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TMI Blog2024 (5) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... The emery cloth even if is based with, sand, for the purpose of its use, that does not change the basic nature of it being a cloth covered in item-5 read with item-59.03 of the First Schedule to the Additional Duties Act. With respect to tarpaulin, in Binny Limited [ 1997 (9) TMI 555 - MADRAS HIGH COURT] it was held that tarpaulin falls within the meaning of the expression cotton fabrics under item-5 of the Fourth Schedule to APGST Act. By reason of Section 8 of APGST Act, Tarpaulin cloth was exempt from tax and the inclusion of this item in item No. 174 made no difference - The Appellate Tribunal rightly concluded that once tarpaulin falls under cotton fabrics in item-5 of the Fourth Schedule to the APGST Act, inclusion of it in item-174 of the First Schedule would make no difference. A perusal of the Order of the learned Appellate Tribunal (at internal page-3) shows that the emery cloth was covered under item-59.03 and was exempted as the same was liable for additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957. There are no illegality in the order of the Appellate Tribunal. No case is made out for interference, inasmuch as the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal by the impugned Order dated 18.06.2001. 6. The Appellate Tribunal formulated the point for consideration; whether the first sales of emery cloth and tarpaulins are not excisable to the tax under APGST Act. The Appellate Tribunal held that the emery cloth is covered in Item-59.03 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (in short Additional Duties Act ) and therefore is exempted under Fourth Schedule to the APGST Act, as the same is liable for additional duties of excise under the Additional Duties Act. It held that emery cloth is cotton coated fabric and therefore liable to be exempted from tax. Regarding the levy of tax on tarpaulins, the Appellate Tribunal held that tarpaulin which is waterproof with the base as cloth falls under cotton fabrics in item-5 of the Fourth Schedule to the APGST Act. It further observed that inclusion of item-174 of the First Schedule would make no difference, and accordingly, it held that no tax was to be levied on tarpaulin. The Appellate Tribunal for its judgment placed reliance in the case of State of A.P. v. Binny Limited (1992) 14 APSTJ 182 wherein the Andhra Pradesh High Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in case of inter-state sales where tax under the Central Sales Act 1956 has been paid. 12. Section 8 of the APGST Act which provides for exemption from tax reads as under: Section 8: Exemption from tax in respect of certain goods:- Subject to such restrictions and conditions as may be prescribed a dealer who deals in the goods specified in the Fourth Schedule shall be exempt from tax under this Act in respect of such goods. 13. Entry-5 of Fourth Schedule to APGST Act reads as under: Cotton fabrics, man made fabrics and woolen fabrics (where AED is leviable) (4005) Explanation : The goods mentioned in entries 5,6 and 7 of this Schedule shall be goods included in the relevant heads and sub-heads of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, but does not include goods where no Additional Duties of Excise are levied under that Schedule. 14. Entry-174 of the First Schedule to the APGST Act reads as under: 174: P.V.C.Cloth, Waterproof cloth, Tarpaulin and Rexine. 15. Item-59.03 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act is as under: 59.03: Textile fabrics, of cotton and man-made textil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, that sales tax cannot exceed 4% of the turnover and that it shall not be levied at more than one stage. The appellants are in appeal by special leave. 4. The Explanation to the Fourth Schedule of the State Sales Tax Act makes it clear that the expressions used in Item 5 thereof have the meaning that is assigned to them in the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The words cotton fabrics, man-made fabrics and woollen fabrics in Item 5 must, therefore, be read in the light of Item 59.03 of the First Schedule to the said Additional Duties of Excise (Goods of Special Importance) Act, 1957 which refers to textile fabrics, impregnated cloth covered or laminated. The appellants' product, rexine cloth, is covered by Item 59.03 and the appellants were, at the relevant times, liable to pay and paid additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. By reason of Section 8 of the State Sales Tax Act, therefore, they were exempt from tax thereunder in respect of their rexine cloth. The inclusion of Item 174 in the First Schedule to the State Sales Tax Act could make no difference to this positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m No. 5 of the Fourth Schedule to the Act. While dealing with the question whether rexine fell within the meaning of the expression cotton fabrics in the said item No. 5, a Division Bench of this Court interpreted the said expression in the same way in State of Andhra Pradesh v. Budha Vinyl (P) Ltd. [1992] 84 STC 131 . On the same basis and applying the test of predominance also, another Division Bench of this Court in State of A.P. v. Goodyear India Ltd. [1989] 74 STC 47, held that cotton fabric subjected to the process of rubberising fell within the meaning of the expression cotton fabrics in the said item No. 5. 13. We are supported in this view by the decision of the Gujarat High Court in Pokardas Brothers v. State of Gujarat [1982] 51 STC 88, wherein also the question that arose for consideration was whether tarpaulin was a cotton fabric as defined in the said item No. 19 at the relevant time. After elaborately considering all aspects of the matter, the Gujarat High Court held that tarpaulin came within the said enlarged definition of cotton fabrics . The Karnataka High Court also took the same view in Bharat Textile and Proofing Industries v. State of Karnataka [1988] 71 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercially speaking, groundnut oil too was different from vanaspati, following the decision of the Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827. A Division Bench of this Court also held in Nathmal Manghilal and Company v. State of Andhra Pradesh [1983] 54 STC 91, that buckram collars , which serve as lining in the collars of ready-made shirts, were cotton fabrics . The buckram collar considered in that case consisted of cotton collar treated with special kind of adhesive and bonded on an oblong buckram cloth; the spread out collar had a lengthwise slit running in the middle and there were also eyelets at either end of the collar. This Court held that merely because it was stiffened, etc., it did not cease to be a cotton fabric and that it was not a different product. This decision negates the contention of the learned Government Pleader. This decision clearly supports our view that tarpaulin, which is a hemmed piece of cotton canvas with eyelets, is cotton fabric under the said item No. 5. 22. We are, therefore, of the view that the Tribunal correctly held that tarpaulin fell within the meaning of the expression cotton fabrics under item ..... X X X X Extracts X X X X X X X X Extracts X X X X
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