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TMI Blog1976 (12) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... item out of the disputed turnover aggregating to Rs. 1,57,584.74. Out of that amount, an amount of Rs. 1,01,464.50 relates to the sales of rubber beltings. Similarly, for the assessment year 1969-70, the assessee-firm filed a return in form A disclosing a gross turnover of Rs. 12,12,928.98 and a net turnover of Rs. 7,85,984.22. For the assessment year, the only dispute was regarding the turnover of Rs. 87,319.22 representing the sales of rubber beltings. The assessee has been contending in both these cases that rubber beltings are cotton fabrics as appearing and defined in entry 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act (hereinafter referred to as "the Act") and hence entitled to exemption and it is also relying on a circular issued by the Board of Revenue (Commercial Taxes), Andhra Pradesh, being circular dated 8th December, 1969. The assessee also relies on a subsequent notification issued by the Government of Andhra Pradesh in G.O. Ms. No. 559, Revenue (S) Department, dated 19th May, 1976, granting exemption, inter alia, to transmission beltings and conveyor beltings in case the fabric content therein is not less than 40 per cent and this exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said provisions from the corresponding provisions of the Act in force immediately before the commencement of the Andhra Pradesh General Sales Tax Act, 1957. This power is to be exercised by the State Government by an order in the Andhra Pradesh Gazette making such provisions as appear to them to be necessary or expedient for removing the difficulties. Sub-section (2) of section 42 is relevant for the purpose of this judgment and it reads: "If any difficulty arises in giving effect to the provisions of this Act (otherwise than in relation to the transition from the provisions of the corresponding Act in force before the commencement of this Act) the State Government may, by order make such provisions, not inconsistent with the purposes of this Act, as appear to them to be necessary or expedient for removing the difficulty." Fourth Schedule to the Act sets out the list of goods exempted from tax under section 8. At the relevant time, entry 5 read as follows: "All varieties of textiles, viz., cotton, woollen or silken including rayon, art silk, or nylon, whether manufactured by handloom, powerloom or otherwise." Subsequently, i.e., during the period with which we are not conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of cloth and then the circular proceeds: "The Government of India have clarified in their letter 3rd cited (copy enclosed) that if the weight of the fabric content of leather cloth, rexine or mackintosh is not less than 40 per cent, it continues to be a fabric for all purposes and the levy of sales tax thereon would not be proper and that if the weight of the fabric contents of the finished products, viz., leather cloth, rexine or mackintosh, is less than 40 per cent, the finished product ceases to be a fabric and that there would be no objection to tax being charged even though the base material already suffered additional duty of excise. They have informed in their letter 4th cited (copy enclosed) that the Collector of Central Excise might be consulted where any doubt is experienced in determining the fabric content of any commodity. The State Government have in the reference 5th cited accepted the above clarification of the Government of India (copy enclosed)." Then the circular proceeds to set out a list of items, which, at the date of the circular, were liable to tax but would fall to be exempted from the sales tax payable under the Act by virtue of the above clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1969-70 up to 8th December, 1969. In Natesam Pillai v. Deputy Commercial Tax Officer [1971] 28 S.T.C. 517., Ramaprasada Rao, J., of the Madras High Court, sitting singly, was dealing with a writ petition where certain benefit was claimed on the ground of article 14 of the Constitution. It must be borne in mind that that case was by way of a writ petition under article 226 of the Constitution and did not come before the court by way of a tax revision case or by way of reference. In that case, the learned single Judge of the Madras High Court held: "If administrative orders are issued by the executive and if such orders have an impinge on civil rights and if such rights, which flow from such executive instructions, are not respected by the executives themselves, then courts exercising jurisdiction under article 226 of the Constitution can extend their arms and correct such an apparent error in the non-implementation of such administrative orders." It was further held: "Executive instructions which confer a certain benefit to a dealer and relieve him from the burden of taxation have to be liberally interpreted. Formalities prescribed by statute are no doubt to be observed but they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the administrative agency or its officers appearing in less formal rulings such as the departmental rulings and the like. Such interpretation, it is true, is formal, or unauthoritative administrative construction. Nevertheless the courts have given weight to it in the construction of doubtful language. It may be that since such rulings or communications are made without the authority, care and deliberation with which ordinarily interpretative rules are promulgated, their efficacy is reduced. The courts, however, in interpreting a word used in a statute may have regard to the interpretation placed by those who are presumed to be acquainted with the economic significance of the tax in question. It is true that these interpretations given by the authorities have no force of law nor are they binding upon the courts. Nevertheless they may serve as a tool of construction of some words used in the statute." In State of Orissa v. D. Sahu & Sons[1976] 37 S.T.C. 583 (S.C.); A.I.R. 1976 S.C. 1561., the question as to what effect should be given to the interpretation placed upon certain words and the notification issued by the Government of India came up for consideration before the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en fabrics; such as may be woven; manufactured by weaving; as, wool is a textile fabric; cloth is a textile fabric". Ordinarily, therefore, a rubber belting produced by the process which we have indicated above, would not be a fabric much less a textile fabric, which would fall within the description of "all varieties of textiles". In Hind Engineering Co. v. Commissioner of Sales Tax[1973] 31 S.T.C. 115., a Division Bench of the Gujarat High Court was concerned with the definition of "cotton fabrics" as defined by item 19 in the First Schedule to the Central Excises and Salt Act, 1944, and thus the Division Bench was concerned with the provisions similar to the provisions in the Andhra Pradesh General Sales Tax Act after its amendment by Act of 1970 at least so far as item 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act is concerned. Therefore, that decision is not of much assistance to us in deciding the question whether rubber belting falls within the description of "all varieties of textiles" or not. In State of Tamil Nadu v. East India Rubber Works[1974] 33 S.T.C. 399., a Division Bench of the Madras High Court was concerned with an entry in the Tamil Nadu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing process came within the meaning of the expression 'cotton fabrics' as defined by rule 3(28) of the Bengal Sales Tax Rules, 1941, and were, therefore, exempt from sales tax during the period from January, 1970, to 6th April, 1975". At page 470, the learned single Judge pointed out that the expression "cotton fabrics" as defined by item 19 of the First Schedule to the Central Excises and Salt Act, 1944, has been incorporated in the definition of "cotton fabrics" as provided under rule 3(28) of the Bengal Sales Tax Rules, 1941. He further observed that whatever be the meaning of "cotton fabrics" in the said Act of 1944, the same would attach to the definition of "cotton fabrics" as provided by the Bengal Sales Tax Rules, 1941. He distinguished the case of Hind Engineering Co. v. Commissioner of Sales Tax[1973] 31 S.T.C. 115. on the ground that, on the facts of the case before him, the Gujarat case(2) was not applicable and he held that rubberised cotton fabrics were cotton fabrics for the purpose of the Bengal Sales Tax Rules, 1941. With respect, we are unable to accept the reasoning of the learned single Judge of the Calcutta High Court, and we would rather prefer to base ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Commercial Taxes[1971] 28 S.T.C. 297., or is made by a Commercial Tax Officer, i.e., without the full backing of the State Government itself, the statement made either by the Board of Revenue or the Commercial Tax Officer, or any lesser authority of the Government will not be binding on the State Government at any subsequent stage in view of the decision of the Supreme Court in Excise Commissioner, U.P. v. Ram KumarA.I.R. 1976 S.C. 2237. In view of the authoritative pronouncement of the Supreme Court in Excise Commissioner, U.P. v. Ram KumarA.I.R. 1976 S.C. 2237., it is not necessary for us to refer to the case of B. Subrahmanyam & Co. v. State of Andhra Pradesh[1974] 2 An. W.R. 228. , decided by a Division Bench of this Court consisting of Gopal Rao Ekbote, C.J., and Lakshmaiah, J. It is true, as the learned Government Pleader pointed out, that in Kashmir House v. Deputy Commissioner of Commercial Taxes[1971] 28 S.T.C. 297., a Division Bench of this High Court consisting of Chinnappa Reddy and Madhava Reddy, JJ., held that, if the Board of Revenue chooses to advise dealers on the question whether a commodity is declared goods or not, it is not doing so in pursuance of any auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment of India in their letter of 15th October, 1968. The learned Government Pleader is right when he contends that the letter issued by the State Government on 13th August, 1969, is not any exemption from tax under section 8 of the Act, because section 8 refers to the goods specified in the Fourth Schedule to the Act. Under section 9, the State Government has been given the power to make exemptions by notification in the Andhra Pradesh Gazette and, in the instant case, the letter of 13th August, 1969, cannot be said to have been issued by the State Government in exercise of its power under section 9 of the Act. However, under section 42(2) of the Act, the State Government has the power to make, by an order, such provisions not inconsistent with the purposes of the Act as appear to them to be necessary or expedient for removing difficulties, provided that the difficulty arises in giving effect to the provisions of the Act otherwise than in relation to the transition from the provisions of the corresponding Act in force before the commencement of the Andhra Pradesh General Sales Tax Act, 1957. In our opinion, the letter of the Government of Andhra Pradesh dated 13th August, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the decision of the State Government about the adoption of the clarification of the Government of India set out in the letter dated 15th October, 1968. It is, therefore, clear that, in view of the factual position, that the cotton fabric content of the transmission belting or rubber belting under consideration was not less than 40 per cent by weight, as certified by the Goodyear India Limited, the manufacturers, the rubber beltings under consideration in each of these two tax revision cases was exempt under entry 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act, in view of the clarification of the Government of India in their letter of 15th October, 1968, as adopted by the State Government in its letter of 13th August, 1969. Under these circumstances, the conclusion reached by the Tribunal in each of these two cases was not correct. It must be held that the rubber belting under consideration was exempt from sales tax for the assessment years 1968-69 and 1969-70. A faint attempt was made by the learned Government Pleader to argue that the effect of the circular of the Board of Revenue should be given only from 8th December, 1969, and not from any prior date. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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