Zebra Zippers (P) Ltd. and Another vs Commissioner, Trade Tax and Another

Heard counsel for the parties.

By the impugned order dated May 7, 1994, annexure 3 to the writ petition, petitioners engaged in the manufacture of zipper tapes and zipper laces, were called upon by the assessing authority to show cause why the items manufactured by the petitioners be not brought to tax at the rate of 4 per cent in view of entry 50 of the Notification No. 7036, dated September 29, 1984.

In its representation dated March 3, 1994, annexure 2 to the writ petition, the petitioners averred that tapes and laces are being manufactured by polyester yarns and hence they are in the nature of fabrics/textiles--not liable to tax.

In the counter-affidavit filed for the respondents, it is denied that the tapes and laces manufactured by the petitioners, are in the nature of fabrics/textiles. It is reiterated that the tapes and laces manufactured by the petitioners fall within the ambit of entry 50 of the Notification No. 7036 dated September 29, 1984, which runs as follows :

"50. Tapes, niwar (excluding cotton niwar) and laces, including cord, string or line, used for tying purposes or for drying clothes".

Submission of counsel for the petitioners is that it is admitted in para 5 of the counter-affidavit that the petitioners are engaged in the manufacture of zipper tapes and zipper laces ; that tapes and laces manufactured by the petitioners constituted raw material for the manufacture of zippers ; that the entire material, namely, tapes and laces manufactured by the petitioners, is being sold only for the manufacture of zippers and for no other purpose ; and that the tapes and laces manufactured by the petitioners, cannot be said to have been used for the purpose of tying and drying clothes, as contemplated by the entry 50.

In para 16 of the counter-affidavit, it is averred that the tapes and laces manufactured by the petitioners may be used for some other purposes as well apart from being used in the manufacture of zippers.

It is categorically denied in para 19 of the counter-affidavit that zipper tapes and zipper laces are fabrics and, therefore, they are non-taxable items.

The questions for consideration, therefore, are :

(1) Whether the tapes and laces manufactured by the petitioners partake the character of fabrics/textiles ; and

(2) Whether the tapes and laces manufactured by the petitioners are also used for the purpose of tying and drying clothes within the meaning of entry 50 of the Notification No. 7036, dated September 29, 1984 or whether they are used only as raw material for the manufacture of zippers, as averred by the petitioners.

These questions are essentially questions of fact and clear findings have to be recorded on them by the assessing authority. Without findings on these vital questions, it is difficult to reach a correct conclusion. The matter, therefore, has to be sent back to the assessing authority.

In the result, the petition is disposed of finally with the observations that the assessing authority shall record clear findings on the above stated questions after affording an opportunity of being heard to the petitioners and then pass an order in accordance with law.