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TMI Blog1973 (7) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... the view taken by the Deputy Commissioner and held that the waterproof cloth will fall under item 4 of Schedule III. The State is aggrieved against the order of the Tribunal. Thus, the only point for consideration in this case is as to whether the waterproof cloth dealt with by the assessees falls under item 4 of the Third Schedule. It appears that the Board of Revenue had issued clarifications on this point on more than one occasion. For the first time in L. Dis. A. 1524/60 dated 2nd April, 1960, the Board had intimated the assessees that waterproof cloth made from base cloth is exempt from sales tax. Later in B.P. Misc. No. 257/61 dated 20th October, 1961, the Board had clarified that rexine, P.V.C. cloth, processed cotton cloth, rubberised or synthetic waterproof fabrics, etc., are to be treated as processed cloth made from base cloth and that they are exempted from payment of sales tax under the Act. The Government by G.O. Rt. No. 498 dated 27th May, 1967, directed that In respect of transactions from 1st April, 1967, the assessments in respect of those articles would have to be made in accordance with law and not with reference to the instructions issued by the Board of Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cloth by rubberising or by using chemicals, it is urged by the assessees, does not change the character of the cloth which continues to be a textile product. The learned counsel for the assessees showed us samples of the various types of rubberised or P.V.C. cloth and also explained to us how they are all manufactured. It is said that all these articles are made with cloth as base. The base cloth is spread over rollers and the solution of coloured polyvinyl chloride or liquid rubber melted on hot plate is applied on the roller cloth uniformly, the excess solution or liquid being scraped off by means of an equalising rod or blade. These materials are then pressed and dried. There are also certain varieties of goods in which rubber solution is applied in the centre and there is a double covering of cloth on both sides of the rubber solution or P.V.C. solution. The main purpose of this manufacturing process of applying rubber or P.V.C. solution to the base cloth is to get the quality of waterproofing. It is pointed out that whatever be the manufactured article, the cotton base is always there and, therefore, the manufactured material continues to be a woven material, i.e., "textile", ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Schedule III independent of any definition given under any other statute. Item 4 of Schedule III is as follows: "All varieties of textiles (other than durries, carpets, druggets and pure silk cloth) made wholly or partly of cotton, staple fibre, rayon, artificial silk or wool including handkerchiefs, towels, napkins, dusters, cotton velvets and velveteen, tapes, niwars and laces and hosiery cloth in lengths." The expression "textiles" usually refers to cloths or fabrics made by weaving, knitting, netting or braiding and classified according to their component fibres such as silk, wool, cotton, linen and such synthetic fibres as rayon, nylon, etc. The essence of textiles consists in the basic process of spinning and weaving. In State of Madras v. T.T. Gopalier[1968] 21 S.T.C. 451. , this court held that the term "textile" as used in entry 4 of Schedule III should be interpreted broadly in the sense of products obtained by weaving and that, if so interpreted, "braided cords" would also be entitled to the exemption provided under that entry. In Government of Madras v. M.B.C. T.P.C. Industrial Society[1968] 22 S.T.C. 470. , this court had to consider the meaning of the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated that this process of applying rubber or P.V.C. solution to the cloth is not in any way different from the usual process of starching, mercedising or sanforising used in textile mills to better the quality of the cloth. But we are not able to understand how the process of applying rubber or P.V.C. solution to cloth, which makes the cloth a different commercial product, can be taken to be the same as the process of starching, mercedising or sanforising or the process of dyeing and colouring the cloth. The process of starching, mercedising or sanforising or dyeing and colouring the cloth is only intended to better the quality of the cloth or to make it more attractive or acceptable to the customers. But the same thing cannot be said of the process of application of rubber or P.V.C. solution to the cloth for, by the application of this process, the cloth is converted into a different commercial article, the user of which is also different from that of the cloth out of which it is manufactured. The fact that by peeling off the rubber or P.V.C. coating, the cloth can be seen cannot mean that the cloth used as base continues to have the same properties or characteristics. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 S.T.C. 286 (S.C.)., construed the word "vegetables" in item 6 of Schedule II of the C.P. and Berar Sales Tax Act, 1947, not in any technical sense, but in the sense in which it is normally understood in the common parlance. Their Lordships said that being a word of eveyday use it must be construed in its popular sense meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it". In State of Gujarat v. Prakash Trading Co. [1972] 30 S.T.C. 348 (S.C.)., the Supreme Court adopted the "user" test for determining the character of an article as understood in common parlance. In that case, as tooth-brush is used for cleaning one's teeth and is an article of toilet it was held to be a toilet article within the meaning of entry 21A of Schedule E of the Bombay Sales Tax Act, 1959. It was held that shampoo which is used as a liquid soap and which has all the essential ingredients of soap will fall within the meaning of entry 28 of Schedule C to the said Act. In Kores (India) Ltd. v. State of Uttar Pradesh[1970] 26 S.T.C. 126., the Allahabad High Court took the view that in the ordinary sense "paper" refers generally to the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... base paper. This ferro and ammonia paper has got only this specific use of obtaining prints and sketches of site plans and it cannot be used as an ordinary paper because of the special texture and its chemical properties. The use test applied by the learned Judges in both those cases is, in our view, the proper test. In respect of the articles before us what is significant is the rubber or P.V.C. coating over the base cloth which gives the quality of waterproofing, and the cloth on which the coating is spread is only of secondary importance inasmuch as it constitutes merely a convenient base for the coating. The processed articles are not sold as cloth but as a material whose use, value and significance lie entirely in the rubber or P.V.C. coating spread thereon. The use of the articles also depends on the thickness of the rubber or P.V.C. coating given on the base cloth. In Calcuttawala v. Commissioner of Sales Tax[1967] 19 S.T.C. 230. , an identical question as the one before us was considered. In that case, P.V.C. rexine cloth which is manufactured with cloth as base and given coating or coatings of polyvinyl chloride in processing factories by special spreading machines was h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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