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TMI Blog2015 (10) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... and weft pattern is a textile falling within entry 51 of Schedule B. It will thus be a good exempted - The entry 51 is inclusive entry. It includes all varieties of cotton, woolen or silken textiles and also rayon, artificial silk or nylon. Thus any textile may be cotton, woolen or silk either from natural fiber or man made fiber falls within the scope of exempted goods. The clarification issued by the Financial Commissioner-cum- Principal Secretary, Government of Haryana, Excise and Taxation Department on 10.12.2009 that the products manufactured by similar manufacturers are not covered under entry 52 and 53 of Schedule B nor under Schedule C of the Act, therefore, an unclassified good is liable to be taxed at the rate of 12.5%. We find that such clarification runs counter to meaning of the expression "textile" including "artificial silk" given by Supreme Court. In view of the interpretation of the similar provision, in respect of the present assessee itself, we find that the clarification could not be issued against an order passed by the competent authority interpreting similar provision. HDPE woven fabric falls within entry 51 of Schedule B of Haryana VAT Act, 2003 and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana Tax Tribunal (for short 'the Tribunal). The Tribunal dismissed the appeal relying upon the order passed in STA No.684 of 2010-11 titled as 'M/s Suraj Plastic Industries, Panipat Vs. State of Haryana', decided on 27.06.2011, later reviewed on 21.02.2012. The learned Tribunal noticed its earlier order in the case of M/s Rishab Farms Industries Ltd. Gurgaon Vs. State of Haryana and others, VATAP No.161 of 2013, wherein considering the Diwakar Gulati 2014.05.14 12:21 I attest to the accuracy and integrity of this document clarification dated 10.12.2009 held that HDPE will attract rate of tax at 4% in terms of fabric falling in Schedule C. However, the order in review was set aside by this Court and consequently the order dated 27.06.2011 is the order, on the basis of which appeal filed by the appellant was decided by the Tribunal. It is the said order which is subject matter of challenge in the present appeals. Before considering the argument raised by learned counsel for the parties, some of the statutory provisions need to be extracted:- It may be stated that the goods mentioned in Schedule B are the exempted from payment of tax in terms of Section 2(1) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and technologists. Thus, artificial silk is not a mere synonym for rayon. The two are not just interchangeable expressions. Artificial silk must be regarded as a genus of which rayon is the species. The artificial silk would seem to be a man-made fibre. In this background the Court held to the following effect:- 4. The claim in the present case for exemption from sales tax is in respect of high density polyethylene. The question is whether it can be regarded as artificial silk. It would appear that polyethylene is a synthetic resin falling under the category of thermoplastic in the same way as nylon or polythene or synthetic plastic resin. In this country, high density polyethylene is imported in granule form. The granules are passed through several processes and stretched into fibres if varying thickness. They are subsequently woven into cloth on looms. The nature of the substance and the manner in which it is made into a fibre to be used as such in the manufacture of fabrics shows that high density polyethylene must be brought under the genus artificial silk . The sales tax authorities would be hard put to it to maintain the proposition that while high density polyethyle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. bags etc. which again falls in item 162 and 202 of entry 58 of Schedule B. On the other hand, in Polyweb Private Ltd. case (supra), the definition of 'artificial Diwakar Gulati 2014.05.14 12:21 I attest to the accuracy and integrity of this document silk fabric' was relating to entry 22 of the First Schedule to the Central Excises and Salt Act, 1944. The Madras High Court has found that entry 22 of First Schedule to the Central Excises and Salt Act, 1944 precisely define what is rayon and what is artificial silk. It thus proceeded to decide that artificial silk manufactured with the manufacturer of fabrics from High- Density Polyethylene must be brought under the genus artificial silk . Therefore, the judgment of the Madras High Court in Polyweb Private Ltd. case (supra) also does not deal with the question as is raised in the present appeal. In the Act in question again, neither rayon nor artificial silk or nylon are defined. Entry 51 of the Schedule B of the Act is in two parts. The first part deals with all varieties of cotton, woolen or silken textiles including rayon, artificial silk or nylon. Therefore, all varieties of textiles may be cotton, woolen or silken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garcane was held not to fall within the definition of the word 'vegetables' and the same meaning was given to the word 'vegetables' in Washi Ahmed's case (supra) where green ginger was held to be 'vegetables' within the meaning of that word as used in common parlance. 4. lt was pointed out by this Court in Washi Ahmed's case (supra) that the same principle of construction in relation to words used in a taxing statute has also been adopted in English, Canadian and American Courts. Pollock B. pointed out in Gretfell v. I. R. C., (1876) 1 Ex D 242, 248 that if a statute contains language which is capable of being construed in a popular sense, such a statute is to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning, of course, by the words popular sense that which people conversant with the subject-matter with which the statute is dealing would attribute it. So also the Supreme Court of Canada said in Planters Nut and Chocolate Co. Ltd v.'The King, (1951) 1 DLR 385 while interpreting the words 'fruits' and 'vegetables' in the Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers for example nylon. Most man-made fibres are made by a chemical process called polymerization (q.v.), in which many units of simple chemical substances combine to form large molecules whose properties are quite different from those of the basic units. By selecting suitable simple compounds and controlling the degree of polymerization, it is possible to produce new substances whose properties can be predicted. When certain types of simple compounds are polymerized under special conditions the units form long chains. Long-chain polymers can be manufactured into fibres; in nature, cellulose (consisting of long chains of glucose) and wool (consisting of long chains of amino acids) are formed into fibres. This means that it is possible to produce entirely new fibre types with desired combinations of properties. Nylon is the generic name for a group of fibres formed from long-chain polyamides. It was the first synthetic polymer fibre to be produced commercially and can now be made in a number of ways from carbon, hydrogen, nitrogen, and oxygen. (Ref : Encyclopaedia Britannica 1969 Edition Volume 9 Page 226- 233). The Hon'ble Supreme Court in Porritts Spencer's case (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Referring to rayon and nylon fabrics, the Court observed as under:- 6...........Take for example rayon and nylon fabrics which have now become very popular for making wearing apparel. When they first came to be made, they must have been intruders in the field of 'textiles' because only cotton, silk and woollen fabrics were till then recognized as 'textiles'. But today no one can dispute that rayon and nylon fabrics are textiles and can properly be described as such. In view of the judgment in Porritts Spencer's case (supra) and keeping in view the test that in a taxing statute words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance and the fact that textile means any woven fabric and therefore the fabric manufactured out of HDPE by warp and weft pattern is a textile falling within entry 51 of Schedule B. It will thus be a good exempted Diwakar Gulati 2014.05.14 12:21 I attest to the accuracy and integrity of this document from payment of tax. The entry 51 is inclusive entry. It includes all varieties of cotton, woolen or silken textiles and also rayon, artificial silk or nylon. Thus an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also to be Diwakar Gulati 2014.05.14 12:21 I attest to the accuracy and integrity of this document treated as 'tax free' on the same footing as HDPE fabrics is falling in entry 14 of Schedule B. The said judgment has attained finality. The clarification issued by the Financial Commissioner-cum- Principal Secretary, Government of Haryana, Excise and Taxation Department on 10.12.2009 that the products manufactured by similar manufacturers are not covered under entry 52 and 53 of Schedule B nor under Schedule C of the Act, therefore, an unclassified good is liable to be taxed at the rate of 12.5%. We find that such clarification runs counter to meaning of the expression textile including artificial silk given by Supreme Court. In view of the interpretation of the similar provision, in respect of the present assessee itself, we find that the clarification could not be issued against an order passed by the competent authority interpreting similar provision. Consequently, in respect of question of law it is held that HDPE woven fabric falls within entry 51 of Schedule B of Haryana VAT Act, 2003 and is exempted from payment of tax. All the aforesaid VAT Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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