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State of Odisha Versus M/s. Auro Plastics, Bhubaneswar

2015 (9) TMI 1456 - ORISSA HIGH COURT

Rate of tax on manufacturing and sale of Linear Low Density Polythene Bags (L.L.D.P.E) - The case of the opposite party is that they are manufacturers of LLDPE bags. According to them H.D.P.E. and LLDPE bags are the same. They are used as packing materials. It is the further case of the opposite party that during the relevant year such commodity being under entry No.129 of the Schedule of the Sales Tax Act is not assessable @ 8% on sales under Entry No.136 but at the rate of 4% on sales. - H .....

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f assessee. - STREV NO. 71 OF 2014 - Dated:- 25-9-2015 - Mr. Indrajit Mohanty and D.P. Choudhury, JJ. For Petitioner - Mr. M.S. Raman (S.S.C.)(C.T) For Opp. Parties - None JUDGMENT The petitioner assails the impugned order dtd.12.11.2013 U/s.24 of the Orissa Sales Tax Act (hereinafter called the Act) passed by Orissa Sales Tax Tribunal, Cuttack in S.A. No.706 of 2008-09. 2. Succinctly, the case of the petitioner is that the opposite party being a registered dealer carries on business in manufact .....

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her alleged by the petitioner that opposite party preferred 1st Appeal before the Assistant Commissioner of Sales Tax (Appeal) (in short A.C.S.T). The First Appellate Authority confirmed the Assessment Order ex-parte on 25.11.2008. Against the order of the First Appellate Authority the opposite party filed Second Appeal before the Orissa Sales Tax Tribunal. The learned Tribunal did not interpret the entry in question and wrongly decided by setting aside the order of the Assessing Authority. It i .....

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d other plastic goods except those specified elsewhere in the notification. It is the case of the petitioner that since L.L.D.P.E. the manufactured commodity of the petitioner is a component of polythene, is covered by entry No.136 but not entry No.129 of sale tax list C . So petitioner alleges that the commodity of the opposite party is assessable to 8% of Sales Tax list but not to 4% of sales tax list for which the opposite party is liable to pay the sales tax @ 8% on sales. It is also the cas .....

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the Schedule of the Sales Tax Act is not assessable @ 8% on sales under Entry No.136 but at the rate of 4% on sales. For this the Assessing Authority should have made assessment on the goods by making it taxable at the rate of 4% under Entry No.129. Opposite party submits that order of the Tribunal being legal, proper and correct should be upheld. SUBMISSIONS:- 6. Learned Senior Standing Counsel for the Revenue submitted that the interpretation made by the learned Tribunal is beyond the purview .....

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hat is to say in entry No.129 should be interpreted to the goods given in list but not otherwise. According to him, entry No.129 does not contain LLDPE bag although other kinds of bags are included. Learned Tribunal has erred in law by not accepting the entry No.136 and misdirected itself by remanding the matter to the learned Assessing Authority for fresh opinion to be obtained with regard to correct identification of the commodity manufactured by the opposite party. Learned Tribunal has failed .....

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pposite party. However, it was submitted on behalf of the opposite party before the Learned Tribunal as appearing from the impugned order that neither the Assessing Authority nor the First Appellant Authority have got expertise in recognizing the commodity in question. Moreover, LLDPE bag is similar to H.D.P.E. bag under Entry No.129 of the taxable list for which it is taxable at the rate of 4% of gross sales and under no circumstances LLDPE bag is coming under the taxable list under entry No.13 .....

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bags and sheets. After examining the books of account the Assessing Authority revealed that the opposite party has collected Orissa Sales Tax @ 4% on the sale price of L.L.D.P.E. bags produced out of raw materials, i.e., L.D.P.E. and L.L.D.P.E. granules. Learned Assessing Authority observed that the words, that is to say used in Entry No.129 confined to only gunny bags, H.D.P.E. bags, charade bags, tin containers and glass bottles but not the L.L.D.P.E. materials. At the same time he observed t .....

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son why the entry No.136 will be accepted, learned First Appellate Authority gave decision that the commodity of the O.P. is coming under Entry No.136. 11. Learned Tribunal framed the issue whether the packing materials as notified in Entry 129 the H.D.P.E. bags include L.L.D.P.E. bags; It noted that L.L.D.P.E. and H.D.P.E. may belong to same family for which he set aside the order of both the authorities below and remanded the case to the Assessing Authority for fresh assessment after collectin .....

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. Similarly Entry No.136 therein speaks that Polythene, polypropylene (P.P.) High density polyethylene (H.D.P.E.) woven fabrics, woven sacks, PVC products and other plastic goods except those specified elsewhere in the notification. It thus does not include L.L.D.P.E. and it has to be interpreted properly so as to bring the same under either of the category. At the same time the Assessing Authority and First Appellate Authority have not assigned any reason as to why L.L.D.P.E. bags and sheets wi .....

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is of the expert opinion obtained. Learned Tribunal should have applied judicial mind and given the decision instead of remanding the matter for de novo assessment. 13. It is the contention of learned Senior Standing Counsel for Revenue that the issue has already been decided by this Court in the decision reported in Soosree Plastic Industry (P) Ltd. Vrs. Union of India, OJC 2755 of 1988, disposed of on 28.8.1992 where this Court held that H.D.P.E. woven sacks/ fabrics are plastic goods, the ord .....

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6 during the relevant period and the commodity of the opposite party being under the family of plastic goods should be assessable to such entry No.136. On the other hand, learned counsel for opposite party submitted that the plastic goods as enumerated in Entry No.136 relates to High Density Polyethylene (H.D.P.E.) woven fabric and woven sacks but not to the materials of opposite party. From the Assessment Order it appears that the commodity in question is L.L.D.P.E. bags produced out of raw mat .....

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used but the entry No.136 contains H.D.P.E. woven fabrics and H.D.P.E. woven sacks. But the entry No.129 contains H.D.P.E. bags. So, definitely there is difference between bags on one hand and woven fabrics and woven sacks on the other. Even if the L.L.D.P.E. is not included in any of the entries but the category or container prepared out of such materials is the crucial question to decide the issue in question. As per Webster s Encyclopedic Unabridged Dictionary bag means container or receptacl .....

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e books of accounts under Assessing Order revealed that the dealer had collected Orissa Sales Tax by selling the L.L.D.P.E. bags being produced from raw materials L.D.P.E. and L.L.D.P.E granules. The fact remains apparently that High density polyethylene (H.D.P.E.) bag is in the Entry No.129 whereas H.D.P.E. woven fabrics and H.D.P.E. woven sacks are purportedly under Entry No.136. On analogy, it is considered that Polyethylene is family in both entry Nos.129 and 136 of Sales Tax List C under Ch .....

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6 of the taxable list C under the Act. 15. Assuming that the L.L.D.P.E. is not covered under Entry No.129 and 136 creating a doubt in the mind of the Assessing Authority but the fact remains that L.L.D.P.E. bag is nothing but Linear Low Density Polyethylene (L.L.D.P.E.) bags sold by the opposite party. It is settled by catena of decisions of Hon ble Apex Court that in interpreting a fiscal statute the Court can not proceed to make good the deficiencies, if there be any, in the statute. It shall .....

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able to the assessee must be accepted, while construing the provisions of a taxing statute. (See 77 I.T.R. 518 (SC) C.I.T. Vs. Kulu Valley Transport Co. Pvt. Limited and 1999 (1) Supp. SCR 192 Mysore Minerals Ltd. Vs. Commissioner of Income Tax ). 16. Thus, It is well settled law that a commodity not being coming under any of the entry but creating a doubt in the mind about rate of tax, as to its entry under the Act, the benefit of such doubt will go to the dealer by assessing the same under the .....

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