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2012 (5) TMI 564 - HC - VAT and Sales Tax


Issues:
Levy of entry tax on duplex board under the U.P. Entry Tax Act based on the notification dated October 31, 2011.

Analysis:
The revision was filed against the order of the Commercial Tax Tribunal regarding the imposition of entry tax on duplex board as "paper of all kind" at a rate of four percent under the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007. The main issue raised was whether duplex board is taxable under the Act, considering a specific notification dated October 31, 2011, which levies entry tax on "paper of all kind excluding newsprint."

The dispute focused on whether duplex board, manufactured by the assessee-dealer, falls under the category of "paper of all kind excluding newsprint" as per the Schedule of the U.P. Entry Tax Act. The assessee-dealer contended that duplex board is a packing material and does not qualify as "paper of all kind" mentioned in the notification, hence should not be subject to entry tax.

The term "paper" was not defined under the Act, leading to an interpretation based on its popular and commercial understanding. The Supreme Court in a previous case clarified that "paper" is generally understood as a substance used for writing, printing, packing, drawing, decorating, or covering walls. This definition was crucial in determining the scope of the term "paper" under the Act.

"Duplex board" was described as a paper with two plies or layers, often used as a packing material. A High Court decision equated duplex board to card board, emphasizing that both serve similar purposes with minor differences. The core issue revolved around whether duplex board falls within the definition of "paper of all kind" as per the notification.

Applying a common sense test, the court analyzed whether duplex board could effectively substitute paper for ordinary use. It was concluded that while duplex board is made of paper, its primary function as a packing material distinguishes it from conventional paper. Previous judgments also supported the view that duplex board is essentially a packing material and not intended for use as paper.

In light of the above analysis and legal precedents, the court ruled in favor of the assessee-dealer, stating that duplex board, being primarily a packing material, does not qualify as "paper" covered by the entry of "paper of all kinds" in the notification. Consequently, the revision was allowed, setting aside the orders of the Tribunal and lower authorities regarding the levy of entry tax on duplex board, with no costs imposed.

 

 

 

 

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