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2008 DIGILAW 484 (AP)

SUPER SPINNING MILLS LIMITED v. STATE OF A. P.

2008-07-10

RAMESH RANGANATHAN, T.MEENA KUMARI

body2008
ORDER RAMESH RANGANATHAN J. These tax revision cases are preferred against the common order of the Sales Tax Appellate Tribunal, Hyderabad, in T.A. Nos. 561 and 562 of 1995 dated January 16, 1998. The short question which arises for consideration before this court is whether the Tribunal was right in holding that blended cotton yarn is not cotton yarn and is therefore covered by entry No. 165 of the First Schedule and not entry 10 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957 ? Cotton yarn sold by the petitioner is admittedly, blended with cellulosic fibre content ranging from 10 to 14 per cent in weight. It is the case of the petitioner both before the Tribunal, and before this court, that the mere fact that cotton yarn was blended with non-cellulosic fibre content ranging from 10 to 14 per cent would not result in its ceasing to be cotton yarn, that the said product continued to remain cotton yarn and was liable to be taxed only at four per cent under entry 10 of the Third Schedule to the APGST Act, 1957. Sri S. Ravi, learned counsel for the revision petitioner, would contend that under the Cotton Textile Control Order, 1976 no manufacturer shall produce yarn without using man-made cellulosic and non-cellulosic staple fibre, that entry 165 of the First Schedule, if read as excluding cotton yarn with non-cellulosic fibre content, even if it be for the minuscule extent of one per cent, would render entry 10 of the Third Schedule otiose and that, in view of sections 14 and 15 of the Central Sales Tax Act, 1956 and as cotton yarn is a declared goods, even if it is blended with non-cellulosic fibre it would still remain cotton yarn liable to be taxed only at four per cent. He would rely on the judgment of the Madras High Court in Sree Arunachalaeswara Mills v. State of Tamil Nadu [1991] 81 STC 137. He would rely on the judgment of the Madras High Court in Sree Arunachalaeswara Mills v. State of Tamil Nadu [1991] 81 STC 137. The learned Special Government Pleader for Commercial Taxes, on the other hand, would place reliance on the Division Bench judgment of this court in State of Andhra Pradesh v. Sri Akkamamba Textiles Ltd. [1990] 79 STC 357, wherein this court dealt with the question whether or not cotton yarn, in which non-cotton yarn was 10 per cent, fell within the ambit of entry 10 of the Third Schedule to the APGST Act, 1957. The Division Bench observed that, after introduction of entry 165 of the First Schedule to the Act, blended cotton yarn would fall within entry 165 of the First Schedule. The learned Special Government Pleader would submit that, admittedly, cotton yarn manufactured by the petitioner was a blend of cotton with non-cellulosic fibre, that it fell within the ambit of entry 165 of the First Schedule and not entry 10 of the Third Schedule and that the vires of these entries cannot be examined in revision proceedings as the scope of revision by this court, under section 22 of the APGST Act, was limited only to a determination of questions of law. In Arunachalaeswara Mills [1991] 81 STC 137, the Division Bench of the Madras High Court observed that a mere declaration that cotton yarn, blended with non-cellulosic fibre not exceeding 16 2/3 per cent, should be treated as non-declared goods under entry 18-A of the Tamil Nadu General Sales Tax Act, 1959 was of no consequence unless the Parliament appropriately amended section 14(ii-b) of the Central Sales Tax Act. It was further held that though blended yarn was brought under entry 18-A of the First Schedule to the State Act, all the restrictions and conditions contemplated under section 15 of the Central Sales Tax Act, 1956 would apply in the matter of levy of tax on cotton yarn blended with 16 2/3 per cent of non-cellulosic fibre by weight and the assessment could be sustained only on that basis. The Madras High Court distinguished the judgment of this court in Sri Akkamamba Textiles [1990] 79 STC 357 holding that the observations made therein were only in the passing. The Madras High Court distinguished the judgment of this court in Sri Akkamamba Textiles [1990] 79 STC 357 holding that the observations made therein were only in the passing. Section 14 of the Central Sales Tax Act declares certain goods to be of special importance in inter-State trade or commerce and sub-section (ii-b) thereunder, relates to cotton yarn, but not including cotton waste. Section 15 of the Central Sales Tax Act places restrictions and prescribes conditions in regard to the tax on sale or purchase of declared goods within a State. Under sub-section (a) thereof, every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the restriction that the tax payable under that law shall not exceed four per cent. Section 6 of the APGST Act, 1957 relates to tax in respect of declared goods and, thereunder, notwithstanding anything contained in section 5, the sales or purchases of declared goods by a dealer shall be liable to tax at the rate, and only at the point of sale or purchase, specified against each in the Third Schedule, on his turnover of such sales or purchases for each year irrespective of the quantum of his turnover in such goods and the tax shall be assessed, levied and collected in such manner as may be prescribed. The Third Schedule to the APGST Act deals with declared goods in respect of which only single-point tax is leviable under section 6 of the Act. Under entry 10 thereof, the point of levy of tax on cotton yarn is at the point of first sale in the State and the rate of tax is four per cent. The State Legislature has made a distinction between cotton yarn under entry 10 of the Third Schedule, and blended cotton yarn with non-cellulosic fibre content not exceeding 16 2/3 per cent by weight under entry 165 of the First Schedule. While the former is to be taxed at four per cent, the latter is to be taxed at eight per cent. While the former is to be taxed at four per cent, the latter is to be taxed at eight per cent. We are in complete agreement with the opinion expressed by the earlier Division Bench in Sri Akkamamba Textiles Ltd. [1990] 79 STC 357 (AP) that, after introduction of entry 165 of the First Schedule, the goods in question would fall under entry 165 alone and not under entry 10 of the Third Schedule. The contention of Sri S. Ravi, learned counsel for the petitioner, that, if entry 165 was read as excluding cotton yarn with even a minuscule extent of non-cellulosic fibre content, then entry 10 of the Third - Schedule would become otiose is only to be noted as rejected, for if the said contention is to be accepted, it would then render entry 165 of the First Schedule to the APGST Act otiose. It must be borne in mind that the Schedule is as much a part of the statute and is as much an enactment as any other part. (Craies on Statute Law, Seventh Edition; Statutory Interpretation, Second Edition, F. A. R. Bennion). A Schedule is an extension of the section which induces it. Material is put in a Schedule because it is too lengthy or detailed to be conveniently accommodated in a section. It is often found convenient to incorporate part of the operative provisions of an Act in the form of a Schedule. The Schedule is often used to hive off provisions which are too long or detailed to be put in the body of the Act. (Statutory Interpretation, Second Edition, F. A. R. Bennion). To simplify the presentation of statutes it is the practice for their subject-matter to be divided wherever appropriate between sections and Schedules, the former setting out matters of principle, and introducing the latter and the latter containing all matters of detail. This is purely a matter of arrangement and a Schedule is as much a part of the statute and as much an enactment as is the section by which it is introduced. (Halsbury's Law of England 4th Edition, Volume 44, para 822). There is a presumption regarding the constitutionality of a statutory provision. This is purely a matter of arrangement and a Schedule is as much a part of the statute and as much an enactment as is the section by which it is introduced. (Halsbury's Law of England 4th Edition, Volume 44, para 822). There is a presumption regarding the constitutionality of a statutory provision. (People's Union of Civil Liberties v. Union of India [2004] 2 SCC 476, R. K. Garg v. Union of India [1981] 4 SCC 675, Bhuri Nath v. State of J & K [1997] 2 SCC 745 and Welfare Association, A.R.P. v. Ranjit P. Gohil [2003] 9 SCC 358.) In the absence of a specific challenge to the vires of a provision, courts would not, ordinarily, adjudicate on such questions. Section 22(1) of the APGST Act enables a dealer or the authority to prefer a revision to the High Court on the ground that the Appellate Tribunal has either decided erroneously, or failed to decide, any question of law. The vires of entries in the Schedule to the Act, cannot be examined in revision proceedings, under section 22 of the APGST Act. We see no reason, therefore, to interfere with the order under revision. The tax revision cases fail and are, accordingly, dismissed.