1952 (7) TMI 10 - HC - VAT and Sales Tax

Court rules against petitioner challenging Sales Tax assessment on ready-made clothes, strict interpretation of exemptions. No constitutional invalidity found.

The court dismissed the petitioner's challenge to the Sales Tax assessment on ready-made clothes, ruling that exemptions should be strictly construed and ... - Issues:1. Jurisdiction of Sales Tax assessment on ready-made clothes.2. Interpretation of exemption under Hyderabad General Sales Tax Act.3. Constitutional validity under Article 286 of the Constitution.Jurisdiction of Sales Tax assessment on ready-made clothes:The petitioner, a manufacturer of ready-made clothes, challenged the Sales Tax assessment imposed on the turnover of his business. The contention was that ready-made clothes should be exempt as they were made from exempted articles specified in the Act. The court observed that the Legislative intent of the exemption was to exempt cloth costing less than Rs. 3 per yard, not ready-made garments. The court emphasized that exemptions from taxation must be strictly construed and limited to the exemption itself. Citing precedents, the court held that exemptions should not be extended beyond the express requirements of the language used in the statute.Interpretation of exemption under Hyderabad General Sales Tax Act:The court analyzed the legislative intent behind the exemption specified in the Act and whether the petitioner could genuinely qualify for the exemption. It was noted that the exemption aimed to minimize the burden on the poorer classes of the community. The court referred to previous cases where it was held that articles made from exempted goods are not automatically exempt. The court emphasized that the assessee must demonstrate that they fall within the exempted list. The judgment concluded that ready-made garments made of cloth costing less than Rs. 3 per yard did not qualify for the exemption under the Act.Constitutional validity under Article 286 of the Constitution:The petitioner argued that the Sales Tax Act was invalid as it had not received the assent of the President under Article 286(3) of the Constitution. However, for a law to be challenged under this provision, there must be a law of Parliament declaring a commodity essential for the community. The petitioner failed to show any such law declaring ready-made garments or cloth as essential. The court noted a pending Bill in Parliament for such declaration but concluded that no existing law supported the petitioner's contention. Therefore, the court dismissed the petitioner's application as they failed to establish a case for the issuance of a writ of certiorari.