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Judgment
Ashok Kumar, J
Heard Sri Aloke Kumar, learned counsel for the revisionist and Sri B.K. Pandey, learned standing counsel for the Commissioner-respondent.
The present revision petition has been filed by the assessee M/s Kumar Impex, Varanasi against the judgment and order of the Trade Tax Tribunal dated 22.5.2006 by which order the Tribunal has allowed the appeal in part filed by the Commissioner and has amended the order passed by the first appellate authority by enhancing the liability of tax in the hands of the applicant.
The assessee dealer deals in purchase and sale of plastic bags and Jute Sutli. The claim of the applicant is that the applicant had imported the Jute Sutli from outside the territory of India i.e. from Nepal. A show cause notice was issued by the assessing authority and the reply thereto was filed by the applicant, however, the assessing authority has rejected the books of accounts and the disclosed turn-over and the claim of the applicant and has assessed the taxable turnover at Rs.59,91,975/- and tax Rs.6,92,595/- respectively.
The only issue involved in the present revision is as to what would be the liability of tax on 'Jute Sutli' imported by the applicant from Nepal.
For the assessment year 2001-02 the applicant has paid the tax on Jute Sutli at the rate of 4%, however, based on the notifications issued by the State Government time to time the assessing authority has treated the 'Jute Sutli' covered by the notification dated 13.9.2001 accordingly and has imposed the tax at the rate of 20%. The basis of imposition of tax at the rate of 20% was that since the Jute Sutli has been imported by the applicant from outside the territory of India therefore the same is taxable at the rate of 20%. The relevant entry No. 58 of the notification dated 13.9.2001 published in the Gazette on 15.9.2001 reads as follows :
Serial Number
Description of Goods
Point of tax
Rate of tax percentage
1
2
3
4
58(i)
Yarn of all kinds imported from outside India.
Importer
20%
(ii)
Yarn of all kinds except those covered by any other notification and not included in clause (i) above
M or I
4%
Aggrieved by the order of assessment an appeal was filed by the applicant before the Joint Commissioner (Appeal). Before the Joint Commissioner (Appeal) the contention of the applicant was that the order passed by the assessing authority is bad as the assessing authority has illegally imposed the tax at the rate of 20% treating the 'Jute Sutli' imported from outside the territory of India as such is taxable at the rate of 20% on the basis of the notification dated 13th September 2001. The contention of the applicant before the assessing authority and first appellate authority and was that the goods imported and sold by the applicant is 'Jute Sutli' which is covered by notification No. 101 dated 15.1.2000 and the relevant entry of the said notification is entry no.21(i) and (ii). The said entry No. 21 of the notification dated 15.1.2000 reads as follows :
(i)
Tat, patti or bags made from jute or hemp and laminated jute bags
M or I
5%
(ii)
Goods other than that mentioned in subitem (a) above made from jute or hemp
M or I
10%
The first appellate authority has considered the notification dated 13/15.9.2001 as well as the notification dated 15.1.2000. The first appellate authority has allowed the appeal and has accepted the submission of the applicant. The relevant finding of the decision of the first appellate authority is quoted hereinbelow :
दोनो पक्षों को सुना गया, आदेश का अवलोकन किया गया। अपीलकर्ता द्वारा फार्म-31 से एच0डी0पी0ई0 बैग्स तथा सुतली का आयात करके बिक्री किया गया है। स्वयं कर निर्धारण अधिकारी ने अपीलकर्ता द्वारा घोषित सुतली की कर योग्य बिक्री रू0 933975.00 को स्वीकार किया है, परन्तु अपीलकर्ता द्वारा घोषित सुतली बिक्री दर 4 प्रतिशत के बजाय कर निर्धारण अधिकारी ने 20 प्रतिशत की दर से कर आरोपित किया है। कर निर्धारण अधिकारी जिन विज्ञप्ति का हवाला दिया है, वह ''आल काईन्डस आॅफ यार्न'' के सम्बन्ध में है, जो भारत बाहर से आयात किया जाता है। अपीलकर्ता द्वारा बेची गयी सुतली, जूट एण्ड हैम्प गुड्स के अन्तर्गत है, जो विज्ञप्ति संख्या-क0नि0-2-10/XIदिनांक 15.01.2000 के अनुसार 5 प्रतिशत की दर से कर देय है। अपीलकर्ता ने विज्ञप्ति संख्या-क0नि0-2-306/XI/दिनांक 29.01.2001 का उद्धरण दिया है। जो टेप नेवाड़। एक्सक्लूडिंग काॅटन टेप। और .................... के सम्बन्ध में है। जबकि अपीलकर्ता द्वारा बेची गयी सुतली उपरोक्त विज्ञप्ति के अनुसार 5 प्रतिशत की दर से करदेय है। अतः इस पर 5 प्रतिशत की दर से रू0 46,698.75 निर्धारित की जाती है।
The first appellate authority has treated the 'Jute Sutli' covered under the notification dated 15.1.2000 under item 21(i) and has held that the tax at the rate of 5% is leviable on it.
Aggrieved by the order of the first appellate authority the Commissioner, Trade Tax, U.P. has filed the appeal before the Trade Tax Tribunal, Varanasi Bench-III, Varanasi.
Before the Tribunal the department has placed another notification no. 3481 dated 7th October 2002. Entry No. 73 of the notification dated 7th October 2002 reads as follows :
Serial Number
Description of Goods
Point of tax
Rate of tax percentage
1
2
3
4
73 (i)
Tat, patti or bags made from jute or hemp and laminated jute bags or jute tabayne or sutli or jute yarn.
M or I
5%
(ii)
Goods other than that mentioned in subitem (i) above made from jute or hemp
M or I
10%
The contention of the departmental representative before the Tribunal was that, that with effect from the issuance of the notification dated 7th October 2002 item 'Jute Sutli' or 'Jute Yarn' has been mentioned in the description of goods and the rate of tax on such goods was fixed at the rate of 5%. The department representative has contented before the Tribunal that prior issuance of the said notification dated 7th October 2002 the words 'Jute Sutli' or 'Jute Yarn' was missing in the previous notifications issued time to time therefore, the rate of tax fixed by the assessing authority at the rate of 20% on 'Jute Sutli' imported by the applicant from outside the territory of India was correct. The departmental representative has further submitted before the Tribunal that the first appellate authority was not justified in allowing the appeal and in accepting the submission of the dealer/ assessee by imposing the tax at the rate of 5% treating the Jute Sutli covered under the notification dated 15.1.2000.
Before the Tribunal learned counsel for the dealer has submitted that the tax was charged by the dealer at the rate of 4% which was deposited in due course and that Jute Sutli is not classified in the scheduled of rate hence the notification dated 15.1.2000 was correctly applied which clearly provides that Tat, Patti and Bags made from Sutli are taxable at the rate of 5% in the hands of manufacture or importer.
The Tribunal has proceeded in the matter and has allowed the second appeal filed by the Commissioner. Tribunal has confirmed the order passed by the assessing authority.
Heard learned counsel for the parties.
Learned counsel for the applicant has contended that the 'Jute Sutli' was mainly used as string for tying things or sewing bags etc. and was therefore, Yarn. He has further submitted that mainly the 'Jute Sutli' is used to make the Tat, Patti or Jute bags, and in fact, the Sutli is a spun strand.
Entry no. 21 of the notification dated 15.1.2000 provides the description of goods namely the Tat, Patti or Bags made from Jute taxable at the rate of 5% and clause (ii) of Sl. No.21 provides the goods other than that mention in sub-item (a) above made from Jute or hemp are taxable at the rate of 10%.
Learned counsel for the applicant has submitted that the assessing authority has incorrectly proceeded by applying the notification dated 13/15.9.2001 and entry no.58 of the said notification dated 15.9.2001 which provides that the Yarn of all kind imported from outside of India are taxable at the rate of 20%. He has submitted that this notification No. 2800 dated 13.9.2001 is an amended notification of the previous notification dated 29.1.2001. Entry 36 of the notification dated 29.1.2001 reads as follows:
36
Tapes, niwar (excluding cotton niwar) and laces including cord, string or line used for tying purposes or for drying clothes.
Sale to consumer
4%
From the reading of entry 36 of the notification dated 29.1.2001 it is clear that the same relates to Tapes, niwar (excluding cotton niwar) and laces ....... for tying purposes or for drying clothes.
Learned counsel for the applicant therefore, submits that the notification dated 13/15.9.2001 is the amendment of entry No. 36 of notification dated 29.1.2001 which has no concern whatsoever with the present issue/item.
Learned counsel for the applicant therefore, submits that in fact the present issue/item is covered by the notification dated 15.1.2000 and he further states that even assuming without admitting, if the 'Jute Sutli' is not covered under item (i) of entry 21 of notification dated 15.1.2000 then it can be covered by item (ii) of Sl. No.21 and the rate of tax cannot be more than 10%.
In support of his submission learned counsel for the applicant has placed reliance of decision of this Court in the case of Commissioner of Sales Tax vs. S/s. Bharat Rope Store 2004 U.P.T.C. 1120. In the case of M/s Bharat Rope Store (Supra) the issue came up before this Court for consideration was as to whether Badh (Baan) falls either entry no.55 or entry no. 25 of the notification dated 7th September 1981. This Court has considered the meaning of word "Yarn". Word Yarn has not been defined either in the Act or Rules or in the notifications. Yarn means Sute (lwr). According to Oxford Dictionary "Yarn" means:
"Any spun thread specially or kinds prepared for weaving, knitting or rope making."
"Any fibre, as woollen, silk, flax, cotton, nylon etc. spun into strands for weaving, knitting or making thread."
"Yarn" has been interpreted by the Supreme Court with reference to the provisions of U.P. Sales Tax Act in the case of Commissioner of Sales Tax, U.P. v. M/s. Sarin Textiles, 1975 U.P.T.C. 429 in connection with the phrase "woollen carpet yarn". The said word is not defined either in the Act and Rules or, in the notifications. The dictionary meaning of these words, as noted by the Supreme Court from Oxford Dictionary in the aforesaid case of M/s. Sarin Textiles reads as follows:
"'Yarn' has not been defined either in the Act and the Rules, or in the notifications. We have therefore the construe this term in its ordinary grammatical sense. According to Oxford Dictionary 'Yarn' means-
'Any spun thread specially of kinds prepared for weaving, knitting or rope-making'."
Webster's New World Dictionary also gives its meaning thus:
"Any fibre, as wool, silk, flax, cotton, nylon etc. spun into stands for weaving, knitting or making thread."
Thus, a fibre in order to answer the description of the yarn in the ordinary commercial sense must have two characteristics. Firstly it should be spun strand. Secondly such strand should be primarily meant for use in weaving, knitting or rope making.
The supreme Court has also defined the weaving in paragraphs Nos. 14, 15 and 16 of the said judgment, which reads as follows :
"The question thus narrows down into the issue: Is woollen carpet Kati--which is admittedly unspun fibre--'used in weaving' within the contemplation of these notifications? Again, 'weaving' has not been defined in these notifications or the other statutory provisions. We have therefore to fall back upon its ordinary dictionary meaning. In that sense, 'weaving7 implies the process of forming thread into fabric by interlacing. 'The most important method by which wool products are produced is weaving, the interlacing at right angles of two or more systems of threads. Variations are almost limitless but all are derived from three basic weaves, plain, satin and twill. Hundreds of yarns wound on large spool or beam form the warp. Each yarn is drawn through the eye of a heddle or wire mounted on a harness frame. The alternate raising and lowering of the frames, each with its hundreds of heddles controlling the warp yarns, forms the shed, the space through which the weft or filling yarn is carried by the shuttle, a long streamlined box holding a bobbin of yarn in its hollowed centre. Each trip of the shuttle is called a pick. After each pick the harness frames shift position in accordance with the predetermined pattern, producing a new shed or different combination of raised and lowered warp yarns. The filling yarn are beaten down with a weaver's reed to make a tighter weave.' (Encyclopaedia Britannica, Vol. 23, page 342, 1971 Edn.)
Thus 'weaving' is the process of combining warp and weft components (respectively lengthwise and crosswise) to make a woven structure. The threads that lie lengthwise are called the warp. The other threads, which are combined with the warp and lie width wise, are called the 'weft', also known as 'woof. An individual thread from the warp of indefinite length is called an end; each individual length of weft from one edge to the other is called a pick. Consecutive picks are usually consecutive lengths of one piece of weft yam that is repeatedly folded back on itself. In all methods of weaving before a length of weft is inserted in the warp, the warp is separated, over a short length extending from the cloth already formed, into two sheets. The process is called shedding. The sequence of primary operations in one weaving cycle is thus shedding, picking and beating in. (Encyclopaedia Britannica, Vol. 23, page 342.)
'Weaving is differentiated from both warp and weft, knitting from braiding and from net-making, in that these processes all make use of only one set of elements. In addition, there are geometrical differences.' (Encyclopaedia ibid.)."
Now the question arises as to whether the 'Jute Sutli' is Yarn or not. In common parlance 'Jute Sutli' as is found is used mainly for the purpose of Tat, Patti or Bags etc. It is not disputed that the Sutli is made of Jute and is Yarn. In this connection it may also be mentioned here that subsequently the State Government has issued a notification dated 7th October 2002 imposing the tax on Tat, Patti or Bags made from Jute ...... Sutli or Jute Yarn at the rate of 5%. Therefore, the notification dated 7th October 2002 is clarificatory in nature. In the notification dated 15th January 2000 the word Sutli or Jute Yarn are missing however, in the subsequent notification dated 7th October 2002 the words Sutli or Jute Yarn are included.
In view of the aforesaid, the revision petition filed by the applicant is allowed. The order of the Tribunal dated 22.5.2006 is set aside and the order of the 1st appellate authority dated 9.12.2004 is restored.