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2016 (9) TMI 1083 - PUNJAB AND HARYANA HIGH COURT

2016 (9) TMI 1083 - PUNJAB AND HARYANA HIGH COURT - TMI - Taxability - classification of goods - rexine cloth - Entry 51 of Schedule B of the Act - Entry 54 of Schedule 'B' of the Act - clarification sought from the Financial Commissioner and Principal Secretary to the Government of Haryana, Department of Excise and Taxation under Section 56(3) of the Haryana Value Added Tax Act, 2003 - Whether the product being manufactured by the applicant which is technically known as “Coated Fabric” and in c .....

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rm 'textile'. - The process for manufacture of coated fabric by the appellant is noticed in the order of the Tribunal in the following terms: (i) PVC resin paste is prepared which is coated on a paper which is called 'release paper'. (ii) A cotton fabric is pasted on the release paper. (iii) This is passed through a heated oven and the resin paste due to the process of heating is coated on the textile fabric. (iv) The release paper is removed and the final product so manufactured is called ' .....

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otton fabrics. The condition that additional excise duty in lieu of sales tax is leviable is applicable only on the products mentioned in second part. The type of goods mentioned in two parts are altogether different. The same are separated by “colon”. - whether the condition regarding leviability of additional excise duty in lieu of sales tax is applicable? - Held that: - Once a punctuation mark has a specific meaning, it has to be given effect to. It cannot be treated as otiose. Meaning th .....

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n case, there is a break in sentence, then certainly the condition of levy of additional excise duty in lieu of sales tax will not be applicable to the goods mentioned in the first part thereof - As leather cloth, which is manufactured by the appellant, is specifically mentioned in Entry 54 of the Act and that no condition of levy of additional excise duty in lieu of sales tax is applicable thereon, the appellant will be entitled to benefits arising therefrom. - If a particular goods fall in .....

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eral, Haryana Rajesh Bindal J. 1. This order will dispose of a bunch of appeals bearing VATAP Nos. 76 of 2012, 48, 50, 51, 53 and 54 of 2013, involving identical issue. 2. The facts have been taken from VATAP No. 48 of 2013. 3. The assessee is in appeal against the order dated 3.1.2013 passed by Full Bench of Haryana Tax Tribunal (for short, 'the Tribunal') in Sales Tax Appeal Nos. 70 and 107 of 2012-13. 4. The appeal was admitted for determination of the following substantial questions .....

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s justified in concluding that entry 54 is one continuous entry merely because the said issue was never raised by anyone earlier? (iii) Whether an assessee can claim exemption under another entry (entry 51) when exemption of VAT is denied under one entry of Schedule B to the Haryana VAT Act, 2003, especially when the assessee's product clearly and undisputedly falls within the ambit of this another Entry as well ? (iv) Whether exempting Entry 54 of the Schedule B can be interpreted like taxi .....

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nancial Commissioner and Principal Secretary to the Government of Haryana, Department of Excise and Taxation under Section 56(3) of the Haryana Value Added Tax Act, 2003 (for short, 'the Act'), on the issue as to whether the product being manufactured by the appellant is covered under Entry 51 of Schedule B of the Act. The Financial Commissioner, vide memo dated 28.6.2012, opined that the product being manufactured by the appellant falls in Entry 54 and not in Entry 51 of Schedule 'B .....

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by the Financial Commissioner or the Tribunal. In fact, the minority view expressed by the Tribunal had rightly appreciated the issue. While deciding the issue raised by the appellant, the Financial Commissioner had wrongly referred to the earlier clarification dated 17.11.2011 given in the case of M/s H.R. Polycoats Pvt. Ltd., Bahadurgarh, where the issue raised was only regarding the rate of tax and not as to whether PVC leather cloth/coated fabric/textile fabric, generally known as PVC leath .....

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no bar in claiming benefit under different entries, if the product manufactured by an assessee is covered under two entries. Even if, as the Tribunal opined, the product of the appellant falls in Entry 54 of Schedule 'B' of the Act, but still the same is in two parts. The condition of leviability of additional excise duty in lieu of sales tax is not applicable on the product being manufactured by the appellant. The observation by the Tribunal that clarification was earlier sought by M/s .....

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on was sought, was the rate of tax. The minority view of the Tribunal had rightly opined that the item being manufactured by the appellant falls in Entry 51 of Schedule 'B' of the Act and not in its exception clause, hence, entitled to exemption from payment of tax. 8. First raising an argument on the issue whether the goods manufactured by the appellant is a textile, the court was apprised of the process of manufacturing. It was submitted that cotton textile is either coated with PVC/PU .....

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paper and then the same is placed on the textile. It is a continuous process. Final product is ready after it is passed through heated chamber. Different processes are followed as per the requirement, as in the first process some of the properties of PVC/PU when poured on the cotton textile in liquid position, are transferred to the textile, hence, makes it harder, whereas in the second process, the final product remains soft. In the process of lamination, a ready film of PVC/PU is pasted on the .....

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men's Wear , 1915 Fairchild Publishing Company, New York. Leather Cloth has been defined to mean 1. a heavy woolen fabric made in England; 2. stout, coarse cotton fabric, covered with a varnish layer, grained and finished to resemble leather. With coating, the textile does not change its character, rather, it remains a textile. The coating merely gives it more strength or makes it water proof. Even if it may become a different marketable commodity. Entry 51 in Schedule 'B' of the Act .....

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. A scheme prepared by the Government of India, namely, Benefits available under Technology Upgradation Fund Scheme was referred to, where it is provided that manufacturing chain in textile industry starts right from ginning of cotton till the clothing stage. The appellant, being eligible, got benefit under the scheme. The definition of cotton fabric , as provided under Section 14 (ii-a) of the Central Sales Tax Act, 1956 was referred to, which provides that cotton fabric is what is covered unde .....

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oms Act, 1962 and Central Excise Tariff Act, 1985 were referred to by Hon'ble the Supreme Court in M/s Porritts & Spencer (Asia) Ltd. v. State of Haryana, 1978 (42) STC 433, wherein dryer felt was opined to be textile. 12. The judgment of Allahabad High Court in Commissioner, Sales Tax, U. P. , Lucknow v. Laxmi Leather Cloth Industries Pvt. Ltd., 2008 (11) VST 79 was referred to, where the issue under consideration was as to whether leather cloth being textile is exempted from taxation. .....

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383 (SC) was cited where rayon tyre cord fabric was held to be textile. The judgment of Hon'ble the Supreme Court in Filterco and another v. Commissioner of Sales Tax, Madhya Pradesh and another, 1986(24) ELT 180 was relied upon, where compressed woollen felt, being manufactured by the assessee, was held to be cloth, hence, textile. 13. As regards the contention that the product being manufactured by the appellant falls in Entry 54 of Schedule 'B' of the Act, but still exempted from .....

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le only on the products mentioned in second part. The type of goods mentioned in two parts are altogether different. The same are separated by colon , hence have to be given meaning accordingly. 14. The definition of colon as contained in Collins English Gem Dictionary was referred to. It means break in sentence. In Oxford Language Reference, colon was referred to state that it can be used to separate two sharply contrasting and parallel statements. In 1911 Classic Encyclopedia, colon has been d .....

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District Engineer and another v. Pramesh Agrawal and another, 1997(1) MPLJ 173 and a Full Bench judgment of this Court in Rajinder Singh etc. v. Kultar Singh and others, AIR 1980 P&H 1 on the same issue. If both the parts of Entry 54 of the Act are read together and the condition regarding leviability of additional duty of excise in lieu of sales tax is held to be applicable on both of them, that means the colon provided in the entry is otiose. It is settled that every word and punctuation m .....

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t Co. v. The Drug Controller General of India and another, 184(2011) DLT 343. 15. Another contention of learned counsel for the appellant is that if a product falls in two or three different entries, the entry giving maximum benefit to an assessee can be invoked by him. In case, an assessee does not get benefit under a specific entry, on account of non-fulfilment of conditions laid down therein, if the benefit is admissible in general entry, the same can be claimed. In support of the plea relian .....

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would get benefit of exemption. Entry 51 of Schedule 'B' of the Act is in two parts was opined by Full Bench of the Tribunal in Sidhart Overseas, Panipat v. State of Haryana, (2010) 35 PHT 512. 17. The judgment in Excise and Taxation Commissioner, Haryana v. Orient Electrical Insulation Private Ltd., (2006) 145 STC 471 relied upon by the Tribunal to opine against the appellant is distinguishable on facts as the product being dealt with therein was sleevings. Here it is leather cloth, wh .....

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by the appellant is leather cloth/PVC cloth. Different products have been mentioned in different Entries from Sr. No. 51 to 54 of the Act in Schedule 'B' of the Act. If a product falls specifically in one entry only that entry, will have to be seen for the purpose of grant of exemption and none else. The product being manufactured by the appellant falls in Entry 54 of Schedule 'B' of the Act. Once the product of the appellant falls in Entry 54 of Schedule 'B' of the Act, .....

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duty was abolished w.e.f. 8.4.2011. The dispute regarding taxation started thereafter. In support of the plea, reliance was placed upon State of Maharashtra v. M/s Bradma of India Ltd., (2005) 2 SCC 669; Commissioner of Central Excise, Nagpur v. Shree Baidyanath Ayurved Bhavan Limited, (2009) 12 SCC 419; and Commercial Taxes Officer v. Jalani Enterprises, (2011) 4 SCC 386. 19. As far as the judgment of Hon'ble the Supreme Court in Porritts & Spencer (Asia) Ltd.'s case (supra) is conc .....

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tts & Spencer (Asia) Ltd.'s case (supra) was considered. If the interpretation, as is sought to be given by the appellant, is accepted, that would defeat the legislative intent. 20. It was further submitted that the condition of levy of additional excise duty in lieu of sales tax is applicable on all the goods mentioned in Entry 54 of Schedule 'B' of the Act and is not limited to the second part thereof. It is evident from the different language used in Entries 51 and 54 of Sched .....

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r determination of character of any good for the purpose of taxation is common parlance test, namely, how the people in trade and market understand the same and not with its technical meaning, but the appellant has sought to argue with reference to technical meaning of the term textile , whereas in market, the product being manufactured by the appellant, is not known as textile, rather, leather cloth/PVC cloth. 21. Heard learned counsel for the parties and perused the paper book. Discussions 22. .....

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ted Fabric and in common parlance known as Rexin falling under Central Excise Tariff Heading 5903 is covered under entry 51 of Schedule B appended to the Haryana Value Added Tax Act, 2003. 23. In our opinion, the issues, which arise for consideration by this court are: (1) Whether the product being manufactured by the applicant which is technically known as Coated Fabric and in common parlance known as leather cloth/ Rexin falling under Central Excise Tariff Heading 5903 is covered under Entry 5 .....

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nt. The product manufactured is described in heading 5903 of the Central Excise Tariff Act, 1985 for the purpose of levy of excise duty. 26. Entries 18 to 21 of Schedule B of the Act as existing after the amendment, as substituted vide notification dated 17.4.2003 and Entries 51 to 54 of Schedule B of the Act, as existing after the amendment, as substituted vide notification dated 30.6.2005, are reproduced hereunder: Entries 18 to 21 as substituted vide notification dated 17.4.2003 Sr. No. Descr .....

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s levied. 20. Such varieties of canvas cloth tarpaulines and similar other products manufactured with cloth as base as per manufactured in textile mills, powerloom factories and processing factories but not including transmission belts. On which additional Excise Duty in lieu of sales tax is levied 21. Leather cloth and inferior or imitation leather cloth ordinarily used in book binding: rubber used tissue or synthetic water tissue or synthetic water-proof fabrics whether single textured or doub .....

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ot levied. 52. All varieties of textiles covered by item 51 on which knitting and embroidery work has been done provided additional Excise Duty in lieu of sales tax is levied on them. 53. Such varieties of canvas cloth tarpaulines and similar other products manufactured with cloth as base as are manufactured in textile mills, powerloom factories and processing factories (but not including transmission belts) provided additional Excise Duty in lieu of sales tax is levied on them. 54. Leather clot .....

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s held by the Full Bench of the Tribunal in Sidhart Overseas's case (supra), which was accepted by the State. This fact is not even disputed by learned counsel for the State before this court. The Full Bench of the Tribunal in the aforesaid order opined as under: 38......Therefore, we set aside the impugned order and on true and correct construction of the entry hold that - (i) All varieties of cotton, woollen or silken textiles including rayon, artificial silk or nylon are part of the entry .....

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as leather cloth/ rexin is covered under Entry 54 of Schedule 'B' of the Act. The relevant parts thereof are extracted below: On a plain reading of the above entries it is clear that the product in question i.e. PVC coated fabric or rexin does not fall in Entry 52 or 53. Further Entry 54 includes leather cloth, synthetic water proof fabrics whether single textured or double textured and book binding cotton fabrics. Under this entry these products are tax exempted provided AED in lieu of .....

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Textile falling under Entry 54 of Schedule B is taxable under the Act. Thus presently the items falling under Entry 54 are taxable under the Act. On a similar issue while issuing clarification to M/s H. R. Polycot Private Limited, Bahadurgarh, it is clearly opined that PVC coated fabric or commonly also known as rexin cloth falling under Central Excise Tariff Heading 5903 is covered under Entry 54 of the Schedule B of the Act and thus liable to tax. The PVC coated fabric stated to be manufactur .....

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taken by him. The decision of the Hon'ble Apex Court taken support of by the applicant does not help him in his case as there is specific and clear Entry 54 covering the product manufactured by the applicant and hence the applicant's contention that the product falls in Entry 51 is not correct and devoid of any merit. In the light of the above, it is clarified that PVC coated fabric commonly known as rexin is taxable under the Haryana Value Added Tax Act, 2003 being covered Entry No. 54 .....

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view of the Financial Commissioner was endorsed by majority opinion of the Tribunal. The dissenting view was recorded by two out of five members of the Tribunal. The opinion expressed by them was that PU/PVC coated fabric manufactured by the appellant is exempt being part of Entry 51 of Schedule 'B' of the Act. Entry 51 of Schedule 'B' the Act is an independent entry and not dependent on Entry 54 of Schedule 'B' of the Act or any other entry in the Schedule. 30. In M/s P .....

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hat dryer felts are textile, as is commonly known. Relevant part therefrom is extracted below: ... There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be 'textiles& .....

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erse uses and it is not the use which determines its character as textile. ...... It is true that our minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard 'dryer felts' as 'textiles'. But it must be remembered that the concept of 'textiles' is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds .....

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ule that there is a reference to textile fabrics and textile articles, of a kind commonly used in machinery or plant' and clause (4) of that chapter provides that this expression shall be taken to apply, inter alia, to woven textile felts.... of a kind commonly used in paper-making or other machinery.... . This reference in a statute which is intended to apply to imports made by the trading community clearly shows that 'dryer felts' which are 'woven textile felts.... of a kind co .....

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cord fabric' was rayon fabric covered by Item 18 of the Schedule providing for exempted goods under Rajasthan Sales Tax Act, 1954. The opinion was in favour of the assessee. 32. A similar issue came up for consideration before Allahabad High Court in Laxmi Leather Cloth Industries Pvt. Ltd.'s case (supra), where the issue was as to whether leather cloth is textile or not, hence, exempted from payment of tax. Allahabad High Court in the aforesaid judgment, besides relying upon the judgme .....

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0) UPTC 912, where fused collars and shoulder straps were held to be cotton fabric, opined that leather cloth is a cotton coated fabric. It is one of the varieties of cotton fabric, hence, falls under 'textile'. 33. The judgment of this court in Orient Electrical Insulation Private Ltd.'s case (supra) is distinguishable for the reason that the issue under consideration in that judgment was whether sleevings, which were in circular form, manufactured by the assessee therein, which is .....

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ich is called 'release paper'. (ii) A cotton fabric is pasted on the release paper. (iii) This is passed through a heated oven and the resin paste due to the process of heating is coated on the textile fabric. (iv) The release paper is removed and the final product so manufactured is called 'PVC Coated Fabric'. 35. If considered in the light of the aforesaid judgments of Hon'ble the Supreme Court and Allahabad High Court, as referred to above, it can be opined that the produc .....

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d in paragraph No.26 above. 37. The contention raised by learned counsel for the appellant was that the Entry is in two parts divided by a 'colon'. The condition regarding levy of additional excise duty in lieu of sales tax is applicable for the goods mentioned in second part. The effect of colon, the punctuation mark used in the Entry is to be examined. The stand of the department was that the goods manufactured by the appellant being leather cloth fall in Entry 54 of Schedule 'B .....

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on 17.4.2003, and as substituted vide notification dated 30.6.2005. A perusal of Entries 18 to 21 in notification dated 17.4.2003, which are similar with reference to the goods mentioned in Entries 51 to 54 of the Act, as substituted in Schedule B, vide notification dated 30.6.2005, shows that these had been mentioned in different manner. In the notification dated 17.4.2003, there were three columns, namely, Sr. No., description of goods and third being exceptions and conditions , whereas in the .....

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required was mentioned in the column of description of goods itself. If we see Entry 21 of Schedule 'B' of the Act in the notification dated 17.4.2003, while mentioning all the goods in the column of description of goods, in the column of exceptions and conditions, it was mentioned that on which additional excise duty in lieu of sales tax is levied . This would necessarily mean that condition of levy of additional excise duty in lieu of sales tax was applicable on all the goods mentioned .....

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ds mentioned in Entries 52 and 53 of Schedule 'B' of the Act in the notification dated 30.6.2005, comparable to Entries 19 to 21 in the notification dated 17.4.2003. The language as used in Entries 52 and 53 of Schedule 'B' of the Act does not make any change in intent, however, Entry 54 of Schedule 'B' of the Act needs to be analysed with reference to the words used therein and the punctuation mark. 40. Much stress was laid at the time of arguments by learned counsel for .....

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indicate a distinct clause of a sentence [The Chambers Dictionary 12th Edition]. He also referred to Full Bench judgment of this Court in Rajinder Singh's case (supra), wherein while considering Entry 3 of List II of the Constitution of India, this Court opined as under: List II-State List 3. Administration of justice; constitution and organisation of all Courts, except the Supreme Court and the High Court; officers and servants of the High Court; procedure in rent and revenue courts; fees .....

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opriate, then the entry may read 'Administration of Justice constitution and organisation of all Courts, except the Supreme Court and the High Court . Apparently, this would appear not only to be an absurd reading but also would make the language both faulty and ungrammatical. Hence, I find no escape from the conclusion that 'Administration of Justice' occurring in entry 3 is a distinct topic. 41. The aforesaid judgment was referred with approval by a Constitution Bench of Hon'bl .....

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under consideration. The provision reads as under: (e) to restrain any auction intended to be made or, to restrain the effect of any auction made by the Government; or to stay the proceedings for the recovery of any dues recoverable as land revenue unless adequate security is furnished. 43. It was opined that use of punctuation mark semi-colon in the later part of the provision has the effect of making disjunctive with the earlier part, hence, the condition as laid down was applicable only for .....

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ement of furnishing of adequate security relates to the third part. In view of this, the argument of the learned counsel for the appellant is sans substance and is rejected. 44. Once a punctuation mark has a specific meaning, it has to be given effect to. It cannot be treated as otiose. Meaning thereby, there is a break in sentence at that stage. It is also evident from a plain reading of the entry itself, which uses the word 'and' in between leather cloth & inferior or imitation lea .....

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t part thereof. The entry can be read as leather cloth and inferior or imitation leather cloth ordinarily used in book binding and rubber used tissue or synthetic water tissue or synthetic water-proof fabrics whether single textured or double textured and book-binding cotton fabrics provided additional Excise Duty in lieu of sales tax is levied on them . The manner in which the entry was there before substitution w.e.f. 30.6.2005 is also supportive of this view, as in the entry as existed earlie .....

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