1971 (7) TMI 141 - HC - VAT and Sales Tax

Summary

Issues: Assessment of sales tax on turnover of kesophane cellulose film under item 42 of the First Schedule of Kerala General Sales Tax Act, 1963.

Analysis:
The petitioner was assessed for sales tax on the turnover of kesophane cellulose film at 5 per cent under item 42 of the First Schedule of the Kerala General Sales Tax Act, 1963. The contention was whether kesophane cellulose film falls under the category of "paper" as per the statutory provision. The assessing authorities and the Tribunal considered kesophane cellulose film as falling within the definition of "paper" under entry 42 of the First Schedule, chargeable at 5 per cent at the point of first sale. The key issue revolved around the interpretation of the term "paper" in the statutory context.

The term "paper" was not defined in the Act, necessitating an analysis based on its popular and commercial sense within the relevant context. Various dictionaries and sources were referred to in order to understand the general meaning of the term "paper." Cellophane, being the material in question, was described as a transparent cellulose sheet used for wrapping, made through a specific chemical process. The contention was whether cellophane, although derived from cellulose like paper, could be considered as falling within the ambit of "paper" as per the statutory provision.

Legal precedents and principles of interpretation were cited to guide the analysis of whether cellophane could be equated with paper for the purposes of taxation. The judgment referred to cases where the popular and commercial understanding of terms played a crucial role in interpreting statutory provisions. The court emphasized the importance of considering how the term "paper" would be understood by traders and consumers in ordinary commerce, rather than relying on technical or scientific definitions.

Ultimately, the court held that cellophane cannot be considered as "paper" falling within entry 42 of the First Schedule. The assessment of sales tax on the turnover of cellophane sheet at 5 per cent was set aside, directing the authorities to reassess the same in accordance with the relevant provision of the Act. The revision petition was allowed, without costs, in favor of the petitioner.