1998 (9) TMI 92 - SC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of Entry 59.03 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957.
2. Application of Section 8 of the Andhra Pradesh Sales Tax Act, 1957 to the exemption of rexine cloth from sales tax.
3. Conflict between the State Sales Tax Act and the Additional Duties of Excise Act regarding the taxation of rexine cloth.

Analysis:
1. The judgment dealt with the interpretation of Entry 59.03 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, which covers coated fabric, including rexine cloth. The Act was enacted to impose additional duties of excise on specified goods. Section 3 of the Act provides for the levy and collection of additional duties on goods described in the First Schedule at specified rates, with reference to the Central Excise Tariff Act, 1985.

2. The issue of the application of Section 8 of the Andhra Pradesh Sales Tax Act, 1957, was examined in the context of the exemption of rexine cloth from sales tax. The Fourth Schedule of the Act contains Entry 5, which includes cotton fabrics, man-made fabrics, and woollen fabrics. The Explanation to the Fourth Schedule clarifies that the expressions used in Entry 5 have meanings assigned in the Additional Duties of Excise Act. The appellants argued that they were exempt from sales tax under Section 8 of the Act due to their classification under Item 59.03 of the Additional Duties of Excise Act.

3. The conflict between the State Sales Tax Act and the Additional Duties of Excise Act regarding the taxation of rexine cloth was a crucial aspect of the judgment. The High Court, in its ruling, attempted to read down Item 174 of the State Sales Tax Act to authorize the imposition of sales tax on declared goods, including rexine, subject to specific provisions. However, the Supreme Court held that the inclusion of Item 174 in the State Sales Tax Act did not alter the appellants' exemption status under Section 8, emphasizing the categorical terms of the provision.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's judgment to the extent that it attempted to subject the appellants to sales tax under Item 174 of the State Sales Tax Act. The Court affirmed the exemption of the appellants from sales tax under Section 8 of the Act, emphasizing the specific classification of rexine cloth under the Additional Duties of Excise Act.