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1963 (8) TMI 38 - HC - VAT and Sales Tax
Issues:
1. Interpretation of whether hosiery goods fall under the category of "ready-made garments" as per the Madhya Pradesh General Sales Tax Act, 1958. Analysis: The case involved a reference under section 44(1) of the Act regarding the classification of hosiery goods under the sales tax schedule. The primary question was whether hosiery goods should be taxed at the rate applicable to "ready-made garments" under entry No. 2 of Part IV of Schedule II or under a different category as per entry No. 1 of Part VI of the Schedule. The dispute arose from the assessment of sales tax on hosiery sold by M/s. Mahajan Brothers of Indore for the period from April 1959 to March 1960. The Assistant Sales Tax Officer and the Appellate Assistant Commissioner initially assessed the goods at four percent under entry No. 1 of Part VI. However, the Board of Revenue considered hosiery goods as "ready-made garments" and directed reassessment at a lower rate of one percent under entry No. 2 of Part IV. The central issue revolved around the interpretation of the terms "ready-made garments" and "hosiery goods" as used in the Act. The Court noted that the Act did not provide specific definitions for these terms, requiring an understanding based on common commercial usage and popular meaning. Referring to the Supreme Court's guidance in Ramavatar v. Assistant Sales Tax Officer, the Court emphasized interpreting terms in their ordinary sense as understood in common parlance. The Court analyzed the dictionary definitions of "garment" and "hosiery" to distinguish between the two categories. It highlighted that while hosiery goods are meant for wearing, they are distinct from garments in terms of material and usage. The Court also considered a decision by the Rajasthan High Court regarding the interpretation of "garment" in a sales tax context. However, it disagreed with the broader interpretation given in that case, emphasizing that the term "garment" typically refers to outer clothing that is displayed. The Court further addressed an amendment to the Act that specifically excluded "ready-made hosiery or knitted garments," indicating that such goods were not encompassed within the term "ready-made garments" prior to the amendment. The Court rejected the argument that this amendment implied a broader definition, clarifying that it was a precautionary measure to avoid ambiguity. In conclusion, the Court held that hosiery goods do not qualify as "ready-made garments" under entry No. 2 of Part IV of the Schedule but should be taxed at four percent under entry No. 1 of Part VI. The judgment underscored the distinction between hosiery goods and traditional garments based on material, usage, and common understanding. The Court's decision was based on the plain and natural meaning of the terms in the context of the Act, emphasizing the importance of interpreting statutory provisions in line with common language usage.
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