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1998 DIGILAW 437 (KAR)

LOTUS ROOFINGS (P. ) LTD. v. STATE OF KARNATAKA

1998-07-17

S.R.BANNURMATH, Y.BHASKAR RAO

body1998
Y. BHASKAR RAO, J. ( 1 ) THE petitioner, a private limited company, is a regular sales tax assessee, under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the Act") and is being assessed regularly to sales tax by the Additional Deputy Commissioner of Commercial Taxes (Assessments), Hassan, and is carrying on business as dealers in red mud plastic sheets. These items are obtained by way of stock transfer from the head office of the company situated at madras. The transactions took place within the State of Karnataka. The assessee was assessed for the assessment year 1992-93 in respect of the above item. The contention of the assessee is that, the item in question was liable to be taxed under entry 7 (ii) of Part "p". of the Second Schedule to the Act as a plastic item, whereas, the stand of the assessing authority is that the above items were liable to be taxed as roofing materials under entry 9 of Part "r" of the Second Schedule to the Act. The pre-assessment notice has been issued to the assessee. The assessee was taxed as per the rate of tax mentioned under entry 9 of Part "r" of the Second Schedule to the Act. Questioning the same, an appeal came to be filed. The same was dismissed on August 30, 1995, by the Joint Commissioner of Commercial Taxes (Appeals), Malnad Division, Shimoga. The matter was carried on in second appeal and the second appeal also came to be dismissed, holding that, since the item has the dominant use of roofing, the same is to be treated as "roofing materials". Therefore, it has to be taxed under entry 78 of the Karnataka Tax on Entry of Goods act, 1979 (hereinafter referred to as "the KTEG Act"),. e. , the wording in entry 9 of Part "r" of the Second Schedule to the KST Act is quite comparable to the entry 78 of the First Schedule to the KTEG Act. ( 2 ) THE main contention of the petitioner is, the plastic roofing material is liable to be taxed under entry 70 of the First Schedule [. e. , entry 7 (ii) of Part "p" of the Second Schedule] to the Act and not under entry 78 of the First Schedule (. e. , entry 9 of Part "r" of the Second Schedule) to the act. e. , entry 7 (ii) of Part "p" of the Second Schedule] to the Act and not under entry 78 of the First Schedule (. e. , entry 9 of Part "r" of the Second Schedule) to the act. On the other hand, it is contended by the learned counsel appearing for the Revenue that, as the matter is about roofing material, though it is a plastic, it is covered by entry 78 (entry 9 of part "r" of the Second Schedule to the Act ). Even the submission of the petitioner before the tribunal was that the classification of the goods in question has to be made on commercial parlance theory and the items being plastic items have got to be treated for purposes of levy of tax as "plastic articles". ( 3 ) IN view of the abovesaid contentions, the question that arises for consideration is : "whether the plastic sheets which are roofing material fall within entry 70 of the First Schedule [entry 7 (ii) of Part 'p' of the Second Schedule to the Act] or under entry 78 of the First Schedule (entry 9 of Part 'r' of the Second Schedule to the Act ). " ( 4 ) TO appreciate the above contention, it is relevant to extract entry 7 (ii) of Part "p" of the second Schedule to the Act ; and entry 9 of Part "r" of the Second Schedule to the Act. Entry 7 (ii) of Part "p" of the Second Schedule reads : "plastic sheets, plastic granules and articles made from all kinds and all forms of plastic including articles made of polythene, polyvinyl chloride, polypropelene, polyesterene and the like materials, but excluding those specified in item (i) above. Rate of sales tax--Ten per cent. " Entry 9 of Part "r" of the Second Schedule reads : "roofing, light roofing and false roofing materials including cement and asbestos sheets, asphalt sheets, straw boards, hard and soft boards, plywood, veneered boards and panels and laminated sheets, but excluding those specified above. Rate of tax--Thirteen per cent. Rate of sales tax--Ten per cent. " Entry 9 of Part "r" of the Second Schedule reads : "roofing, light roofing and false roofing materials including cement and asbestos sheets, asphalt sheets, straw boards, hard and soft boards, plywood, veneered boards and panels and laminated sheets, but excluding those specified above. Rate of tax--Thirteen per cent. " ( 5 ) BY reading the above entries together, it is manifest that, all forms of plastic products including plastic sheets, plastic granules and articles made from all kinds and all forms of plastic including articles made of polythene, polyvinyl chloride, polypropelene, polyesterene and the like materials are covered by entry 7 (ii) of Part "p" of the Second Schedule to the Act. Roofing, light roofing and false roofing materials including cement and asbestos sheets, asphalt sheets, straw boards, hard and soft boards, plywood, veneered boards and panels and laminated sheets, are covered by entry 9 of Part "r" of the Second Schedule. There is no dispute that, corrugated translucent sheets used as roofing material is made out of plastics. By general impression, one may come to the conclusion that the roofing material falls under entry 78 of the First Schedule (entry 9 of Part "r" of the Second Schedule to the Act ). But by reading two entries together, it is evident that, all plastic products fall within entry 70 of the First Schedule [entry 7 (ii) of Part "p" of the Second Schedule]. Once they fall under entry 70, automatically they deemed to be excluded from entry 78 (entry 9 of Part "r" of the Second Schedule to the Act ). It is well-settled principle of law that, the words in entries and their effective meaning must be understood, otherwise, the entry becomes redundant. The Legislature has specifically made entries, prepared the Schedule with the entries covering respective materials connected with the entry. Therefore, in interpreting those entries of the Schedule, user of the article alone is not the sole test. When legislation has specifically covered all articles made of plastic, it should necessarily include the article called laminated sheets, when it is clear that these sheets are one kind of articles made of plastics and full effect had to be given to the words "all articles made of plastics" under entry 70 [entry 7 (ii) of Part "p" of the Second Schedule]. Therefore, the contention that the disputed article is taxable under entry 78 (entry 9 of Part "r" of the Second Schedule) is not sustainable. We are also fortified by the decision of a division Bench of this Court reported in R. N. Dongare v. State of Karnataka [1990] 77 STC 462. After considering the entries 78 and 110 of the Act, which are similar to the entries, the division Bench held : ". . . . . . . . . . . . . . that for interpretation of entries in the Second Schedule to the Karnataka Sales Tax act, 1957, the user test cannot be the sole test. Entry No. 110 categorically declares that plastic sheets and all articles made of plastic polythene or polyvinyl chloride material would fall within that entry. When legislation has specifically covered all articles made of plastic, it should necessarily include the article called laminated sheets, when it is clear that these sheets are one kind of articles made of plastics. Full effect had to be given to the words 'all articles made of plastics. . . . . . . . . . . . . '. The view of the Tribunal was wrong. In the interpretation of entries in a taxing statute, full effect should be given to all the words used therein. If a particular article would fall within a description, by the force of words used, it is impermissible to ignore that description, and denote the article under another entry, by a process of reasoning. " ( 6 ) BY reading of the above, it is clear that the articles in any form covered by entry 70 [entry 7 (ii) of Part "p" of the Second Schedule]. Once it is covered by entry 70, it is deemed to be excluded from another entry. Where the article falls under two entries, the entry in favour of the assessee must prevail over the other entry. In that view of the matter also, entry 70 prevails over entry 78 of the First Schedule. Once it is covered by entry 70, it is deemed to be excluded from another entry. Where the article falls under two entries, the entry in favour of the assessee must prevail over the other entry. In that view of the matter also, entry 70 prevails over entry 78 of the First Schedule. ( 7 ) LEARNED counsel for the other side, relied on the judgment reported in Visaka Industries limited, Secunderabad v. State of Karnataka 1996 (40) Kar LJ 86 wherein, it reads : "the Tribunal has held that asbestos ridges and gutters are admittedly used as fittings of asbestos sheet roofing, they properly fall under the ordinary meaning of the opening words of the said entry 'roofing materials' (entry 9 of Part 'r' of the Second Schedule ). ( 8 ) IN the above case, the facts are quite different from the facts which we are concerned now. Therefore, the principle laid down in the above judgment will not apply to the facts of the present case. In view of the above circumstances, the revision petitions are allowed and held that the plastic sheets which are roofing material falls under entry 70 of the First Schedule [entry 7 (ii) of Part "p" of the Second Schedule] to the Act.