1974 (7) TMI 56 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether hosiery banyans were exempt from sales tax under Item 23 of Schedule III of Notification No. STGL-AR-107/59-9134 F.T., dated the 1st July, 1959, as amended by the Government of Bihar, under Section 4 of the Bihar Sales Tax Act, 1959.

Detailed Analysis:

1. Notification and Exemption:
The primary issue was whether hosiery banyans were exempt from sales tax under the relevant notification. The assessee, a dealer in hosiery goods, argued that hosiery banyans should be exempt under the notification dated 1st July 1959. However, the assessing officer imposed sales tax on the sale of hosiery banyans while exempting hosiery cloth. The appellate authority and the Deputy Commissioner of Commercial Taxes upheld this decision, leading to the assessee filing a revision before the Commercial Taxes Tribunal, which also upheld the imposition of sales tax.

2. Interpretation of 'Cotton Fabrics':
The court examined Notification No. STGL-AR-107/59-9134-F.T., which exempted certain goods from sales tax. Item 23 of Schedule III included "Cotton fabrics, rayon or artificial silk fabrics, woollen fabrics, sugar and tobacco, as defined in the Additional Duties of Excise (Goods of Special Importance) Act, 1957." Another notification dated 5th August 1959 added items to Schedule III, including "hosiery cloth sold in lengths." A subsequent notification on 19th October 1966 added "Cotton, silk and cotton-silk mixed hosiery goods" to the Third Schedule. The court noted that hosiery goods were not exempt from sales tax in the year 1964-65.

3. Definition of 'Cotton Fabrics':
Section 2(c) of the Additional Duties of Excise Act, 1957, defines 'cotton fabrics' as per Item 19 of the First Schedule of the Central Excises and Salt Act, 1944. The court analyzed Item 19, which includes various cotton fabrics but does not explicitly mention hosiery. The court noted that while the Central Government included hosiery in a 1955 notification, the State Government did not treat 'cotton fabrics' to include 'hosiery' in the 1959 notifications.

4. Exclusion of Hosiery Goods:
The court emphasized that the 1959 notifications should be treated as part and parcel of the same notification, indicating that 'hosiery cloth sold in lengths' and 'hosiery goods' were not included in 'cotton fabrics.' The court applied the rule of interpretation that special words are not meant to be included in general expressions. Thus, hosiery goods were expressly excluded from the levy of sales tax until 1966.

5. Judicial Precedents:
The court referred to several judicial precedents to support its interpretation. In Ishardas Kapoor and Sons v. Member, Board of Revenue, Bengal, it was held that needlework on handloom-woven cloth excluded it from being considered handloom-woven cloth. In Sharfaji Rao v. Commr. of Sales Tax, ready-made garments were distinguished from cotton cloth. In Lakshmiratan Cotton Mills. Co. Ltd. v. S.T.O. Sector II, Kanpur, the difference between 'cloth' and 'clothes' was highlighted. In Pravin Bros. v. The State of Gujarat, embroidered sarees were not considered cotton fabric. These cases supported the view that hosiery goods could not be equated with 'cotton fabrics.'

6. Conclusion:
The court concluded that hosiery banyans were not exempt from sales tax under Item 23 of Schedule III of the notification dated 1st July 1959, for the period in question. The court held that the term 'cotton fabrics' was used in a narrow sense and did not include hosiery goods. The question of law was answered in the negative, in favor of the Department and against the assessee. The assessee was ordered to pay the costs of the reference, with a hearing fee assessed at Rs. 100/-.

Summary:
The court held that hosiery banyans were not exempt from sales tax under the relevant notification for the period in question. The term 'cotton fabrics' did not include hosiery goods, as evidenced by subsequent notifications and judicial precedents. The decision was in favor of the Department and against the assessee.