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1989 Supreme(Kar) 432
Karnataka High Court
Judges : K.Shivashankar Bhat,S.Rajendra Babu
R.N.DONGARE - Appellant
Versus
STATE OF KARNATAKA - Respondent
S. T. R. P. 54 Of 1986
Decided On : 12/12/1989
Advocates Appeared :
B.P.GANDHI, M.R.ACHAR
The main legal point established in the judgment is that full effect should be given to all the words used in a taxing statute, and the benefit of doubt should be extended to the assessee in case of ambiguity in entry classification.
Headnote:
laminated sheets - turnover of laminated sheets - Karnataka Sales Tax Act, Entry No. 78, Entry No. 110 - The court discussed the interpretation of the entries under the Second Schedule of the Karnataka Sales Tax Act, emphasizing the specific inclusion of plastic sheets and all articles made of plastic polythene or poly-vinyl chloride material under Entry No. 110. The court highlighted the principle that full effect should be given to all the words used in a taxing statute and extended the benefit of doubt to the assessee in case of ambiguity in entry classification.
Fact of the Case:
The case involved the classification of laminated sheets for turnover under the Karnataka Sales Tax Act. The revising authority and the Tribunal held that the laminated sheets fell under Entry No. 78, while the petitioners argued that they should be classified under Entry No. 110 due to being made of plastic material.
Finding of the Court:
The court found that the laminated sheets should be classified under Entry No. 110 as they are made of plastic material, and the specific inclusion of plastic sheets and articles in Entry No. 110 should be given full effect. The court also emphasized the principle of extending the benefit of doubt to the assessee in the interpretation of a taxing statute.
Issues: The main issue was the classification of laminated sheets under the relevant entries of the Karnataka Sales Tax Act.
Ratio Decidendi: The court applied the principle that full effect should be given to all the words used in a taxing statute and extended the benefit of doubt to the assessee in case of ambiguity in entry classification.
Final Decision: The revision petitions were allowed, and the orders of the revising authority and the Tribunal were set aside to the extent of turnovers of laminated sheets.
( 1 ) IN all these cases the question pertains to the turnover of laminated sheets which according to the petitioners fall within entry 110 of the Second Schedule to the Karnataka Sales Tax Act as it stood during the relevant period, while the revising authority held that the laminated sheets come under entry 78 in the course of exercising its revisional power. The Tribunal upheld the view taken by the revising authority.
( 2 ) IT is not necessary to state elaborately the other facts except to extract the 2 entries which have come up for consideration. Entry No. 78 : Cement and asbestos sheets, straw boards, hardboards, plywood and the like. . . . 10% entry No. 110 : Plastic sheets and all articles made of plastic polythene or polyvinyl chloride material. . . . 8%
( 3 ) THE Tribunal as well as the revising authority approached the problem by applying the test of user and held that laminated sheets were put to similar uses for which hardboards and plywoods were used. The dealers challenged this approach by pointing out entry No. 110 and the manner in which laminated sheets are produced.
( 4 ) BEFORE the Appellate Tribunal, the State representative seems to have explained the process of manufacturing laminated sheets; that the laminated sheets consisted of transparent plastic on top, printed paper underneath to show the designs and a thin a layer of plywood-like substance (which is explained by Mr. Gandhi, learned counsel for the petitioners, that the plywood-like substance is kind of resin) at the bottom to which adhesives were applied before fixing the sheets on table tops, partitions, etc. The petitioners, in the reply sent to the notice proposing revision has described that laminated sheets are made up of paper resin and decorative paper, impregnated with transparent plastic sheets. Thus it is clear that these laminated sheets are nothing but plastic articles. Whatever may be the manner of process, the basic raw material is plastic for the manufacture of laminated sheets and, therefore, it cannot be said that laminated sheets are not plastic articles. If so, just because these articles could be used like hardboards and plywoods, can it be said that laminated sheets fall within entry No. 78 ?
( 5 ) THERE is no specific reference to laminated sheets under entry No. 78. But, Entry No. 110 categorically declares that plastic sheets and all articles made of plastic polythene or poly-vinyl chloride material would fall within the entry. When legislation specifically covers all articles made of plastic, it should necessarily include the article called laminated sheets, when it is clear that these sheets are one kind of articles made of plastics. If so, entry 110 covers these articles which necessarily would exclude them from entry No. 78. The Tribunal has also stated that -
"according to Interpretation of Sales Tax Commodities, page 227, to laminate means to 'manufacture by placing layer on layer' or 'to form or press into a thin sheet or layer, to separate into thin sheets or layers to cover with thin layers, to make by building up in layers as plywood'. It is therefore clear from the above that the decorative laminated sheets consists of different layers glued together into a sheet like different layers forming hardboard or plywood and this fits into the entry No. 78 within the words 'and the like'. "
What is stated by the Tribunal as above also shows that laminated sheet are made of plastic layers. The test of use which was applied to attract entry No. 78 by the Tribunal cannot be the sole test, when such a test is not applied for the goods coming under entry No. 110. For the inter-pretation of entries under Second Schedule, the user test cannot be the sole test.
( 6 ) IN Porritts and Spencer (Asia) Ltd. 's case AIR1979 SC 300 , 1989 (25 )ECR443 (NULL ), 1980 CENCUS397d , 1983 (13 )ELT1607 (SC ), (1979 )1 SCC82 , [1979 ]1 scr545 , [1978 ]42 STC433 (SC ), 1978 (10 )UJ697 (SC ), the Supreme Court had to cons
