Sales Tax Exemption for Old Newspapers Denied as Waste Paper Sales Lose Newspaper Character

Old newspapers sold as waste paper do not retain the constitutional exemption from sales tax available to newspapers, because the exemption applies only while the material continues to function as a newspaper or vehicle of news. Once sold by weight for packing or other non-reading purposes, it loses that character and becomes taxable. On the conflict between co-equal Supreme Court decisions, Article 141 does not require automatic acceptance of the later view where it appears to overlook earlier binding authority or operates per incuriam; the High Court may follow the earlier decision directly on point. The revisions were allowed and the appeal was dismissed.

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Issues: (i) Whether old newspapers sold as such are covered by the constitutional exemption from sales tax available to newspapers under the Seventh Schedule. (ii) Whether, in case of conflict between decisions of co-equal Benches of the Supreme Court, the later decision must necessarily be followed.

Issue (i): Whether old newspapers sold as such are covered by the constitutional exemption from sales tax available to newspapers under the Seventh Schedule.

Analysis: Entry 54 of List II, subject to Entry 92A of List I, excludes newspapers from the State's taxing power. The exemption, however, applies only to newspapers retaining their character as newspapers. Old or discarded newspapers sold by weight as waste paper, for packing or similar non-reading purposes, lose the character of newspaper and are not sold as vehicles of news. The earlier sales-tax decisions directly on this point held that turnover from such sale is taxable.

Conclusion: The sale of old newspapers as waste paper is not covered by the constitutional exemption and is liable to tax; the finding is against the assessee and in favour of the Revenue.

Issue (ii): Whether, in case of conflict between decisions of co-equal Benches of the Supreme Court, the later decision must necessarily be followed.

Analysis: Article 141 requires adherence to the law declared by the Supreme Court, but a later co-equal decision does not automatically prevail where it is rendered on a mistaken impression, without noticing an earlier decision directly on the point, or where the later reasoning operates sub silentio or per incuriam. In such a situation, the High Court may prefer the earlier decision that squarely answers the controversy and is supported by reasoning.

Conclusion: The later decision was not treated as controlling; the earlier direct sales-tax rulings were followed. This issue is decided against the assessee and in favour of the Revenue.

Final Conclusion: The revisions were allowed and the appeal was dismissed, because old newspapers sold as waste paper do not retain the exemption applicable to newspapers and the earlier directly applicable precedent was preferred over the later contrary view.

Ratio Decidendi: A newspaper sold after it has lost its character as reading matter and is disposed of as waste paper does not fall within the constitutional exemption for newspapers, and where two co-equal Supreme Court decisions conflict, the High Court may follow the earlier decision directly on point if the later one rests on an apparent error or omission of binding precedent.

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