1. Dispute over whether injection-moulded plastic suitcases are plastic articles under Entry 113 of Schedule I to the Andhra Pradesh General Sales Tax Act. (Para 1 , 2 )
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1994 Supreme(SC) 672
SUPREME COURT OF INDIA
B.P. Jeevan Reddy and B.L. Hansaria, JJ.
Civil Appeal No. 2020(NT) of 1989
Decided On: 19.07.1994
A. Nagaraju Bros., Visakhapatnam Appellants
Vs.
State of A.P. Respondent
Important Points
The court held that the 'common parlance' or 'commercial usage' test is the primary method for classifying goods. Consequently, VIP suitcases are 'plastic articles' based on trade understanding and raw material predominance, regardless of whether other components have a higher monetary value.
Subject
Taxation Law - Sales Tax
Act Referred
Headnote
Andhra Pradesh General Sates Tax Act - Sections 22 and 5(1) - All kinds of suitcases, briefcases and vanity bags - Appellant is a dealer inter alia in VIP suitcases - Suitcases are made of leather cloth rexine and other material - Court are concerned herein with suitcases made of plastic by method known as injection-moulding and fitted with steel bands locks and ancillaries made of other materials - Appellant submitted that said suitcases are plastic articles within meaning of Entry of Schedule to Act and therefore taxable only at first point of sale - Inasmuch as sales effected by him were second sales he submitted turnover relating to said suitcases was not taxable in his hands - Though assessing authority agreed with him Deputy Commissioner revised assessment order holding that said suitcases are not plastic articles and must therefore be taxed as general goods under Section 5(1) of Act - Which means multi-point tax - Sales Tax Appellate Tribunal dismissed dealers appeal following its own earlier decision in disposed of - ax revision filed by appellant-dealer under Section 22 of Act was also dismissed by High Court - It is brought to our notice that this very question arose in case of certain other dealers as well and decisions of Tribunal are not uniform - In Tribunal took view that VIP suitcases are plastic articles - Same view was taken in and batch disposed in case of Safari Suitcases (P) Ltd - Indeed in case of this very dealer relating to assessment year Tribunal following decision in that these suitcases are plastic articles - Contrary view was expressed in and in this very matter - Tribunal has set out following circumstances in support of its opinion that said suitcases are plastic articles is whether VIP suitcases are plastic articles within meaning of Entry of Schedule I to Andhra Pradesh General Sates Tax Act - Held, Dealer did not produce any material in support of his submission and that it would not be permissible to rely upon material produced in another case by another dealer to give relief to appellant-dealer - Counsel stressed fact that in tax law each assessment year is a separate unit and hence fact that this very appellant got a decision in his favour in a subsequent assessment year is no ground for giving relief in this assessment year - Issue relating to this assessment year must be decided on material adduced in these proceedings alone submitted counsel - There can be no quarrel with the aforesaid propositions - This is not a case where a concluded assessment is being reopened - Correctness of assessment is still under consideration in this appeal - Since this very assessees appeal for a subsequent assessment year was allowed following decision of Tribunal in and also because the goods are identical Court have referred to material referred to in judgment in - Orders have been filed as material in this appeal with permission of court - In circumstances it cannot be said that material in another case is being relied upon in this case to determine question at issue. - Appeal Allowed
Legal Category Hierarchy
Table of Contents
2. Dealer claims suitcases are plastic articles taxable at first point of sale; Revenue contends they are general goods taxable at multiple points based on component value. (Para 2 , 5 , 6 )
3. The court applied the common parlance and trade usage tests, concluding that injection-moulded suitcases are understood as plastic goods regardless of the value of other components. (Para 3 , 4 , 5 )
4. The common parlance or commercial usage test is generally more appropriate for classifying goods than a strict test of predominance by value. (Para 4 , 5 )
5. Appeal allowed; orders of the High Court, Tribunal, and Deputy Commissioner set aside; assessing authority's order granting exemption affirmed. (Para 7 )
6. How should goods be classified when they consist of multiple materials?
The court held that the common parlance or commercial usage test is generally the most appropriate. While tests of predominance by weight or value may be used for new products, goods are classified based on how they are understood in trade circles. (Para 4 , 5 )
7. Does the higher value of non-plastic components prevent a product from being classified as a plastic article?
No. The court ruled that merely because the value of steel or other materials exceeds the value of plastic, the goods cannot be excluded from being called plastic articles if they are understood as such in common parlance. (Para 5 )
8. Can material produced in a separate case be relied upon to determine the classification of identical goods in a current appeal?
Yes, provided the correctness of the assessment is still under consideration and the goods are identical, material from other cases may be referred to and filed with the court's permission. (Para 6 )
JUDGMENT
B.P. Jeevan Reddy, J.
1. The question in this appeal is whether VIP suitcases are plastic articles within the meaning of Entry 113 of Schedule I to the Andhra Pradesh General Sates Tax Act. The question arises with reference to the assessment year 1981-82. With effect from 1-7-1985 a new entry, viz., Entry 163 was introduced in Schedule I expressly taking in all kinds of suitcases and simultaneously amending Entry 113. Prior to 1-7-1985, there was no entry dealing specifically with suitcases. Entry 113 read as follows: "Plastic sheets and articles" and the rate of tax was 6%. In the year 1983, the rate of tax was increased to 9%. The amended Entry 113 (w.e.f. 1-7-1985) reads as follows: "Plastic sheets and articles excluding those allied goods falling under any other item" whereas Entry 163 reads:
"All kinds of suitcases, briefcases and vanity bags."
2. The appellant is a dealer inter alia in VIP suitcases. Suitcases are made of leather, cloth, rexine and other material. We are concerned herein with suitcases made of plastic by the method known as "injection-moulding" and fitted with steel bands, locks and ancillaries made of other materials. The appellant submitted that the said suitcases are plastic articles within the meaning of Entry 113 of Schedule 1 to the Act and, therefore, taxable only at the first point of sale. Inasmuch as the sales effected by him were second sales, he submitted, the turnover relating to said suitcases was not taxable in his hands. Though the assessing authority agreed with him, the Deputy Commissioner revised the assessment order, holding that the said suitcases are not plastic articles and must, therefore, be taxed as general goods under Section 5(1) of the Act -- which means multi-point tax. The Sales Tax Appellate Tribunal dismissed the dealers appeal following its own earlier decision in TA No. 566 of 1984 disposed of on 12-3-1987. The tax revision filed by the appellant-dealer under Section 22 of the Act was also dismissed by the High Court.
3. It is brought to our notice that this very question arose in the case of certain other dealers as well and the decisions of the Tribunal are not uniform. In TA Nos. 1357 of 1988 and 1400 of 1988 (Blow Plast Ltd. v. State of A.P.) the Tribunal took the view that VIP suitcases are plastic articles. Same view was taken in TA No. 83 of 1989 and batch disposed of on 21-2-1991 in the case of Safari Suitcases (P) Ltd. Indeed in the case of this very dealer relating to the assessment year 1983-84, the Tribunal held following the decision in TA No. 1357 of 1988 that these suitcases are plastic articles. Contrary view was expressed in TA No. 566 of 1984 and in this very matter. In TA No. 1357 of 1988, the Tribunal has set out the following circumstances in support of its opinion that the said suitcases are plastic articles:
"1. That when licensing the industry for production of these suitcases, the Government of India described the articles to be manufactured as injection-moulded plastic goods;
2. For exporting the said injection-moulded plastic goods they are registered with the Plastics and Linoleum Export Promotion Council and they are described as plastic goods in the Certificate of Registration given by the Plastics and Linoleums Export Promotion Council.
3. Organisation of Plastics Processors of India has issued Certificate stating that VIP suitcases and briefcases are classified as suitcases and briefcases made predominantly of plastic and are charged 31.5% excise duty as against 26.25% chargeable for suitcases, briefcases etc., not being of predominantly of plastic.
4. Even in regard to the monthly production statements by the VIP Industries, these goods are mentioned as injection-moulded plastic goods only.
5. The Plastics and Linoleums Export Promotion Council selected the VIP manufacturers as the Top Exporters for Plastic Moulded Luggage for 1985-86 and given the award of top exporter of Plastic Moulded Luggage.
6. They also filed affidavits of three p
