Nylon Net Manufacturing Company Vs. Addl. Sales Tax Officer & Others
EmailAppeal: Civil Appeals Nos. 971-72 of 1991 with Nos. 5469 of 1995 and 5305 1997 in SLP No. 1832 of 1991 ,
Petitioner: Nylon Net Manufacturing Company
Respondent: Addl. Sales Tax Officer & Others
Apeal: Civil Appeals Nos. 971-72 of 1991 with Nos. 5469 of 1995 and 5305 1997 in SLP No. 1832 of 1991 ,
Judges: S. P. Bharucha & V. N. Khare , JJ.
Date of Judgment: Jul 29, 1997
Head Note:
SALES TAX
Kerala General Sales Tax Act , 1963
Schedule I , Entry 100 ; Schedule III , Entry , 7 – Nylon Fishing Nets – Held that they fall under Entry 7 of Schedule II and not under Entry 100 of Schedule I .
Kerala General Sales Tax Act , 1963
Schedule I , Entry 100 ; Schedule III , Entry , 7 – Nylon Fishing Nets – Held that they fall under Entry 7 of Schedule II and not under Entry 100 of Schedule I .
Held:
The assessee averred in its writ petition that the process of bonding was not carried out in making nylon fishing nets . There was no affidavit to counter the averment . The High Court ought to have proceeded on this basic and not on some assumption about coir fabrics to come to the conclusion that Entry 100 of Schedule I should be so read as not to give the word ” bonded ” its ordinary technical meaning but the meaning ” bound together ” . The conclu-sion , therefore , that nylon fishing nets fell within Entry 100 of Schedule I cannot be upheld .( Para 5 )
Cases Reffered:
1 . Kishinchand Chellaram v. Jt. CTO ( 1968 ) 21 STC 367 ( Mad ) ( Para 6 )
JUDGEMENT:
S.P. BHARUCHA , J.
1 . Special leave in SLP (C) No. 1832 of 1991 granted .
2 . The order under appeal was made by a Division Bench of the High Court of Kerala . The question for consideration was whether nylon finishing nets were , for the purposes of sales tax under the provisions of the Kerala General Sales Tax Act , 1963 , proper-ly classifiable under Entry 7 of Schedule II , as contended by the Sales Tax authorities .
3 . Entry 7 of Schedule II reads thus :
” 7 . Cotton fabrics , woolen fabrics and rayon or artificial silk fabrics as defined in Items Nos. 19 , 21 and 22 respective-ly of the First Schedule to the Central Excises & Salt Act , 1944 . :
Entry 100 of Schedule I reads thus :
” 100 . Bonded fibre fabrics other than those made of coir. “
4 . The High Court took the view that nylon fishing nets fell under both the aforesaid entries , but that Entry 100 of Schedule I being of a specific nature , they were taxable thereunder . The High Court noted the averments in the writ petition and that they had not been controverted by the Sales Tax authority . It noted that it had been averred :
” Bonded fibre is totally different . . . .It will be seen therefore that bonding is holding together of fibres by adhe-sive substance . There is no element of bonding involved in the making of fish net yarns or in the weaving thereof in the fish nets . “
The High Court also noted that a government order issued under the provisions of Section 59-A of the Act had noted that nylon nets were manufactured out of the nylon twines by the process of weaving , and that twine was the product obtained by twisting two or more nylon fibres . The twine was the product obtained by twisting two or more nylon fibres . The High Court referred to literature that stated that the term ” bonding ” was applied to the process of lamination by an adhesive . it , however , rejected the contention on behalf of the assessee that there being no bonded fibre in a nylon fishing net , it could be a bonded fibre fabric within the meaning of Entry 100 of Schedule I . The High Court said that Entry 100 of Schedule I applied to ” bonded fibre fab-rics other than those made of coir ” ( emphasis supplied ) ; coir yarn fabrics would not satisfy the bonding process if that pro-cess was given the restrictive and narrow meaning referred to in the literature relied upon by the assessee . If not expressly , at least by clear implication , there was a demonstration of the legislative will that a bonding process with adhesion or fusion of other substances was not indispensable for the process of bonding as visualised in Entry 100 of Schedule I . That which had been bound together was the meaning attributed by the legislature to the word ” bonded ” in the context of Entry 100 of Schedule I .
5 . We are of the opinion that the High Court was in error . Bonding has a clear technical significance , which the High Court noted . The assessee averred in its writ petition that the pro-cess of bonding was not carried out in making nylon fishing nets . There was no affidavit to counter the averment . The High Court ought to have proceeded on this basic and not on some assumption about coir fabrics to come to the conclusion that Entry 100 of Schedule I should be so read as not to give the word ” bonded ” its ordinary technical meaning but the meaning ” bound together ” . The conclusion , therefore , that nylon fishing nets fell within Entry 100 of Schedule I cannot be upheld .
6 . This brings us to Entry 7 of Schedule III which applies , inter alia , to ” rayon or artificial silk fabrics ” . The High Court relied upon the Division Bench judgment of the Madras High Court in Kishinchand Chellaram v. Jt. CTO ( 1968 ) 21 STC 367 ( Mad ) to come to the conclusion that nylon fishing nets were classifi-able as rayon or artificial silk fabrics . The Madras High Court considered literature about artificial silk , now known as rayon . It found that nylon fabrics were covered by the descriptive rayon or artificial silk fabrics . The Madras High Court considered literature about artificial silk , now known as rayon . It found that nylon fabrics were covered by the descriptive rayon or artificial silk fabrics . Having regard to the fact that the Sales Tax authorities had placed no material before the High Court to indicate any possible alternative classification , the High Court cannot be faulted for relying upon the Madras High Court judgment to come to the conclusion that nylon fishing nets fell within the ambit of Entry 7 of Schedule III .
7 . The appeals are allowed . The judgment and order under appeal is set aside insofar as it classified nylon fishing nets for the purposes of sales tax under the Kerala General Sales Tax Act , 1963 , under Entry 100 of Schedule I thereto . Its finding that nylon fishing nets fall under Entry 7 of Schedule III is upheld and nylon fishing nets shall be classified thereunder .
8 . No order as to costs .
1 . Special leave in SLP (C) No. 1832 of 1991 granted .
2 . The order under appeal was made by a Division Bench of the High Court of Kerala . The question for consideration was whether nylon finishing nets were , for the purposes of sales tax under the provisions of the Kerala General Sales Tax Act , 1963 , proper-ly classifiable under Entry 7 of Schedule II , as contended by the Sales Tax authorities .
3 . Entry 7 of Schedule II reads thus :
” 7 . Cotton fabrics , woolen fabrics and rayon or artificial silk fabrics as defined in Items Nos. 19 , 21 and 22 respective-ly of the First Schedule to the Central Excises & Salt Act , 1944 . :
Entry 100 of Schedule I reads thus :
” 100 . Bonded fibre fabrics other than those made of coir. “
4 . The High Court took the view that nylon fishing nets fell under both the aforesaid entries , but that Entry 100 of Schedule I being of a specific nature , they were taxable thereunder . The High Court noted the averments in the writ petition and that they had not been controverted by the Sales Tax authority . It noted that it had been averred :
” Bonded fibre is totally different . . . .It will be seen therefore that bonding is holding together of fibres by adhe-sive substance . There is no element of bonding involved in the making of fish net yarns or in the weaving thereof in the fish nets . “
The High Court also noted that a government order issued under the provisions of Section 59-A of the Act had noted that nylon nets were manufactured out of the nylon twines by the process of weaving , and that twine was the product obtained by twisting two or more nylon fibres . The twine was the product obtained by twisting two or more nylon fibres . The High Court referred to literature that stated that the term ” bonding ” was applied to the process of lamination by an adhesive . it , however , rejected the contention on behalf of the assessee that there being no bonded fibre in a nylon fishing net , it could be a bonded fibre fabric within the meaning of Entry 100 of Schedule I . The High Court said that Entry 100 of Schedule I applied to ” bonded fibre fab-rics other than those made of coir ” ( emphasis supplied ) ; coir yarn fabrics would not satisfy the bonding process if that pro-cess was given the restrictive and narrow meaning referred to in the literature relied upon by the assessee . If not expressly , at least by clear implication , there was a demonstration of the legislative will that a bonding process with adhesion or fusion of other substances was not indispensable for the process of bonding as visualised in Entry 100 of Schedule I . That which had been bound together was the meaning attributed by the legislature to the word ” bonded ” in the context of Entry 100 of Schedule I .
5 . We are of the opinion that the High Court was in error . Bonding has a clear technical significance , which the High Court noted . The assessee averred in its writ petition that the pro-cess of bonding was not carried out in making nylon fishing nets . There was no affidavit to counter the averment . The High Court ought to have proceeded on this basic and not on some assumption about coir fabrics to come to the conclusion that Entry 100 of Schedule I should be so read as not to give the word ” bonded ” its ordinary technical meaning but the meaning ” bound together ” . The conclusion , therefore , that nylon fishing nets fell within Entry 100 of Schedule I cannot be upheld .
6 . This brings us to Entry 7 of Schedule III which applies , inter alia , to ” rayon or artificial silk fabrics ” . The High Court relied upon the Division Bench judgment of the Madras High Court in Kishinchand Chellaram v. Jt. CTO ( 1968 ) 21 STC 367 ( Mad ) to come to the conclusion that nylon fishing nets were classifi-able as rayon or artificial silk fabrics . The Madras High Court considered literature about artificial silk , now known as rayon . It found that nylon fabrics were covered by the descriptive rayon or artificial silk fabrics . The Madras High Court considered literature about artificial silk , now known as rayon . It found that nylon fabrics were covered by the descriptive rayon or artificial silk fabrics . Having regard to the fact that the Sales Tax authorities had placed no material before the High Court to indicate any possible alternative classification , the High Court cannot be faulted for relying upon the Madras High Court judgment to come to the conclusion that nylon fishing nets fell within the ambit of Entry 7 of Schedule III .
7 . The appeals are allowed . The judgment and order under appeal is set aside insofar as it classified nylon fishing nets for the purposes of sales tax under the Kerala General Sales Tax Act , 1963 , under Entry 100 of Schedule I thereto . Its finding that nylon fishing nets fall under Entry 7 of Schedule III is upheld and nylon fishing nets shall be classified thereunder .
8 . No order as to costs .
