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TMI Blog2018 (4) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... abric is Artificial silk and therefore falls within the ambit of Entry 51 of Schedule B of Haryana VAT Act, 2003, held that HDPE woven fabric falls within entry 51 of Schedule B of Haryana VAT Act, 2003 and is exempted from payment of tax. Both the appellate authority and the Tribunal have analyzed the facts to arrive at a conclusion in favor of the assessee. In fact, the Assessing Officer himself has allowed exemption, on sale of goods in question in the previous years and subsequently also, which the Tribunal has taken note of - The Tribunal has rightly held that the sale of synthetic woven fabric, would fall under item 8(ii) of Part A of Third Schedule and eligible for exemption. Tax case revision dismissed - decided against Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... the connected records. At the time of hearing, the learned Assistant Additional State Representative (Incharge) has forcefully argued that the order of the learned Appellate Assistant Commissioner is not based on facts of this case on hand. The order of the Assessing Officer is based on facts of this case and therefore, prayed to restore the assessment order in its entirety and setting aside the order of the first Appellate Authority in respect of this appeal and thus render justice. The learned Counsel for the respondent-assessee has vehemently argued by filing written submissions and argued that the commodity dealt by the respondent-assessee is in synthetic woven fabric which cannot be considered as plastic product. The learned Counsel for the respondent-assessee has further stated that synthetic woven fabric is an exempted goods falling under item 8(ii) of Part A of III schedule hence not liable to tax under Tamil Nadu General Sales Tax Act, 1959. But the learned Assessing Officer assessed the sales turnover on the basis of the Commissioner of Commercial Taxes clarification and levied tax. This is not correct. The plastic product falling under Item 33 of Part C of Ist Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills as well as subsequent year, wherein the sale of synthetic woven fabric was allowed exemption, had held that the goods sold by the Dealer will fall under Item 8(ii) of Part A of third Schedule and hence, eligible for exemption and therefore, set aside the assessment made on the same. We find that the reasoning of the Appellate Authority is based on facts and there is no material to contradict the same, except the Circular relied by the Appellant, which is not applicable to the case on hand. The appeal order of the learned Appellate Assistant Commissioner is found correct and there is no compelling reason to interfere with the same and accordingly, the same is sustained and the appeal is dismissed. In the result, the State Appeal is dismissed." 5. The abovesaid order is challenged in the present Tax Case Revision, on the following substantial question of law:- "Whether in the facts and circumstances of the case, the Tribunal is legally correct, in having decided that the synthetic fabric dealt with by the petitioners would be eligible for exemption under the third schedule to the Tamil Nadu General Sales Tax Act, 1959 inspite of the fact that there was no entry in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with any textile fibre.....", and "textile" is said to refer to "a broad classification of any material that can be worked into fabric, such as fibres and yarns including woven and knitted fabric, felt, netted fabric, lace and croched goods." In "Textile Terms and Definitions" (1960) the word cloth is defined as "a generic term embracing all textile fabrics and laminar felts" and "textile" is applied in its modern sense" to "any manufacture from fibres, filaments, or yarns, natural or artificial, obtained by interlacing." The 1967 Annual Book of ASTM Standards defines cloth as "any textile fabric but specially one designed for apparel domestic or industrial use," and textile fabric as "a planar structure consisting of interlaced yarns or fibres." The 1973 Annual Book of ASTM Standards reproduces those definitions." 9. In State of Tamil Nadu v. Polyweb Pvt. Ltd., reported in (1982 ) 51 STC 364, while considering the question whether HDPE woven fabrics are artificial silk fabrics within the contemplation of Item No.4 of the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench noticed that such item 22 does not precisely define either rayon or artificial silk. The Court examined that what is the sense in which rayon and artificial silk are understood by the Central Excise and Salt Act, 1944. The Court noticed that rayon is understood by technologists and traders, as a fibre made from regenerated cellulose, cellulose being the substance in living plants out of which the skeletal structure of plant cell walls are formed. The expression artificial silk denotes that it is the opposite of natural silk. This term was originally used to refer to rayon because rayon was the only kind of artificial silk but so many other varieties of artificial silk have subsequently been invented and perfected by scientists 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural implements, the food articles and other consumer goods. Schedule C is list of articles which are basically inputs for manufacturing of other products. We find that the judgment in Lakshmi Polyfab (supra) does not deal with the issue in question. The entry under consideration was textile fabric including terry towels . The Court held that HDPE falls in the list of industrial inputs attracting VAT at the rate of 4% under Section 8 of the Act. It was also not disputed that goods in question were merely used as packaging material in its present form or even in its changed form i.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 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 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are grown in kitchen gardens and are used for the table. and observed that the word 'vegetables' in taxing statutes is to be understood as in common parlance i.e. denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table." This meaning of the word.. 'vegetables' was reiterated in M/s Motipur Jamindary case where sugarcane 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas wool and silk are animal based fibre. On the other hand, man-made fibres are manufactured by alteration of natural fibres for example rayon from cellulose, or by synthesis of polymers 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 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the category of textiles , was rejected. 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 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 any textile may be cotton, woolen or silk either from natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained 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 Appeals are disposed of accordingly." 11. Both the appellate authority and the Tribunal have analyzed the facts to arrive at a conclusion in favour of the assessee. In fact, the Assessing Officer himself has allowed exemption, on sale of good ..... X X X X Extracts X X X X X X X X Extracts X X X X
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