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1987 Supreme(Cal) 70
High Court Of Calcutta
CHITTATOSH MUKHERJEE, PADMA KHASTGIR
STATE OF WEST BENGAL - Appellant
Versus
SHRI MADANLAL SHROFF - Respondent
F. H. S. T. 3498 Of 1979
Decided On : 03/06/1987
Important Points
Subject
Sales Tax - Goods of Special Importance
Act Referred
CENTRAL EXCISE AND SALT ACT : .
CENTRAL SALES TAX ACT : S.15, S.14
Headnote
SALES TAX - Bengal Finance (Sales Tax) Act, 1941 - Section 5(1)(d), Schedule II Entry 24 - Central Sales Tax Act, 1956 - Sections 14(x), 15(a) - Carpets manufactured wholly of wool or containing 40% or more by weight of wool are woollen fabrics and goods of special importance - State sales tax on such carpets cannot exceed the maximum rate prescribed by Section 15(a) of the Central Sales Tax Act.
Fact of the Case:
The petitioners, dealers in woollen carpets, challenged the validity of a notification issued by the State Government amending Rule 3(28) of the Bengal Sales Tax Rules, 1941, which resulted in the withdrawal of exemption from sales tax on the sale of woollen carpets. The petitioners contended that woollen carpets were 'woollen fabrics' as defined in the Central Excises and Salt Act, 1944, and therefore, were 'goods of special importance' under the Central Sales Tax Act, 1956. As such, the State sales tax on woollen carpets could not exceed the maximum rate prescribed by Section 15(a) of the Central Sales Tax Act.
Finding of the Court:
The court held that woollen carpets were indeed 'woollen fabrics' as defined in the Central Excises and Salt Act, 1944, and therefore, were 'goods of special importance' under the Central Sales Tax Act, 1956. Consequently, the State sales tax on woollen carpets could not exceed the maximum rate prescribed by Section 15(a) of the Central Sales Tax Act.
Issues: 1. Whether woollen carpets are 'woollen fabrics' as defined in the Central Excises and Salt Act, 1944, and therefore, 'goods of special importance' under the Central Sales Tax Act, 1956? 2. Whether the State sales tax on woollen carpets can exceed the maximum rate prescribed by Section 15(a) of the Central Sales Tax Act?
Ratio Decidendi: 1. The court interpreted the definition of 'woollen fabrics' in the Central Excises and Salt Act, 1944, and concluded that it included carpets manufactured wholly of wool or containing 40% or more by weight of wool. 2. The court referred to Section 15(a) of the Central Sales Tax Act, 1956, which restricts the State sales tax on 'goods of special importance' to a maximum rate. The court held that since woollen carpets were 'goods of special importance', the State sales tax on them could not exceed the maximum rate prescribed by Section 15(a).
Final Decision: The court dismissed the appeals filed by the State Government and upheld the judgment of the trial court, subject to certain modifications. The court declared that the State and its officers had the power to levy and realize sales tax on sales and purchases of carpets manufactured wholly of wool or containing 40% or more by weight of wool at a rate not exceeding the maximum prescribed by Section 15(a) read with Section 14(x) of the Central Sales Tax Act, 1956. The sales tax authorities were also given the liberty to inquire into and determine if the carpets sold and purchased by the petitioners contained the required quantity of wool specified in the Central Excises and Salt Act, 1944.
I.P.AGGARWAL, J.P.KHAITAN, R.N.BAJORIA, S.K.BAGARIA, SAMARENDRA NATH DUTTA
( 1 ) THESE appeals are at the instance of the State of West Bengal and others and they are directed against the judgment and order dated 13th November, 1979 of his Lordship the Honourable Mr. Justice D. K. Sen, inter alia, declaring that the impugned notification amending Rule 3 (28) of the Bengal Sales Tax Rules, 1941 is ultra vires and also commanding the State not to give effect or further effect to the said amended Rule 3 (28) and not to withdraw exemption allowed under Sections 14 and 15 of the Central Sales Tax Act, 1956 in respect of carpets.
( 2 ) UNDER Clause (x) of Section 14 of the Central Sales Tax Act, 1956, woollen fabrics as defined in item No. 21 of the First Schedule to the Central Excises and Salt Act, 1944 are "goods of special importance" in inter-State trade or commerce. Under Section 15 of the Central Sales Tax Act, 1956 every sales tax law of a State imposing or authorising the imposition of a tax on the sale or purchase of declared goods is subject to the restrictions and conditions mentioned in Clauses (a) to (d) of the said Section 15 of the Act. Under Clause (a) of Section 15, tax payable under the State sales tax law in respect of sale or purchase of goods of special importance inside the State shall not exceed the rate specified in the said Clause (a) of the sale or purchase thereof and such tax shall not be levied at more than one stage. The different clauses of Section 5 of the Bengal Finance (Sales Tax) Act, 1941 prescribe the rates of tax payable by a dealer on his taxable turnover. In respect of taxable turnover as representing sale of goods included in Schedule II [other than those specified by the State under Clause (ccc)], Clause (d) of Section 5 (1) of the Bengal Finance (Sales Tax) Act the prescribed rate of sales tax is 11 per cent. Entry No. 24 of Schedule II of the Bengal Finance (Sales Tax) Act is as follows : carpets of all varieties and descriptions.
( 3 ) IN case woollen carpets are "woollen fabrics" as defined in item No. 21 of the First Schedule to the Central Excises and Salt Act, 1944 then the same being goods of special importance within the meaning of Section 14, Clause (x) of the Central Sales Tax Act tax payable under the Bengal Finance (Sales Tax) Act in respect of sale or purchase thereof cannot exceed the maximum rate specified by Section 16 (a) of the Central Sales Tax Act, 1956. In other words, tax under the Bengal Finance (Sales Tax) Act upon taxable turnover representing sales of woollen carpets shall be at a rate not exceeding the maximum laid down in Section 15 (a) of the Central Sales Tax Act.
( 4 ) THE petitioner-respondents stated in their respective writ petitions that prior to the substitution by Notification No. 1823-F. T. dated 1st April, 1975 Clause (28) of Rule 3 of the Bengal Sales Tax Rules, 1941 provided for deduction from a dealer's gross turnover of sales of woollen fabrics. Prior to the substitution of the said rule the sales tax authorities treated woollen carpets as woollen fabrics and used to exempt payment of sales tax upon sales and purchases of woollen fabrics.
( 5 ) AT the outset, it is necessary to clarify that the State Government had competence to issue the impugned Notification No. 1823-F. T. dated 1st April, 1975 for substitution of the said Clause (28) in Rule 3 of the Bengal Sales Tax Rules, 1941. It is open to the State Government to amend, alter or vary the different clauses of Rule 3 which contain the list of commodities whose sales and purchases are to be deducted from the gross turnover of a dealer liable to pay tax under the Bengal Finance (Sales Tax) Act. In fact, Mr. Bajoria, appearing on behalf of the writ petitioner-respondents, did not dispute that the said notification was not liable to be struck down and therefore, the learned trial Judge, with respect, was not right in striking down the said notification. Mr. Bajoria's submission was that the State Government's power to tax sales and purch
