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TMI Blog1998 (9) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ey (the applicants) have not collected sales tax from their purchasers. They further contended that cotton canvas cloth even after being subjected to the waterproofing process by application of wax, resin and colours does not lose its character as the cotton fabric. The applicants allege that while assessing officer has himself made mistake in calculating the measurements of the product, he has rejected the books of accounts on the plea that the applicants' calculation of the measurements of the product was erroneous. On appeal against the impugned assessment, the appellate authority, Assistant Commissioner of Commercial Taxes (respondent No. 2) has endorsed the view of the assessing authority that "cotton canvas" and "cotton canvas waterproof" are two distinct commodities and rejected the appeal. The revision application filed before the West Bengal Commercial Taxes Appellate and Revisional Board (in short, "the Board") was disposed of upholding the view of the assessing authority as regards the waterproof canvas cloth. According to the applicant, all processed cloths excepting "rubberised cloth" were brought within the ambit of the expression "textile fabrics" within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partly of cotton, staple fibre, rayon, artificial silk or wool including handkerchiefs, towels, bedsheets, bed spreads, table cloths, napkins, dusters, cotton velvets, and velveteen, tapes, niwars and laces. Explanation.-In this sub-clause the expression 'textile fabrics' includes embroidered textile fabrics, but does not include pure silk cloth, canvas cloth, rubberised cloth, plasticised, rexine or waterproof cloth, belting and pipes including hose pipes." By Notification No. 2443-F.T., dated May 27, 1975 the Government amended, with effect from April 7, 1975, sub-clause (a) of clause (28) of the said Rules by omitting the words "canvas cloth" from the explanation to the said sub-clause. Thereafter, by Notification No. 3434-F.T., dated August 2, 1975 substituted in the explanation to the sub-clause, the words "rubberised cloth" for the words "rubberised, plasticised, rexine or waterproof cloth". Therefore, at the relevant period that is from November 4, 1983 to October 23, 1984 the text of the sub-clause stood as follows: "3(28)(a). Sale of all varieties of textile fabrics (other than satranchi, carpets and druggets) made wholly or partly of cotton, staple fibre, rayon, art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "embroidered textile fabric" though it is not textile fabric simpliciter because after woven into textile it is subjected to embroidery work. Sixthly, by express term rubberised cloth, belting and pipes including hose pipes have been excluded from the scope of "textile fabric". Of these "rubberised cloth" is the item which has been subjected to other processing (i.e., rubberisation) after woven into textile. Thus, when we consider the language of the rule in its totality we find that though the expression "all varieties of textile fabrics" has been used in rule, in effect the scope of the expression has been greatly narrowed down. Therefore, the words "all varieties" are not controlling in their total scope the expression "textile fabric". 8.. Again, in the absence of any specific provisions to the contrary (like the referential legislation of the Bombay Sales Tax Act, 1953 adopting the definition of cotton fabric as given in item 19 of the Central Excises and Salt Act, 1944), the expression "textile fabric, made wholly or partly of cotton", should be considered to be the product which is the direct outcome of the process of weaving (knitting, felting or braiding) of the cotton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the amendment and then to decide if the expression "textile fabrics" even in its amended form takes such item within its fold. 11. It may be seen that embroidered textile fabric by a special mention has been included within the scope of "textile fabric". It indicates that the Legislature did not consider such embroidered textile fabric as part of "textile fabrics" and to include it within the meaning of "textile fabrics" they had to make a special mention in the explanation appended to rule 3(28)(a). The only conceivable disqualification of this item (embroidered textile fabric) for being dislodged from the expression "textile fabric" is the ornamentation by embroidery work to which its base material, a textile fabric, is subjected, after it is manufactured as textile fabric. So, it is clarificatory to avoid any confusion due to such extra-ornamentation work. Thus, where the Legislature has attached a special meaning to an expression appearing in a statute the ordinary or dictionary meaning of the expression will cease to have application in deciding the meaning of the expression. We have seen that here a special meaning has been attributed to the expression "textile fab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se cloth which is a textile fabric can be seen intact. But its base cloth is incapable of being used for the purpose for which waterproof canvas cloth can be put to. After conversion of the base cloth into waterproof cloth the latter assumes a distinct name, character and utility as a different commercial commodity. A person interested in purchasing waterproof canvas cloth because of its special utility as a waterproof cloth will never be interested to purchase an ordinary textile fabric. The waterproof canvas cloth and ordinary canvas cloth cannot be substitute for each other in the domain of their respective special utility which they are made for. We should consider the matter in the light of "users" test as adopted by the Supreme Court in the case of State of Gujarat v. Prakash Trading Co. [1972] 30 STC 348 for determining the character of an article as understood in the common parlance. It is appropriate to refer to the case of Kilburn Co. Ltd. v. Commissioner of Sales Tax, U.P., Lucknow [1973] 31 STC 625 (All.). In that case the question for decision was whether ammonia paper and ferro paper used for obtaining prints and sketches of site plans could be considered as "paper" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late, the process to which the base material is subjected converts the same into altogether a different commercial commodity having special field of use. 15.. The case as is presently before us is very similar to the case of State of Tamil Nadu v. East India Rubber Works, Madras-1 [1974] 33 STC 399 (Mad.). In that case what fell for consideration of the Madras High Court was whether waterproof cloth, as dealt with by the assessee of that case, would come under item 4 of Schedule III of the Madras General Sales Tax Act, 1959, and would be exempted from tax. Undisputedly, waterproof cloth is made with cotton cloth as base. In manufacturing such waterproof cloth, the base cloth is spread over rollers and the solution of coloured polyvinyl chloride (PVC) or liquid rubber melted on hot plate is applied on the roller cloth uniformly. The material is then pressed and dried to get waterproof cloth. The application of rubber or PVC imparts to the base cloth the quality of waterproofing. The Madras High Court held in the case that waterproof cloth was not "cotton textile" within the meaning of item 4 of Schedule III. In giving its decision High Court has observed as follows: "But it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd.) the contentious issue was whether transmission belting, which is made of cotton superimposed with rubber, is "cotton fabric" within the meaning of entry 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act, 1957 and if it is exempted from tax. The High Court of Andhra Pradesh held that it was "cotton fabric". But this decision was made in view of what has been specifically referred in the explanation to the Fourth Schedule. The explanation runs thus: "Explanation".-The expressions in items 5, 6 and 7 shall have the same meanings assigned to them in Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)." Again, the text of item 19(1)(b) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 runs as follows: "19(1)............... (a)................... (b) Cotton fabrics, subjected to the process of bleaching, mercerising, dyeing, printing, waterproofing, rubberising, shrink-proofing, organdie processing or any other process or any two or more of these processes." Thus, the Andhra Pradesh General Sales Tax Act, 1957, itself by specific reference to the Central A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not tyre) manufactured by the appellant in that case. But in our case, as already observed, there is no such scope to include waterproof cotton canvas cloth either by specific reference to the said Central Act of 1957 or by any necessary implication. 20.. In the third case [1978] 42 STC 433 (SC) [Porritts Spencer (Asia) Ltd. v. State of Haryana] the question before the Supreme Court for determination was whether dryer felts, made out of cotton or woollen yarn by the process of weaving and used as absorbents of moisture in paper manufacturing factory, fell within the meaning of the word "textile" in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948. The Supreme Court has held that dryer felts were textiles. In coming to its decision the court made the following observations: "The word 'textiles' is derived from the Latin 'texere', which means 'to weave' and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material is woven into a fabric, what comes into being is a 'textile' and it is known as such........................ Whatever be the mode of weaving employed, woven fabric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 21 and 4 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944)." Again, item 19 of the said Central Act (hereinafter referred to as the "Excise Act") is as follows: "19. Cotton fabrics.-'Cotton fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton, and include dhoties, sarees, chadars, bed-sheets, bed-spreads, counterpanes and table-cloths, but do not include any such fabrics- (a) if it contains 40 per cent or more by weight of wool; (b) if it contains 40 per cent or more by weight of silk; or (c) if it contains 60 per cent or more by weight of rayon or artificial silk;". While deciding the case, the High Court observed: "It has to be noticed 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. 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. ............The opening words of the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific inclusion of embroidered textile fabrics, which is a textile fabric with subsequent processing, is clearly not intended to be covered by the definition in the normal course. 22.. In the last case [1982] 51 STC 88 (Guj) (Pokardas Brothers v. State of Gujarat) the contentious issue was whether tarpaulins were cotton fabrics. This case was also decided because of adoption of the definition of "cotton fabrics" as given in item 19 of the First Schedule to the Central Excises and Salt Act, 1944 as well as the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980. Detailed discussion on the point is not necessary because of the discussions made above. This would suffice to say that rule 3(28)(a) of the 1941 Rule makes no reference to the said two Central Acts. 23.. In view of the discussions above we do not consider that any of the decisions on which Mr. Bhattacharyya has put reliance is applicable to the case before us. We have already held that neither rule 3(28)(a), in terms of its own language, covers "waterproof canvas cloth" nor can by necessary implication this item be included into the rule nor can in common parlance it be treated as a canvas cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question. It is not the case that the opening stock of products for the concerned year was nil. This matter requires reconsideration by the competent authority. As regards the fourth point, we find that though in the assessment order the C.T.O. appears to have multiplied the figure of cost of production of the quantity of goods sold by the factor 125.7, actually he has multiplied it 1.257 and so the final calculation is correct. However, this calculation will be very much dependent on the outcome of the reconsideration of the issue in regard to the third point above. 25.. Therefore, correction of the abovementioned mistakes and reconsideration of the matter as observed above is necessary and the same can be competently done by the appellate authority. 26.. In the result, as we have already observed, it cannot be held that the assessing authority erred in levying tax on the sale of waterproof canvas cloth. On the same ground it cannot be said that the orders of the appellate as well as revisional authorities are bad in law. However, as already pointed out, for reconsideration of certain matters and for correction of mistakes the case should go back on remand to the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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