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2004 DIGILAW 929 (MP)

Tata Exports Limited v. Commissioner of Sales Tax

2004-11-22

A.M.SAPRE, ASHOK KUMAR TIWARI

body2004
Judgment ( 1. ) THIS is a sales tax reference made Under Section 44 (1) of the Madhya Pradesh General Sales Tax Act, 1958 (since repealed) (herein after for short called "the Act") by the Tribunal (Board of Revenue at the instance of the assessee/dealer to this Court in R. A. No. 7-1/89, which arise out of an appellate order dated April 10, 1989 passed by Tribunal in Appeal-119-5/88 to answer the following questions of law: 1. Whether, on the facts and on the evidence on record, the Board of Revenue was correct in law in rejecting the contention of the applicant that the products in question were covered by entry No. 7 in Part I of Schedule II to the M. P. General Sales Tax Act, 1958 and accordingly the sales thereof were exigible to tax at the rate of 3 per cent only ? ( 2. ) WHETHER, on the facts and in the circumstances of the case and on a proper construction of the relevant entries in Schedule II to the M. P. General Sales Tax Act, 1958, the Board of Revenue was justified in law in holding that the products of the applicant were covered by entry No. 5 in Part III of Schedule II and the sales thereof were exigible to tax at the rate of 10 per cent ? 2. In order to appreciate the issue involved in the reference, relevant facts which are part of the statement of case drawn by the Tribunal need to be taken note of infra in brief: The applicant/assessee is engaged in the business of manufacturing of items made of leather in their factory at Dewas. These items include (1) leather jackets, (2) leather coats and (3) skins. The question arose in assessment year 1983-84 before the sales tax authority as to under which entry these items be taxed. The contention of the applicant/assessee was that the items such as leather jacket and leather coats are liable to be taxed as ready-made garments in entry No. 7 in Schedule II of Part I whereas the contention of State (sales tax authority) was that the items referred above are liable to be taxed as leather goods in entry No. 5 in Schedule II of Part III. It is essentially this question which was probed. It is essentially this question which was probed. The A. O. by order dated December 30, 1986 (at page 8) held the issue against the applicant and in favour of State. It was held that the two items mentioned (supra) are leather goods and hence exigible to tax under entry No. 5 in Schedule II, Part III. This view of A. O. was upheld in appeal by the Deputy Commissioner (Appeal) by his order dated January 19, 1988 (at page 14) and lastly by the Board of Revenue in an appeal filed by the applicant by order dated April 10, 1989 (at page 20 ). It is against these decisions, the applicant prayed to Tribunal for making reference to this Court Under Section 44 (1) of the Act. As observed supra, the prayer of the applicant was allowed and accordingly the Tribunal made the reference to this Court on the two questions referred supra for answer on merits. This is how this reference has come to this Court. ( 3. ) HEARD Shri G. M. Chaphekar, learned Senior Advocate with Ku. Vandana Kasrekar, learned Counsel for the applicant and Shri A. S. Agrawal, learned Government Advocate for the respondent. ( 4. ) SUBMISSION of the learned Counsel for the applicant was the same which they urged before the lower taxing authorities including before the Tribunal in support of their contention. In substance, according to him, the items in question, i. e. , leather jacket and leather coat have to be treated as ready-made garments as specified in entry No. 7 in Schedule II, Part I. In reply, learned Counsel for the State supported the view taken by Board and prayed for answering the reference in favour of the State. ( 5. ) THE relevant entries as it stood at the relevant time having a bearing need mention infra: Entry No. 7/schedule II/part I Ready-made garments excluding garments of silk fabrics and ready-made hosiery or knitted garments. Entry No. 5/schedule II/part III All kinds of leather goods excluding sports goods. ( 6. ) PERUSAL of entry No. 7 quoted supra would indicate that it starts with general and exclude three kinds of garments. In other words, the entry excludes three types of ready-made garments made of silk fabric, hosiery or knitted. Entry No. 5/schedule II/part III All kinds of leather goods excluding sports goods. ( 6. ) PERUSAL of entry No. 7 quoted supra would indicate that it starts with general and exclude three kinds of garments. In other words, the entry excludes three types of ready-made garments made of silk fabric, hosiery or knitted. To elaborate more, all ready-made garments made of these three raw materials would not be regarded as ready-made garments though otherwise they are regarded in the common parlance and in market as ready-made garments. Similarly, when we peruse entry No. 5, it also indicates that it takes within its sweep all kinds of leather goods and exclude only one specific kind of leather goods, namely, sports goods. In other words, though sports goods are made of leather and is in fact leather goods, yet the Legislature in its wisdom thought it fit not to regard sports goods as leather goods for the purpose of entry No. 5. ( 7. ) ONE thing that emerges on perusal of aforementioned two entries is that the Legislature has made one specific entry No. 5 in so far as items relating to or/and made of leather are concerned. Entry No. 5 also suggests that since there are number of items available in market which are made of leather, such as belts, purses, shoes, bags, suitcases and like that many more and hence the Legislature thought it proper to use the expression "all kinds of leather goods" by making it as generalised one rather than to go on specifying each and every item. In this view, if a particular item is found to have A been made of leather as its raw material then it is or can be identified as leather goods. ( 8. ) IT is not in dispute that the two items or we may call two goods which are subject-matter of controversy are made of only leather. In other words, these two items were manufactured by the applicant only with the aid/use of leather as its basic raw material. In these circumstances, these items/goods can safely be termed or known as "leather goods". The word "goods" means a commodity or article. The use of expression "leather" prior to word "goods" denotes the identity of goods in market. In other words, these two items were manufactured by the applicant only with the aid/use of leather as its basic raw material. In these circumstances, these items/goods can safely be termed or known as "leather goods". The word "goods" means a commodity or article. The use of expression "leather" prior to word "goods" denotes the identity of goods in market. In other words, if any goods/article c is found to have been made of leather then it has to be treated as leather goods. As observed supra, since Legislature has included all kinds of leather goods for being taxed in the entry No. 5 except one, i. e. , sports goods, the same has to be taxed under this entry and in no other entry. ( 9. ) IN our opinion, when there is a specific entry in the taxing statute for a particular commodity, then general entry will have no application. Indeed, these are certain well-settled principles for which no authority is needed. ( 10. ) WE are thus inclined to concur with the reasoning assigned by the Tribunal on the interpretation of entry No. 7 while repelling the contention of applicant. Mere perusal of entry No. 7 suggests that ready-made garments are made of cloth and not of any other raw material. We have to understand these terms in common parlance and not in any other parlance [see Shree Baidyanath Ayurved Bhavan Ltd. v. Collector of Central Excise (1996) 9 SCC 402 and Alpine Industries v. Collector of Central Excise [2003] 131 STC 9 (SC) : AIR 2003 SCW 415], In our view if the intention of the Legislature was to tax the items in question as ready-made garments then those items would have been or could have been put in exclusion clause of entry No. 5 along with sports goods. In other words, in order to take out these goods from the clutches of entry No. 5, the Legislature had the liberty to put them in exclusion clause along with sports goods. In fact, after the MPGST Act was repealed and replaced by the Madhya Pradesh Commercial Tax Act, 1994, the Legislature amended the entry relating to leather goods falling in Part III of Schedule II (entry No. 8) and added "footwears" in the exclusion clause along with sports goods, thereby taking out two kinds of specified goods from the entry. In fact, after the MPGST Act was repealed and replaced by the Madhya Pradesh Commercial Tax Act, 1994, the Legislature amended the entry relating to leather goods falling in Part III of Schedule II (entry No. 8) and added "footwears" in the exclusion clause along with sports goods, thereby taking out two kinds of specified goods from the entry. This could have been done because admittedly these goods are made of leather. Since this was not done, the entry No. 5 will continue to govern the field so far as its taxability in respect of these two items are concerned. ( 11. ) IN view of aforesaid discussion, we answer the two questions referred supra in favour of State and against the assessee. In other words, we answer the question by holding that products in question are covered by entry No. 5 in Part III, Schedule II to the MPGST Act, 1958. No costs.