1963 (3) TMI 39 - HC - VAT and Sales Tax

Summary

Issues:
Determining whether the goods sold by the applicants constituted "textile fabrics" under entry 79 of the Bombay Sales Tax Act, 1953.

Analysis:
The applicants sold "machine cloth" or "silk bolting cloth" and contended that their goods did not fall under entry 79 but should be taxed under the residuary entry, which was entry No. 80. They argued that entry 79 was limited to specific textile fabrics like saris, dhottes, sheets, chaddars, blankets, and similar articles. However, the Sales Tax Authorities held that the cloth sold by the applicants fell under "textile fabrics" and should be taxed under entry 79 as it encompassed textile fabrics of any kind. The Sales Tax Tribunal also rejected the argument that the scope of "textile fabrics" in entry 79 was limited by the specific items listed in the entry.

In the revision before the Sales Tax Tribunal, the applicants further argued that the expression "textile fabrics" in entry 79 should be interpreted restrictively based on the items listed in the inclusive part of the entry. They contended that common understanding of "textile fabrics" would not include the type of cloth they sold. However, the Tribunal, citing a Supreme Court decision, emphasized that inclusive definitions are meant to extend the scope and should not be restricted. The argument that the inclusive part of the entry limited the meaning of "textile fabrics" was rejected.

The applicants also tried to argue that common parlance understanding of "textile fabrics" would not cover the cloth they sold. They cited a letter from the manufacturers stating that the cloth was treated differently for customs purposes in certain countries. However, the Court found this argument unsubstantiated as the letter did not provide enough evidence to show that the cloth did not fall under the common understanding of textile fabrics. The Court concluded that despite the wide scope of "textile fabrics of any kind" in entry 79, the specific items listed did not restrict its interpretation. Therefore, the goods sold by the applicants were deemed to fall under entry 79 and were taxable accordingly.

In conclusion, the Court answered the reference question in the affirmative, stating that the goods sold by the applicants constituted "textile fabrics" under entry 79. The applicants were directed to pay the costs of the department.