Allowed

Jayantilal T. Shah v. the State of Maharashtra and Anr.

Bombay HC24 Apr 2009WP/117/1998

Case brief

AI extract

What is this about?

This writ petition challenged an order imposing tax on stitched cotton poplin as handkerchiefs under Entry 45. The High Court held that the matter was governed by Entry 76, which exempted sales of handkerchiefs by dealers, and allowed the petition.

What did the court decide?

The impugned order of the Sales Tax Commissioner is set aside and the Writ Petition is allowed in terms of Entry 76 of the Schedule to the Bombay Sales Tax Act.

Jayantilal T. Shah Vs the State of Maharashtra and Anr. — GST and Indirect Tax | Bombay HC (2009)

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 IN THE HIGH COURT OFJUDICATURE AT BOMBAY

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 ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION NO. 117 of 1998

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 JAYANTILAL TALAKCHAND SHAH )
 trading in the name and style of )
 Viral Trading Company, having its )
 place of business at 30A Chakla )
 Cross Lane, Mumbai-3. ).. Petitioner

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Vs.

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 1) THE STATE OF MAHARASHTRA )
 having its office at Mantralaya )
 Madam Cama Road, Mumbai-32, )

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 2) SHRI SUBODH KUMAR )

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 the Commissiioner of Sales Tax )
 having his office at Vikrikar )
 Bhavan, Mazgaon, Mumbai-10. )..Respondents

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 Mr. B.C.Joshi with Ms. Nikhita Badhekar i/b. Mrs. Sarla

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 P. Sata for the petitioner.

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 Mr. S.K.Nair, Panel Counsel for the respondents.

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CORAM: F.I.REBELLO AND

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 J.H.BHATIA,JJ.

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 DATE: 24th April, 2009.

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 JUDGMENT : (PER J.H.BHATIA,J.)

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 1. The petitioner is in the trade of purchase of
 cotton fabric and making handkerchief of the same by
 cutting and stitching the piece of cloth from all the
 four sides. The petitioner submitted an application
 under Section 52 of the Bombay Sales Tax Act to the
 Sales Tax Commissioner for determining the following
 questions :-

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 (i) Whether the process of purchasing cloth and
 stitching four sides of pieces of cloth amounts to
 a process of manufacture?.

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 (ii) If yes, what is the rate of tax on Cotton
 Poplin stitched four sides ?

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 2. The Commissioner held that the process of
 purchasing cloth stitching four sides of the same
 amounts to manufacture and sale of cotton poplin
 stitched four sides as evidenced by invoice No.34801
 dated 22.2.1997 is a sale of handkerchief and is covered
 by the expression "other articles of personal wear"

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 falling under entry 45 of Part II of the Schedule ‘C’ of
 the Bombay Sales Tax Act, 1959 and is liable to tax at
 the rate of four paise in the rupee. This finding has
 been challenged in the present Writ Petition. It was
 contended on behalf of the petitioner that merely
 cutting the fabric into pieces and then stitching said
 piece from the four sides and selling those pieces as
 handkerchief does not amount to any process of
 manufacture and it cannot be taxable because fabric
 itself is not taxable. It is contended that several
 authorities in this respect, particularly the Judgment
 of this Court in Sathyavijay Commercial Company v/s.

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Commissioner of Sales Tax 55 STC 186 (Bom) have not been
 properly appreciated by the Commissioner. The petition
 was contested by filing a reply by the Deputy
 Commissioner of Sales Tax, Legal.

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 3. Even though the petition was initially contested
 on behalf of the State, at the time of hearing, the
 learned Counsel for the State fairly pointed out that
 entry No.76 to the Schedule under Section 41 of the
 Bombay Sales Tax Act was added by the Maharashtra
 Government as per GN.FD dated 29.4.1998 with effect from
 1.5.1998 and the said entry was given effect from
 1.10.1996 and in view of the said entry, whole of the
 tax on sale or purchase of Gandhi Top and handkerchief

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 by a dealer, effected on or after 1.10.1996 covered by

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 entry No.45 of Part II of Schedule ‘C’ has been

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 exempted. The said entry 76 reads as follows :-

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SCHEDULE

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`_____________________` `Sr. Class of Sales` `No. or Sales`	`____________` `Extent of` `Exemption`	`______` `Co`	`____________________________________` `nditions Authority Period` `for`
			`Exemption`
`(1) (2)` `_____________________`	`(3)` `____________`	`______`	`(4) (5) (6)` `___________________________________`
`76.Sales or pur-`	`Whole of`	`(i)`	`The claimant G.N.F.D. 1.10.96`
`chases of` `Gandhi Topi &` `Handkerchievs` `by a dealer` `effected on` `or after 1st` `October 1996` `covered by` `entry 45 in` `Part II of` `Schedule.`	`tax.`	`(ii)` `(1)`	`dealer has No.STA. to` `not collected 1098/CR- date` `tax separately 46/` `in the bill/ Taxation-` `cash memo/ 2 dated` `invoice 29.4.1998` `issued to` `customer.` `Notwithstanding` `anything` `contained in` `column (3), if` `the tax has` `been paid or` `otherwise` `recovered in` `part or full` `in respect` `of the` `period starting` `on the 1st` `October 1996` `and ending` `on the 1st` `May 1998 (both` `days inclusive)` `then the exemption` `shall be subject` `to following` `conditions:` `Where tax is paid` `or recovered in` `full then no` `exemption shall`

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 be granted, or
 (2) Where tax is
 paid or recovered
 in part then the
 exemption shall be
 restricted to
 the extent of
 unpaid tax."

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 The above entry was added to the Schedule on 29.4.1998 by
 Government Notification dated 29.4.9s8 i.e. after the
 impugned order was passed by the Sales Tax Commissioner.

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 4. In view of the entry 76, the impugned order
 passed by the Commissioner of Sales Tax is automatically
 superseded and stands set aside.

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 5. For the aforesaid reasons, the Writ Petition is
 allowed in terms of entry No.76 in the Schedule to the
 Bombay Sales Tax Act.

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(J.H.BHATIA,J.) (F.I.REBELLO,J.)

Jayantilal T. Shah v. the State of Maharashtra and Anr.

Case brief

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What did the court decide?

Jayantilal T. Shah v. the State of Maharashtra and Anr.

Case brief

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