1984 (2) TMI 95 - HC - VAT and Sales Tax

Summary

Issues:
Whether 'hosiery goods' are 'declared goods' and fall within the ambit and scope of section 14 of the Central Sales Tax Act, 1956?

Analysis:

1. The case involved a question of law referred by the Sales Tax Tribunal, Punjab, regarding the classification of 'hosiery goods' under the Central Sales Tax Act. The petitioner, a dealer in hosiery goods, claimed exemption from Central Sales Tax on inter-State sales made to Nagaland during the assessment year 1966-67. The primary issues were whether 'hosiery goods' qualified as 'declared goods' and the applicable tax rate for sales to unregistered dealers.

2. The Court clarified that 'hosiery goods' are not explicitly listed as 'declared goods' under section 14 of the Central Sales Tax Act. The petitioner attempted to categorize them under 'cotton fabrics' or 'woollen fabrics' listed in the Act. The definition of 'cotton fabrics' and 'woollen fabrics' as per the First Schedule to the Central Excises and Salt Act, 1944, was crucial in determining the classification of 'hosiery goods'.

3. To ascertain the meaning of 'hosiery goods,' the Court referred to legal precedents emphasizing interpreting terms based on common parlance and commercial understanding. The term 'hosiery' was defined as knitwear or knitted goods for clothing, encompassing items like vests, underwear, pullovers, sweaters, gloves, socks, and caps. The commercial and popular understanding of 'hosiery goods' was crucial in determining their classification.

4. The petitioner argued that 'hosiery goods' should be considered as fabrics, either woollen or cotton, citing a Supreme Court case related to woollen fabrics. However, the Court differentiated between 'woven material' and 'knitted material,' highlighting the distinction between 'fabric' and 'clothing.' The judgment emphasized that knitted clothing, such as hosiery goods, did not qualify as fabric under the technical or scientific definition.

5. Ultimately, the Court concluded that 'hosiery goods' could not be classified as 'declared goods' under section 14 of the Central Sales Tax Act. The judgment rejected the petitioner's argument that 'hosiery goods' fell within the scope of 'woollen fabrics' or 'cotton fabrics' based on the interpretation of legal definitions and commercial understanding. The question posed was answered in the negative, favoring the revenue authority.

6. The judgment provided a detailed analysis of the term 'hosiery goods' and its classification under the Central Sales Tax Act, emphasizing the importance of common parlance, commercial usage, and legal definitions in determining the scope of taxation for specific goods.