2007 (4) TMI 662 - HC - VAT and Sales Tax

Summary

Issues involved:
The taxability of HDPE woven fabrics under the U.P. Trade Tax Act, 1948.

Taxability of HDPE Woven Fabrics:
The applicant, engaged in the business of HDPE woven fabrics, sought clarification on the taxability of such fabrics under the U.P. Trade Tax Act, 1948. The Commissioner of Trade Tax ruled that HDPE woven fabrics are not exempt from tax as they are specifically excluded from the definition of "textile." The applicant's appeal before the Trade Tax Tribunal was dismissed. The applicant argued that HDPE fabrics used for domestic purposes, like mosquito-nets, should not be excluded from the definition of "textile." Reference was made to the principle of noscitur a sociis and previous court decisions to support this argument. The court noted that subsequent notifications reiterated the exclusion of HDPE fabrics from "textile." Despite arguments to the contrary, the court upheld the Tribunal's decision that HDPE fabrics, including those used for domestic purposes, are not exempt from tax under the "textile" category.

Interpretation of Exclusion Clause:
The court examined the entry for "textiles" in Notification No. 7038 dated January 31, 1985, which excluded various fabrics from the definition. Previous court decisions were cited to show that HDPE fabrics were considered under rayon or artificial silk fabric before the exclusion from "textile." The court emphasized that the language of the entry was clear and unambiguous, excluding all HDPE fabrics from "textile." The court rejected the argument that only HDPE fabrics used for commercial purposes were excluded, stating that each excluded item stood independently. Court decisions were referenced to support the strict interpretation of taxing statutes and exemption notifications. Ultimately, the court upheld the exclusion of HDPE fabrics from "textile" as per the notification.

Alternative Question on Tax Rate:
The applicant raised an alternative argument that HDPE fabrics should be taxed at four percent as a declared commodity under section 14 of the Central Sales Tax Act, 1956. However, this issue was not raised before the Commissioner or the Tribunal, and therefore, could not be adjudicated upon in the present revision. The court noted that such questions should be raised in regular assessment proceedings. Consequently, the revision was dismissed, and the applicant was advised to pursue the alternative question in the appropriate forum.