1978 (9) TMI 72 - SC - VAT and Sales Tax

Whether dryer felts manufactured by the assessee fall within the category of all varieties of cotton, woollen or silken textiles specified in Item 30 of Schedule B of the Punjab General Sales Tax Act, 1948? Held that - A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that dryer felts are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against dryer felts falling within the category of textiles , if otherwise they satisfy the description of textiles . If we look at the Customs Tariff Act, 1975, we find in Chapter 59 occurring in Section XI of the First Schedule that there is a reference to textile fabrics and textile articles, of a kind commonly used in machinery or plant and clause(4) of that Chapter provides that this expression shall be taken to apply inter alia to woven textile felts...... of a kind commonly used in paper making or other machinery....... . This reference in a statute which is intended to apply to imports made by the trading community clearly shows that dryer felts which are woven textile felts......of a kind commonly used in paper making machinery are regarded in common parlance, according to the sense of ordinary traders and merchants, textile fabrics. We have, therefore, no doubt that dryer felts , are textiles within the meaning of that expression in Item 30 of Schedule B . Appeal allowed in favour of assessee.

Summary

Issues:
Interpretation of the term "textiles" under Item 30 of Schedule `B' of the Punjab General Sales Tax Act, 1948.

Analysis:

The case revolved around determining whether "dryer felts" manufactured by the assessee fell within the category of "all varieties of cotton, woollen or silken textiles" specified in Item 30 of Schedule `B' of the Punjab General Sales Tax Act, 1948. The assessing authorities and the Tribunal held that the "dryer felts" were not exempt from sales tax as they were not considered "textiles" under Item 30. The High Court was approached with a reference question on this matter. The Division Bench and the third Judge held against the assessee, leading to the appeal in the Supreme Court.

The Supreme Court analyzed the definition of "textiles" under the Act, emphasizing that words in taxing statutes should be construed in their common parlance meaning, not in a scientific or technical sense. Referring to previous judgments, the Court highlighted that the term "textiles" should be understood as woven fabric, irrespective of size, strength, or use. The Court rejected the argument that "dryer felts" were not textiles due to their specific use in paper manufacturing, asserting that the weaving process defines a textile.

The Court examined the manufacturing process of "dryer felts," noting they are woven fabrics made of cotton, woolen, and synthetic yarn. It emphasized that the popular understanding of textiles encompasses various woven fabrics, including those developed through new materials and techniques. Drawing parallels with the evolution of fabric types like rayon and nylon, the Court concluded that "dryer felts" qualified as textiles under the common parlance definition. The Court referenced the Customs Tariff Act, further supporting the classification of "dryer felts" as textile fabrics.

In conclusion, the Supreme Court allowed the appeal, overturning the High Court judgment and ruling in favor of the assessee. The Court determined that "dryer felts" met the criteria to be considered textiles under Item 30 of Schedule `B'. The State was directed to bear the costs incurred by the assessee throughout the legal proceedings.