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2007 (9) TMI 559 - HC - VAT and Sales Tax
Issues: Classification of nylon fishing nets for sales tax purposes under the Kerala General Sales Tax Act, 1963
Issue 1: Classification under Entry 100 of Schedule I The High Court considered whether nylon fishing nets should be classified under entry 100 of Schedule I, which pertains to "Bonded fibre fabrics other than those made of coir." The court noted that nylon fishing nets were manufactured from nylon twines by weaving, and that the term "bonding" typically involves lamination by an adhesive. The court rejected the contention that nylon fishing nets did not contain bonded fibers, emphasizing that the legislative intent behind entry 100 was to encompass fabrics bound together. The court held that nylon fishing nets did not qualify as bonded fiber fabrics under entry 100 due to the absence of a bonding process involving adhesion or fusion of substances, overturning the lower court's decision. Issue 2: Classification under Entry 7 of Schedule III The High Court also examined whether nylon fishing nets could be classified under entry 7 of Schedule III, which includes "rayon or artificial silk fabrics." Relying on a previous Madras High Court judgment, the court determined that nylon fishing nets could be considered as falling under the category of rayon or artificial silk fabrics. The court found that nylon fabrics fit the description of rayon or artificial silk fabrics based on the available literature. Since the sales tax authorities did not present any alternative classification, the High Court upheld the classification of nylon fishing nets under entry 7 of Schedule III, thereby overturning the lower court's decision. Conclusion In conclusion, the High Court allowed the appeals and set aside the lower court's decision to classify nylon fishing nets under entry 100 of Schedule I. The court upheld the classification of nylon fishing nets under entry 7 of Schedule III for sales tax purposes under the Kerala General Sales Tax Act, 1963. No costs were awarded in the matter.
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