1997 (1) TMI 516 - HC - VAT and Sales Tax

Summary

Issues Involved:
The judgment deals with the interpretation of the term "paper" under Explanation II to entry 16B of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 for the assessment years 1985-86 to 1988-89.

Interpretation of "Paper" under Explanation II:
The petitioner, a manufacturer of paper cartons and playing cards, claimed exemption for paper boards and duplex boards as "raw material, component parts and inputs" under Explanation II to entry 16B of the Act. The assessing authority, appellate authority, and Tribunal disagreed, stating that the expression "paper" does not include pulp boards and duplex boards used for printing, as they are not for writing. The revision petition under section 15A raised the question of whether these boards are taxable under the Act.

Legislative History and Notification:
The legislative history of entry 16B and Explanation II was discussed, which excludes certain items from tax, including paper. A notification issued in 1985 specified paper as an exempt item. The petitioner argued that the term "paper" should include paper boards based on a broader interpretation, contrary to the Tribunal's narrow view.

Court's Decision and Analysis:
The High Court analyzed the term "paper" in context of legislative practice and history. It noted that historically, "paper" encompassed various types like carbon paper, blotting paper, etc. The absence of specific exclusions in the term "paper" indicated its broad scope. The Court held that paper boards, being a thicker variety of paper, fall within the definition of "paper" under Explanation II. The Tribunal's view was overturned, and the turnover related to these boards was directed to be deleted from assessment.

Conclusion:
The High Court allowed the petitions, setting aside the Tribunal's decision and directing the deletion of the turnover related to paper boards and duplex boards from the assessment.