1972 (12) TMI 77 - HC - Indian Laws

Court rules rubber beltings not 'cotton fabrics' under Sales Tax Act

The High Court held that 'Hind Rubber Beltings' and 'Cooper Rubber Beltings' are not covered by Entry 15 of Schedule A to the Bombay Sales Tax Act, 1959. ... - Issues Involved:1. Whether the sales of Hind Rubber Beltings and Cooper Rubber Beltings are covered by Entry 15 of Schedule A to the Bombay Sales Tax Act, 1959.2. Whether the appellants were entitled to the benefit of sub-section (2) of section 52 of the Bombay Sales tax Act, 1959.Issue-wise Detailed Analysis:1. Whether the sales of Hind Rubber Beltings and Cooper Rubber Beltings are covered by Entry 15 of Schedule A to the Bombay Sales Tax Act, 1959The primary issue revolves around the interpretation of 'cotton fabrics' as defined in Entry 15 of Schedule A to the Bombay Sales Tax Act, 1959. The definition of 'cotton fabrics' is adopted by reference from Item 19 of the First Schedule to the Central Excises and Salt Act, 1944. This entry defines 'cotton fabrics' as all varieties of fabrics manufactured either wholly or partly from cotton, excluding those containing 40% or more by weight of wool, silk, or artificial silk, or those manufactured on a handloom.The assessee, Messrs Hind Engineering Co., argued that their rubber beltings, which consist of canvas (a form of cotton fabric) coated with rubber, should be classified as 'cotton fabrics' because the canvas content by weight exceeds 40%. However, the Deputy Commissioner of Sales Tax and the Tribunal both rejected this argument. They held that the process of superimposing rubber on canvas transforms it into a new commercial product, thereby losing its identity as 'cotton fabric.'The Tribunal's decision was based on several points:- The primary intent of 'cotton fabrics' is to cover articles that are primarily cotton fabrics, not all articles containing cotton.- The process of coating canvas with rubber is not incidental or ancillary to the manufacture of canvas.- The superimposition of rubber on canvas results in a new commercial product that cannot be classified as 'cotton fabrics.'The High Court agreed with the Tribunal's interpretation, emphasizing that the legislative intent was to exempt 'cotton fabrics' as defined in the Central Excises and Salt Act. The court noted that the definition is precise and unambiguous, and should not be expanded by considering legislative history or subsequent notifications under different statutes. The court concluded that rubber beltings do not qualify as 'cotton fabrics' under Entry 15 of Schedule A.2. Whether the appellants were entitled to the benefit of sub-section (2) of section 52 of the Bombay Sales tax Act, 1959This issue was not pressed by the counsel for the assessee during the hearing, and therefore, the court did not address it in detail. The Tribunal had previously held that granting the benefit of Section 52(2) was discretionary and declined to interfere with the Deputy Commissioner's exercise of discretion.Conclusion:The High Court concluded that 'Hind Rubber Beltings' and 'Cooper Rubber Beltings' are not covered by Entry 15 of Schedule A to the Act. The court answered the first question in the negative and did not address the second question as it was not pressed. The assessee was ordered to pay the costs of the reference to the Commissioner.