Dhirendra Nath Sen vs State of West Bengal

P.K. Banerjee, J.—In this Rule the Petitioner challenges the assessment proceeding on the sale of jute caddies imposing sales tax thereon. The facts which are not disputed are as follow: The Petitioner is a dealer in raw jute including jute caddies and is registered under the Bengal Finance (Sales Tax) Act, 1941, having its certificate registered No. LR/2378A. The Petitioner stated that the jute caddies consist of short fibres separated during the processing of raw jute prior to weaving and during weaving. Carding operation prior to weaving leaves out dropping of short fibres which, it is alleged, are jute caddies. It differs from jute waste because jute waste includes all kinds of rejections collected from mill and factory, that is jute dust, small strips of gunny cuttings etc. It is alleged that jute caddies are nothing but jute cuttings and falls within the meaning of raw jute under the Bengal Finance (Sales Tax) Act, 1941. ''Raw jute'' has been defined u/s 2(8) of the Bengal Raw Jute Taxation Act, 1941. It is stated that even the Customs authorities hold that jute caddies are raw jute under the Indian Tariff Act, 1954. Under the Bengal Finance (Sales Tax) Act, 1941, ''raw jute'' has been declared to be tax-free goods. u/s 5(2)(a)(i) of the Bengal Finance (Sales Tax) Act the sale of goods declared to be tax-free u/s 6 of the said Act and included in Schedule I to the said Act are exempted from tax under the said Act. For the assessment year 1960-61, the Commercial Tax Officer, Lyons Range, made an assessment on January 7, 1963, wherein the said officer treated ''jute caddies'' as raw jute as defined u/s 2(8) of the Bengal Raw Jute Taxation Act and exempted from tax under the said Act and allowed the claim of the Petitioner u/s 5(2)(a)(i) of the said Act. In the said assessment order, the Commercial Tax Officer arbitrarily disallowed the sale of jute caddies for Rs. 17,100 in absence of purchase invoices and treated the same as purchase of taxable goods other than ''jute caddies''. Aggrieved by the said disallowance, the Petitioner preferred an appeal before the Asstt. Commissioner, Commercial Tax, Chowringhee Range, Calcutta. Thereafter, in a subsequent assessment year 1368 B.S. (1961-62) and 1369 B.S. (1962-63) the Petitioner claimed for exemption in respect of sale of jute caddies and that was exempted. The appeal preferred by the Petitioner for the year 1367 B.S. was taken up for hearing and the Asstt. Commissioner of Commercial Tax relying on the decision of the Board of Revenue in Kharda and Co. v. The State of West Bengal held that jute caddies are something other than raw jute and therefore, is not entitled to the exemption. Again, for the year 1371-72 B.S. the assessment order did not exempt the sale of jute caddies from the purview of the Bengal Finance (Sales Tax) Act, 1941. Being aggrieved by the said order the Petitioner moved this Court and obtained the present Rule.

On behalf of the Respondent affidavit has been filed reiterating that the Petitioner is not entitled to the exemption under the Act as jute caddies are not raw jute, inasmuch as jute caddies are obtained after spinning and weaving of raw jute.

Mr. Bose on behalf of the Petitioner contended that jute caddies are raw jute and therefore, is exempted from tax that the jute caddies fall within the definition of raw jute when being processed till remains raw jute and therefore, is entitled to exemption under the Bengal Finance (Sales Tax) Act, 1941. The short point, therefore, is whether the jute caddies are raw jute or not. ''Raw jute'' has been defined u/s 2(8) of the Bengal Jute Taxation Act, 1941, as follows:

''Raw jute'' means the fibre of jute which has not been subjected to any process of spinning or weaving and includes jute cuttings, whether loose or packed in drums or bales.

Under Item No. 32 of Schedule I, read with Section 6 of the Bengal Finance (Sales Tax) Act, 1941, it has been provided that the goods mentioned in the schedule is exempted from taxation. Section 8 is in the following terms:

6(1) No tax shall be payable under this Act on the sale of goods specified in the first column of Schedule I subject to the condition and exceptions, if any, set out in the corresponding entry in the second column thereof.

(2) The State Government, after giving by notification in the Official Gazette, not less than 3 months notice of its intention so to do, may be like notification add to Schedule 1 and thereupon Schedule I shall be deemed to be amended accordingly.

Therefore, the sale of raw jute is not taxable under the Bengal Finance (Sales Tax) Act, but the question which still remains is whether jute caddies are raw jute within item No. 32 of Schedule I of the Bengal Finance (Sales Tax) Act.

''Jute caddies'' mean, admittedly, cutting from raw jute and such cuttings are obtained when the raw jute is processed and placed into the mills for weaving and processing. This cutting which falls out before the processing of the raw jute cannot be anything other than raw jute. After ''raw jute'' is processed and weaved and the resultant product ceases to be raw jute within the meaning of Bengal Jute Taxation Act, 1941, otherwise they still remain ''raw jute''. Before processing the jute cuttings fall out cannot be treated as anything but raw jute and it is exempted from tax. The Petitioner will not be entitled to any exemption if the jute caddies are not raw jute. There cannot be any doubt and it is not disputed that the raw jute when placed for processing and weaving, the resultant product is not raw jute ''Raw jute'' has not been denned in the Bengal Finance (Sales Tax) Act, 1941, but it has been defined by the Bengal Raw Jute Taxation Act, 1941. Raw Jute Taxation Act defines ''raw jute'' u/s 2(8) which means the fibre of jute which has not been subjected to any process of spinning or weaving and includes jute cuttings, whether loose or packed in drums or bales. Jute cutting is a fibre of jute and has not been subjected to any process of spinning and weaving because jute caddies fall out before the process begins. In that view of the matter I have no hesitation in holding that jute caddies are ''raw jute'' within the meaning of Schedule I, Item No. 32 of the Bengal Finance (Sales Tax) Act. The Supreme Court has held in the case Tungabhadra Industries Ltd. Vs. The Commercial Tax Officer, Kurnool, , inter alia, that when raw groundnut oil is converted into refined oil, there is no doubt processing, but this consists merely in removing from raw groundnut oil that constituent part of raw oil which is not really oil. The matter removed from raw groundnut oil, not being oil, cannot be used after separation, as oil or for any purpose for which oil could be used. In other words, the processing consists in the non-oily contents of the raw oil being separated and removed, removed, rendering the oily contents of the oil 100 per cent. For this reason refined oil continues to be groundnut oil and such oil does not loose the characteristic colour or taste etc. of the raw groundnut oil. In the said case, the Supreme Court held that, even when processing is done, removing non-oily contents from the raw groundnut oil, it still remains groundnut oil. Here in the present case, it is even better than that. The jute cuttings fall out even before the processing and it still remains raw jute. As raw jute only is exempted and in my opinion, jute caddies are raw jute, they are exempted from taxation under the Act. I, therefore, hold that the jute caddies are nothing but raw jute and are exempted from taxation under item No. 32 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941.

The Rule is, therefore, made absolute and there will be no order as to costs.