Montex Glass Fibre Industries Pvt. Ltd. vs Commissioner of Sales Tax, Bombay

Dr. B.P. Saraf, J.—By this reference u/s 61(1) of the Bombay Sales Tax Act, 1959, the Maharashtra Sales Tax Tribunal, Bombay, has referred the following question of law to this Court for opinion at the instance of the assessee :

"Whether, on true interpretation of item 22 in the Central Excise Tariff and entry 12 in Schedule A to the Bombay Sales Tax Act, 1959, the Tribunal was correct in law to hold that fibre glass fabrics and fibre glass sleevings (unvarnished) sold by the applicants were covered by entry 102 in Schedule C, Part II to the Bombay Sales Tax Act, 1959 and not entry 12 in Schedule A to the said Act, as in force since July 1, 1981."

The assessee is a manufacturer and dealer in fibre glass cloth, fibre glass tapes, and fibre glass sleevings of various sizes and thickness. On December 28, 1981, the assessee made an application to the Commissioner of Taxes, Maharashtra State, Bombay, u/s 52(1)(e) of the Bombay Sales Tax Act, 1959 ("the Act") seeking determination of the question whether any tax was payable under the Act in respect of sales of fibre glass cloth and fibre glass sleevings by the assessee. According to the assessee, no tax was payable in respect of the sales thereof as they were man-made fabrics failing under entry 12 of Schedule A to the Act. In support of this contention, the assessee relied upon the definition of "man-made fabrics" in the First Schedule to the Central Excises and Salt Act, 1944 ("the Central Excise Act"). Though the Commissioner accepted the contention of the assessee that the goods sold by it were man-made fabrics, he rejected the claim of the assessee that these items were covered by entry 12 of Schedule A to the Act. The Commissioner did so because of Explanation II to item 22 of the First Schedule to the Central Excise Act which says that "man-made fabrics" in item 22 would not include "glass fibres or fabrics falling under item No. 19 or item No. 21" of the said Schedule. The Commissioner, therefore, held that glass fabrics, fibre glass cloth and fibre glass tapes did not fall within the meaning of man-made fabrics under entry 12 of Schedule A to the Act and hence sales thereof would be taxable as sales of goods covered by the residuary entry 102 of Part II of Schedule C to the Act. The assessee appealed to the Maharashtra Sales Tax Tribunal ("the Tribunal") against the above order of the Commissioner which was dismissed by the Tribunal. Hence this reference.

The question that arises for our determination is whether "fibre glass fabrics" and "fibre glass sleeving (unvarnished)" are covered by entry 12 of Schedule A. If the answer is in the affirmative, the sales of these items by the assessee would be exempt from tax, otherwise they would be regarded as goods falling under the residuary entry 102 of Part II of Schedule C to the Act and sales thereof would be taxable at the rates applicable to sales of such goods, which at the material time was 8 paise in the rupee.

Schedule A to the Bombay Sales Tax Act (as substituted by Maharashtra Act 32 of 1981 with effect from July 1, 1981) contains the list of goods, the sale or purchase of which is free from all taxes. Entry 12 thereof, as it stood at the material time, reads :

We are concerned in this case with "man-made fabrics" because the case of the assessee is that fibre glass fabrics and fibre glass sleevings are man-made fabrics within the meaning of item (ii) of the above entry.

From a plain reading of the above entry, it is clear that only "man-made fabrics" as defined in the First Schedule to the Central Excise Act would fall under that entry. "Man-made fabrics" has been defined in item 22 of the First Schedule to the Central Excise Act. This item, at the material time, so far as relevant, read :

Explanation II. - This item does not include glass fabrics or fabrics falling under item No. 19 or item No. 21.

It is evident from the above definition of "man-made fabrics" that it does not include "glass fabrics". In view of the above, in our opinion, there is no basis whatsoever for the contention of the assessee that "man-made fabric" in entry 12 of Schedule A to the Act includes "glass fabric". "Glass fabric", therefore, cannot be regarded as "man-made fabrics" falling under entry 12 of Schedule A to the Bombay Sales Tax Act.

We are, therefore, of the clear opinion that on true interpretation of entry 12 of Schedule A to the Bombay Sales Tax Act read with item 22 of the First Schedule to the Central Excises and Salt Act, the Tribunal was correct in holding that the fibre glass fabrics and fibre glass sleeving did not fall under entry 12 of Schedule A to the Bombay Sales Tax Act (as in force since July 1, 1981). These items would therefore fall under the residuary entry 102 of Part II of Schedule C to the Act.

In the premises, the above question referred to us is answered in the affirmative and in favour of the Revenue.

In the facts and the circumstances of the case, we make no order as to costs.

Reference answered in the affirmative.