Novelty Dress Manufacturing Company vs Karnataka Appellate Tribunal and others

G.C. Bharuka, J.—These two revision petitions filed u/s 23(1) of the Karnataka Sales Tax Act, 1957 (in short "the Act"), are directed against the common order dated January 5, 1996 passed by the Tribunal in relation to the assessment periods 1990-91 and 1991-92. The Tribunal has affirmed the views taken by the authorities under the Act that the cotton rags (chindies) were liable to tax at the rate of 7 per cent on its turnover u/s 5(1) of the Act as unspecified goods.

The petitioner is engaged in the business of readymade garments. During the assessment years in question, its sale turnover of chindies was taken as Rs. 50,000 for each of the years by way of best judgment assessment since the petitioner had failed to show any sale on this count.

The learned counsel for the petitioner has assailed the order of the Tribunal on the basis of an unreported judgment of a learned single Judge passed in the case of Ashok Exports v. A.C.C.T. (W.P. No. 35953 of 1992 dated August 3, 1995) wherein on the basis of a circular issued by the Commissioner dated May 30, 1988 it is held that the said cotton rags (chindies) would be exempt from the levy of tax under the Act being Cotton fabrics. The learned single Judge while so holding has also noticed that no material placed before him to show that the said clarification had been withdrawn before the assessment.

Before going into the said aspect we find that there is a Division Bench judgment of this Court, in the case of Prabhat Rolling Metal Works Vs. Commissioner of Commercial Taxes in Karnataka and Another, , wherein this Court had specifically entered into the question at hand and held as follows :

"It is settled position in law that in understanding the meaning of the words used in the law levying sales tax the words must be given the meaning, as understood in common or commercial parlance. It appears to us that the word ''cotton fabric'' at common parlance conveys the meaning of cotton cloth used as such or for manufacturing clothing and other cotton goods, but does not include rags and chindies which are waste products of tailoring industry or old pieces of cloth which has lost utility as cotton fabrics."

Apart from this, in the case of Sree Jagadish Colour Company Vs. Commissioner of Commercial Taxes, Karnataka and others, it has been held by one of us (Bharuka, J.) that the Commissioner had no power to issue clarifications like the one relied upon by the petitioner purporting to exercise his power u/s 3A(2) of the Act. In these circumstances we are constrained to hold that cotton rags or chindies as known in common parlance are not cotton fabrics and therefore the same are liable to tax u/s 5(1) of the Act as unspecified goods.

Accordingly these petitions are dismissed, but without cost.

Petitions dismissed.