9911796707
TMI Blog1988 (4) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... Cotton fabrics are declared goods under section 14 of the C.S.T. Act. For the purpose of section 14 of the Act, the definition of the word "cotton fabrics" has to be ascertained from the provisions of tariff item No. 19 of the Central Excises and Salt Act, 1944 (in short "the Excise Act"). Cotton textiles are exempted from the levy of sales tax as per entry 8A of Fifth Schedule of the K.S.T. Act read with section 8 of the said Act. Entry 8A of the Fifth Schedule reads as follows: "Act 9 of 1964 (from 1-4-1964 to 31-12-1970). 8A. All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon, whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths. Act 3 of 1983 (from 1-1-1970 to 31-3-1979). All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths but excluding tyre cord fabrics specified in serial number 7A of the Fourth Schedule. Act 3 of 1983 (from 1-4-1979 to 28-3-1981). All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon whether ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners have contended that entry 75 in the Second Schedule would not enure to the benefit of the Revenue as tarpaulin or P.V.C. rexine cloth under entry 8A to the Fifth Schedule are cotton textiles and are declared goods which are exempt from sales tax as they are liable to pay Central excise duty. This tariff item No. 19 of the Excise Act was amended in the year 1969 and then in the year 1980. 4.. We will first consider the decisions of this Court on this point rendered in Writ Petitions Nos. 4656 and 4657 of 1979. A learned judge of this Court following his earlier decision in W.P. No. 5297 of 1975 (Varma Industrials Limited v. Commercial Tax Officer [1981] 47 STC 43) has held that the turnover regarding P.V.C. rexine cloth was not exigible to sales tax. But, that decision was rendered on a concession made by the Government Advocate on behalf of the State. But, the earlier decision of this Court in S.T.R.P. Nos. 39 and 40 of 1973 disposed of on 18th October, 1973 (Anant N. Gholba v. State of Mysore) requires to be noticed. That was a case which related to assessment periods commencing from 13th November, 1966 to 21st October, 1968. That is to say the assessments in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brics' as defined in section 14 of the Central Sales Tax Act read with item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944." It should be noticed that, at that time, the second amendment to tariff item No. 19 to the Excise Act had not been brought about and therefore the courts had to go into the user test and that is the reason the Division Bench of this Court remitted the matter to the appellate authority for determining whether the P.V.C. rexine cloth was treated as textiles during the relevant assessment period. But, now we are not confronted with the problem of actual treatment of this material by the authorities as textiles or with the problem of determining the meaning of the word "cotton fabrics". In our view, meaning of the word "cotton textiles" should be determined by the amended definition of the word "cotton fabrics" in the Excise Act as amended by Act 6 of 1980 with retrospective effect. The present amended definition of cotton fabrics reads as follows: "1. Cotton fabrics, other than (i) embroidery in the piece, in strips or in motifs, and (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives, or of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amendment given to item No. 19. If it is held that the amended meaning of the word "cotton fabrics" as amended by the Finance Act of 1969 and the Amendment Act of 1980 should be applied to the facts of this case, then there would be no difficulty for this Court to come to the conclusion that both tarpaulin and P.V.C. rexine cloth are exempted under entry 8A of the Fifth Schedule to the K.S.T. Act. Now what is the effect of that amendment will have to be considered? Since this point did not come up for consideration in any of the decisions rendered by this Court so far, we will have to go into that question afresh. The Sales Tax Tribunal which had gone into the question, applied ruling of the Privy Council reported in AIR 1931 PC 149 (Secretary of State v. Hindustan Co-operative Insurance Society Limited) and observed as follows: "The Act has borrowed the definition of cotton fabrics from the Central Excise Act as it stood on 1st October, 1958. There is no intendment in section 14(iia) that future amendments affecting the definition of cotton fabrics in the Central Excise Act would also be automatically adopted for the purpose of the Act. Therefore, the question arises as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent amendment to cotton fabrics in the Central Excise Act should be taken note of in construing item 7 of the Third Schedule to the Kerala Sales Tax Act because the concept of cotton fabrics in the Kerala Sales Tax Act is integrally linked with the provisions of the Central Excise Act. No such link is existing in the instant case between the Central Excise Act and the Act." Though at first sight this reasoning appears to be correct, we are of the view that had the Tribunal kept in view the purpose of defining cotton fabrics under the C.S.T. Act as the same as the definition of the word "cotton fabrics" under the Excise Act, the Tribunal would not have committed the error by taking the view that the amended definition could not be given retrospective effect in so far as it relates to tarpaulin and rexine cloth. The only tenable objection that could have been raised for applying the amended definition to the word "cotton textiles" in entry 8A of the Fifth Schedule to the K.S.T. Act is that the legislature would be abrogating its legislative powers to levy sales tax on textiles or cotton fabrics by giving the amended definition of cotton fabrics in the Excise Act retrospective eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t December, 1956. It should be recalled that cotton fabrics were not included in the list of the declared goods. Twofold restriction was placed by section 15 of the Central Sales Tax Act. The first restriction was as regards the rate of tax which enjoined that the State shall not charge sales tax or purchase tax on declared goods exceeding 2 per cent and the second restriction was that such tax shall not be levied at more than one stage. The result of this twofold restriction was that the State Governments were exposed to likely loss of revenue. In order to compensate State Governments for this apprehended loss of revenue, the Additional Duties of Excise Act, 1957, was enacted and put on the statute book with effect from 24th December, 1957. The reason underlying the enactment of this Additional Duties of Excise Act has been stated by the Division Bench of this Court in Hind Engineering Company's case [1973] 31 STC 115 in the following terms: '..........The proposal to levy additional duties of excise on the said goods was a part and parcel of the integrated scheme under which sales tax levied at different rates by the States on certain goods was ultimately substituted by the lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of inter-State trade or commerce. Thus, the tax already paid in respect of such goods was made refundable by new section 15 which was inserted by the aforesaid Central Sales Tax (Amendment) Act. When the Bombay Sales Tax Act, 1959, was put on the statute book with effect from 25th September, 1959, it provided under section 5(1) that notwithstanding anything contained in the Act but subject to the conditions or exceptions, if any, set out against each of the goods specified in column 3 of Schedule A, no tax shall be payable on the sales or purchases of any goods specified in that Schedule. Entry 15 of Schedule A specified 'cotton fabrics' which were not liable to payment of tax on the sale or purchase as provided in section 5(1). The definition in entry 15 was 'cotton fabrics' as defined in item 12 of the First Schedule to the Central Excises and Salt Act, 1944. Now this item 12 was renumbered as item 19 by the Central Excises (Conversion to Metric Units) Act, 1960. The State Government, therefore, by a notification issued under section 5(2) of the Bombay Sales Tax Act, 1959, which was adopted and enforced in the area under the jurisdiction of the State of Gujarat, amended this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed a policy and provided a definition which should be in consonance with the definition of "cotton fabrics" as understood in the Excise Act since any inconsistency or repugnancy may have far reaching consequences on inter-State trade or commerce. 7.. Earlier, under the K.S.T. Act, cotton fabrics as such were not exempted. It was only handloom cloth which was exempt from the liability to pay sales tax. In 1956, the Central Government, in the interest of inter-State trade or commerce, declared certain goods of special importance in the course of inter-State trade and commerce. The said goods were known as declared goods under the C.S.T. Act, 1956, which received the President's assent on 21st of December, 1956. Cotton fabrics was not included in the list of declared goods at that time. There were twofold restrictions under section 15 of the C.S.T. Act. The first restriction was as regards the rate of tax which enjoined that the States shall not charge sales tax or purchase tax on declared goods exceeding four per cent and the second restriction was that such tax shall not be levied at more than *Here italicised. one stage. The result of this twofold restrictions was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to time. In that view of the matter, therefore, we must read the enlarged definition as effected by the amending Act of 1980 in the referential legislation contained in entry 37 as if the law was all along the same according to the enlarged definition with effect from 1st March, 1955, and therefore, at all the relevant times of the assessment. " This in substance brings out the real purpose of giving retrospective effect to the amendment of tariff item No. 19 in the Excise Act. 8.. The scope of the referential legislation was considered by the Supreme Court in AIR 1975 SC 1835, (State of Madhya Pradesh v. M.V. Narasimhan). The point that arose for consideration was whether the meaning of the word "public servant" as defined under the Prevention of Corruption Act should be tagged on to the amended definition of the same word in the Indian Penal Code. The Supreme Court in reversal of the judgment of the Madhya Pradesh High Court on that point held that the amended definition of the Indian Penal Code would be applicable to the words "public servant" as defined under the Prevention of Corruption Act. The principle laid down by the Supreme Court in that case would be equally appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Bombay High Court also the amendment to tariff item No. 19 of the Excise Act was not brought to the notice of the Division Bench, which had differed earlier on the interpretation of the word "cotton fabrics" and that is the reason, by applying the user theory, the two learned judges constituting the Division Bench of the Bombay High Court differed in their views and the same was referred to a third judge for resolving the controversy. Chief Justice Madon, as he then was, speaking for the Court, observed that: "Unfortunately, the discussion on the above point in both the differing judgments, so far as the present writ petition is concerned, was academic by reason of the amendment made in item No. 19 of the First Schedule to the Excise Act by the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980. By section 5 of the said Amendment Act the amendment to the said item No. 19 has been made with retrospective effect from 1st March, 1955. By the said amendment the definition of 'cotton fabrics' has been substituted by the following one: '1. Cotton fabrics, other than (i) embroidery in the piece, in strips or in motifs, and (ii) fabrics impregnated, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the Excise Act makes all the difference to the cases on hand and since this amendment was not considered, as there was no occasion to consider in the earlier decisions of this Court, we are not inclined to accept the submission of Sri K. Srinivasan, learned counsel for the petitioners in the S.T.R.Ps. that the point in issue is concluded by the earlier decision of the Division Bench of this Court. The very same reasoning given by the Gujarat High Court for exempting tarpaulin from sales tax under the Gujarat Act would apply to the P.V.C. rexine cloth also because that cloth comes within the meaning of the word "cotton fabrics" under the amended definition of tariff item No. 19 of the Excise Act. 11.. For these reasons the finding of the authorities below that the unamended definition holds the field and not the amended definition is not correct either on principle or authority and therefore these writ petitions and the S.T.R.Ps. have to be allowed and it is ordered accordingly. 12.. Though it was contended by the learned Government Pleader that the petitioners in the W.Ps. have come up against the order of clarification made by the Commissioner for Commercial Taxes, it sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
