TMI Blog2008 (7) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favour of the assessee and against the Revenue. - - - - - Dated:- 2-7-2008 - DATTU H.L. C.J. AND SANKARAN K.T. , JJ. ORDER:- The order of the court was made by H.L. DATTU C.J. The only question that arises for consideration and decision in these revision petitions is, whether craft paper falls under entry 94(i) or 94(ii) of the First Schedule to the Kerala General Sales Tax Act, 1963 and the rate of tax payable thereon. The assessing authority for the assessment years in question has classified the commodity in question as a paper product coming under entry 94(ii) of the First Schedule to the KGST Act on the sole ground that paper and craft paper are goods of different identity and has different use. The first appellate authority in the appeals filed by the assessee has held that craft paper requires to be classified as an item falling under entry 94(i) of the First Schedule, treating it as paper, relying on the decision of the Supreme Court in the case of Khatema Fibres Ltd. v. State of Uttar Pradesh reported in [2004] 135 STC 193; [2001] 9 KTR 349. In the second appeal filed by the Revenue, the Appellate Tribunal has taken the view, that, since c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities are justified in treating craft paper manufactured and sold by the appellants as one coming under entry 94(ii) of the First Schedule taxable at five per cent. So, this contention is found against the appellants. The appeals for the assessment years 1994-95, 1995-96, 1997-98 and 1998-99 were considered by the Tribunal in T. A. No. 11 of 2003 and connected cases, which were disposed of by a common order dated February 15, 2005, wherein the Tribunal has followed the earlier decision in T.A. No. 44 of 2002 dated February 1, 2003 relating to assessing year 1996-97 and held as follows: The facts in the two cases are identical. In the above-referred appeal, the assessing authority as well as the first appellate authority found the rate of tax on craft paper at five per cent as coming under item 94(ii) of the First Schedule. The finding was sustained in second appeal by this Tribunal. We see no reasons to deviate from the above finding of the Tribunal. In that view of the matter, we find that the order of the first appellate authority is not legally sustainable. We hold that the assessing authority was justified in treating craft paper manufactured by the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a product, it must be something that is brought from either naturally or as a result of effort and work. Apart from the dictionary meaning, even as understood in common parlance, it could only mean, a commodity or a thing which has come into existence either naturally or as a result of effort and work. The expression paper products merely means anything produced or obtained from paper, whether such derivation is by a simple physical process or by a chemical reaction would seem to make no difference to the end-produce. Alternatively, paper product means an article different from paper and something produced with or out of paper. In the instant case, the assessing authority has assessed the dealer for the relevant assessment years in respect of sale of craft paper treating it as paper product falling under item No. 94(ii) of the First Schedule to the KGST Act taxable at five per cent. The Tribunal applying user-test theory has concluded, that, since the assessee is engaged in the production and sales of craft paper from waste paper and product is mainly sold to carton manufacturers, the craft paper requires to be classified as paper product and is exigible to tax at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Allahabad High Court, the assessee did not succeed in its claim either before the authorities under the Act or before the High Court. In the appeal filed before the apex court, while remanding the matter for fresh consideration, the court has observed that the word paper in exclusionary clause of notification dated December 31, 1976 issued under the Uttar Pradesh Trade Tax Act, 1948 includes craft paper irrespective of the fact that it is also used for wrapping/packing purposes. The observation made by the apex court in this regard is as under (at page 195 of STC): . . . The word 'paper' in the exclusionary clause of the notification dated December 31, 1976 is used in its generic sense and the term as understood in the common parlance and commercial sense includes craft paper manufactured by the appellants. 'Paper' as understood in common parlance and commercial sense, can be used for writing, printing, packing and wrapping purposes, and therefore, 'craft paper' does not cease to be 'paper' merely because it is also used for packing purposes. Indeed, any type of paper can be used for the purpose of packing and packing material as us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been an omission to enact it. In a court of law of equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication. In a taxing statute, words which are not technical expressions or words of art, but words of everyday use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance, i.e., that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it. Such words must be understood in their popular sense . The particular terms used by the Legislature in the denomination of articles are to be understood according to the common commercial understanding of those terms used and not in their scientific and technical sense, for the Legislature does not suppose our merchants to be naturalists or geologists or botanists. (See Mukesh Kumar Aggarwal and Co. v. State of Madhya Pradesh [1988] 68 STC 324 (SC). In the instant case, the Appellate Tribunal has proceeded to determine the nature of the goods by the test of use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the scientific or technical meaning of such term. To consider whether an item falls within the meaning of an entry of a Schedule to an Act, it has to be seen whether its qualities would fall in any one of the entries or in any of the items included in that entry. The question, therefore, is, whether craft paper is paper simple or a paper product, since the assessee primarily sells its products to carton manufacturers. Before we proceed to answer the issue, in our view, we have to find out the intention of the framers of the Schedule in making the entry. The best guide to ascertain their intention is, the language employed by them. The Legislature has carved out two sub-entries in item No. 94 of the First Schedule to the KGST Act. Sub-entry (i) of item 94 speaks of paper . The paper as understood in common or commercial parlance includes craft paper also. Sub-entry (ii) of item 94 speaks of newsprint, cardboard, paper products, notebooks and printed materials including greeting cards. In the common parlance, newsprint, cardboard are also paper, but the framers of the entry have separately placed them only to indicate, even though in the common parlance or trade circles they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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