, taxable at 10% at the point of first sale in the State.

3. Exemption of Tarpaulin as "Cotton Fabrics":
The assessee claims that tarpaulin, being 100% cotton cloth, is exempt from tax as it falls under item No. 7 or 11 of the Third Schedule to the Act, which deals with "goods exempted from tax" u/s 9 of the Act. However, the court notes that the exemption notification was withdrawn with effect from June 1, 1974, and subsequent legislative changes classified tarpaulin under taxable items.

4. Tarpaulin as a Declared Good:
The assessee argues that tarpaulin is one of the goods of special importance (declared goods) and thus should not be subject to additional sales tax. The court refers to the Central Sales Tax Act, 1956, and the Additional Duties of Excise (Goods of Special Importance) Act, 1957, noting that certain goods, including "cotton fabrics," were categorized as declared goods and subjected to additional excise duty. However, the court finds that the legislative changes and notifications justify the levy of tax on tarpaulin.

5. Legislative Competence and Rate of Tax:
The court addresses the submission that the rate of tax on tarpaulin should not exceed 4% and should not be levied beyond one stage, as per section 15 of the Central Act. However, it notes that this issue was not raised before the Tribunal and cannot be adjudicated in a revision u/s 41 of the Act. The court concludes that the levy of tax on tarpaulin is within the legislative competence of the State and dismisses the tax revision cases.

Conclusion:
All tax revision cases are dismissed, and the petitions are without merit. The court upholds the taxability of tarpaulin as classified under the relevant items in the First Schedule of the Kerala General Sales Tax Act.