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2022 (12) TMI 965 - HC - VAT and Sales TaxClassification of goods - SAREE, PATTA, DHOTI and GAMUCHHA - whether SAREE, PATTA, DHOTI and GAMUCHHA fall under Entry Serial No.3 of Part-II of Schedule appended to the OET Act? - HELD THAT - When saree, patta, dhoti, gamuchha are considered, they are the products of textile . They do not lose essential characteristics of fabric. Thus, the expression textile products including cotton fabrics and ready-made garments is wide enough to take into its sweep the goods in question. The learned OSTT has appropriately held that the Appellate Authority has erred in giving restricted meaning to the expression contained in Entry 3 of Part-II of Schedule appended to the OET Act. The question whether the Division Bench of the Odisha Sales Tax Tribunal, Cuttack is right in law to hold that saree, patta, dhoti and gamuchha do fall under Entry No.3 of Part-II of Schedule appended to the OET Act, is answered in the affirmative in favour of the State of Odisha-Revenue and against the petitioner-dealer.
Issues Involved:
1. Whether saree, patta, dhoti, and gamuchha fall under Entry Serial No.3 of Part-II of Schedule appended to the Odisha Entry Tax Act, 1999 (OET Act). Detailed Analysis: Background and Facts: The petitioner, a proprietorship concern, challenged the Order dated 22nd September 2017 in Second Appeal No.205(ET) of 2014-15 by the Odisha Sales Tax Tribunal (OSTT). This was in response to an earlier order by the Deputy Commissioner of Sales Tax, Bhubaneswar, related to an Audit Assessment under Section 9C of the OET Act for tax periods from 01.04.2006 to 30.09.2011. The assessment raised a demand of Rs.7,54,898/- (tax of Rs.2,51,632.82 + penalty of Rs.5,03,265.64) on the basis that saree, patta, dhoti, and gamuchha are taxable under the OET Act. Issues: The primary issue framed by the court was whether saree, patta, dhoti, and gamuchha fall under Entry Serial No.3 of Part-II of Schedule appended to the OET Act. Contentions of the Petitioner: The petitioner argued that the term "textile" in Entry Serial No.3, Part-II of the Schedule should be interpreted restrictively to include only "cotton fabrics and ready-made garments". The petitioner relied on the judgments in N.D.P. Namboodripad Vrs. Union of India & Ors., and Sterlite Optical Technologies Ltd. Vrs. Oil India Limited & Ors., to support this restrictive interpretation. Contentions of the Opponent-Revenue: The Revenue contended that the OSTT correctly classified the goods in question as "textile products" and thus subject to entry tax. The OSTT held that the term "textile products" includes saree, patta, dhoti, and gamuchha, and the use of "including" in the entry was for clarification and not restriction. Legal Discussion: The relevant entries for consideration were: - Part-I: Pure silk fabric, silk, artificial silk yarn, and raw silk. - Part-II: Textile products including cotton fabrics and ready-made garments. The court analyzed the term "including" as used in Entry 3 of Part-II, noting that it generally enlarges the meaning of the preceding words. The court referenced multiple judgments to support this interpretation, including Ramala Sahkari Chini Mills Ltd. Vrs. Commissioner of Central Excise and Krishi Utpadan Mandi Samiti Vrs. Shankar Industries, which held that definitions using "means and includes" are to be given a wider meaning. The court further examined the term "textile" in common parlance and judicial precedents, including Porritts & Spencer (Asia) Ltd. Vrs. State of Haryana, which defined "textile" broadly as any woven fabric. The court also referenced Delhi Cloth & General Mills Co. Ltd. Vrs. State of Rajasthan and Shree Meenakshi Mills Ltd. Vrs. Union of India, which discussed the broad nature of the term "textile". Conclusion: The court concluded that saree, patta, dhoti, and gamuchha fall within the connotation of "textile products" as per Entry Serial No.3 of Part-II of the Schedule appended to the OET Act. The OSTT correctly held that these items are subject to entry tax under the OET Act. Decision: The court affirmed the OSTT's Order dated 22.09.2017 and dismissed the sales tax revision petition filed by the petitioner-dealer. The question of law was answered in the affirmative in favor of the State of Odisha-Revenue and against the petitioner-dealer. Each party was left to bear its own costs.
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