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TMI Blog2014 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... the shape of artificial flower petals is not so either shaped or marked, but sold as fabric and it remains as an exempted item. But, it has lost its characteristic of "cloth" and fabric or textile, because of being marketed as artificial flower petals and in a particular shape, though made of textiles or fabric. In the present case, the assessee himself having claimed that it is an item fitting into entry 78 figuring in the Third Schedule, we find no need to remand the matter but proceed to accept the submissions and the stand taken by the assessee that the item known as artificial flower petals is used extensively in readymade garments. In the wake of our examination as above, we find that artificial flower petals having its origin in textile or fabrics, necessarily fits into the description of "clothing accessories" figuring as item No. 2 in entry 78 of the Third Schedule to the Act. - Decided in favor of assessee. - STA Nos. 5 of 2010 & STA Nos. 107- 117 of 2012 - - - Dated:- 11-6-2012 - SHYLENDRA KUMAR D.V. AND MANOHAR B., JJ. For the Appellant : M/s. K.J. Kamath and Kamath For the Respondent : Ms S. Sujatha, Additional Government Advocate, The judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral in respect of goods which attract levy of tax being at 12.5 per cent for the relevant period between April 1, 2005 to March 31, 2006. 5. The assessee-dealer being aggrieved by the revisional order passed by the Commissioner and restoring the order as passed by the assessing authority is in appeal before us. 6. Notice had been issued to the respondent-Revenue who is served and represented by counsel. 7. We have heard Sri K.J. Kamath, learned counsel for the appellantdealer and Smt. S. Sujatha, learned Additional Government Advocate appearing for the respondent-Commercial Taxes Department. 8. The facts in brief are that the appellant is a dealer who is essentially a trader, who buys and sells several goods such as acrylic yarn, M.F. yarn, thread, paper bags, artificial flower petals and even exempted goods like kumkum, etc. 9. It appears that the dealer has purchased these artificial flower petals9 which are without any dispute is made up of textile, but cut into shape to present itself in the form of artificial flower petals and which according to Mr. Kamath, learned counsel for the appellant is used as a decorative accessory to enhance the appearance and look of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority also noticed that there was no stitching on the flower petals to bring it to that shape and that they are used to attach the same on frocks, pants, t-shirts, etc., to enhance the appearance of the readymade garments and is also used to create a trend in fashion and therefore the appellate authority found that such cut pieces of textiles which are utilized in making readymade garments or in improving their appearance are nothing but clothing accessories fitting into entry 78 and the assessing authority has not examined the manner of bringing into existence artificial flower petals and its application, etc., that just because it is described as artificial flower petals, the assessing authority had proceeded to examine that no such entry is found in the Schedule and therefore it is not one fitting into the Third Schedule to the Act forgetting that it is nothing but a clothing accessory, etc. 17. The Additional Commissioner of Commercial Taxes however took up the matter for exercise of suo motu revisional jurisdiction being of the opinion that the Joint Commissioner of Commercial Taxes has committed an error in taking the view that item is covered under entry 78 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ription of competent authority having been so authorized or nominated by the Commissioner, could have been examined, but Smt. S. Sujatha, learned Additional Government Advocate, has countered the preliminary objection to contend that it is not open to the assessee to raise such preliminary objection relating to jurisdiction at this stage; that in terms of section 67 of the Act reading as under: 67. Objections to jurisdiction.-No objection as to the territorial or pecuniary jurisdiction of any prescribed authority shall be entertained or allowed by any court, Tribunal or authority in an appeal or revision, unless such objection was taken before the prescribed authority at the earliest possible opportunity. objections to the jurisdiction should be raised before the first authority and if not so raised cannot be raised later either before the appellate authority or revisional authority and therefore submits it is not open to the assessee to put forth such contention in these appeals before this court. 22. We find submission of Smt S. Sujatha, learned Additional Government Advocate, appearing for the respondent is a valid one and therefore in the wake of statutory provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 78 being a product of textile and also being used in combination with other items mentioned in entry 78 and therefore submits it cannot be taken out of entry 78 of the Third Schedule to the Act. 27. On the other hand, Ms. S. Sujatha, learned Government Advocate, has very strongly countered these submissions and supported the order passed by the revisional authority. It is submitted that if any particular goods has to be brought within the scope of any of the entries in any of the schedules, it should necessarily fit into that entry in all respects to the description of the goods given in the entry; that in interpreting an entry in the Schedule, court has to adopt a strict construction view, and until and unless the product by itself fits into the description of the goods, it cannot be included in the particular entry either by way of analogy or by a process of reasoning; that the Commissioner has examined this aspect in some detail; that it is neither a readymade garment nor a clothing accessory, though claimed as such, as the user of artificial flower petals is not demonstrated and on the other hand does not fit into the description of any of the items mentioned in entry 78 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the charge in respect of any goods is to be worked out by a combination of sections 3 and 4 of the Act, reading as under: 3. Levy of tax.-(1) The tax shall be levied on every sale of goods in the State by a registered dealer or a dealer liable to be registered, in accordance with the provisions of this Act. (2) The tax shall also be levied, and paid by every registered dealer or a dealer liable to be registered, on the sale of taxable goods to him, for use in the course of his business, by a person who is not registered under this Act. 4. Liability to tax and rates thereof.-(1) Every dealer who is or is required to be registered as specified in sections 22 and 24, shall be liable to pay tax, on his taxable turnover, (a) in respect of goods mentioned in,- (i) Second Schedule, at the rate of one per cent, (ii) Third Schedule, at the rate of four per cent, and (iii) Fourth Schedule, at the rate of twenty per cent. (b) in respect of other goods, at the rate of twelve and one half per cent. (c) in respect of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract specified in column (2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entries mentioned or figuring in any of the Schedules, it necessarily remains there and does not get into the residuary clause or goods of general description in respect of which a uniform rate of tax, viz., 12.5 per cent becomes applicable. 35. It is because goods figuring in the Third Schedule to the Act attract tax at lower rate than general rate, a dealer or an assessee will be keen to get into any one of the entries if is possible and remain there, as tax liability is lower. A mere desire or inclination is not the criterion, but it is the nature of the goods and the description of the goods as figures in the Schedule. 36. In the present case, it is of some significance to notice that in entry 4 of the First Schedule to the Act, all varieties of textiles and fabrics, produced or manufactured in India, including declared goods, but other than those specified elsewhere in the Third Schedule or notified by the Government, are all exempted from payment of tax in terms of sub-section (1) of section 5 of the Act. In the present case, artificial flower petals is a goods owing its origin to textiles and fabrics and it is not in dispute that it is manufactured in India. If a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are also made up of fabrics and textiles. It is, therefore, proper to understand entry 78 as one inclusive of such items which are also in the nature of accessories for being used as accessories along with one of the items mentioned in entry 78 or in general usage of clothing . Clothing is necessarily used in making of readymade garments and therefore if artificial flower petals are used for enhancing the appearance or look or quality or even as a brand figuring and as a trendy fashion, etc., and it can be fit into textile and clothing accessories. 41. In the absence of any supporting materials on record, though we did examine the need for remanding the matter at one stage of hearing of these appeals, having realized that a particular item or goods is one which has its origin in textiles or fabrics, which is an exempted goods and with entry 78 being an exception to entry 4 in the First Schedule to the Act by a combined reading and understanding of the charging section and First and Third Schedules, an item if has to go out but which otherwise can fit in entry 4 of the First Schedule to the Act, it has to be found as an item figuring in the Third Schedule. 42. In the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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