Northern India Rubber Mills … vs The State Of Punjab And Ors. on 23 September, 1980

Punjab-Haryana High Court
Northern India Rubber Mills … vs The State Of Punjab And Ors. on 23 September, 1980
Author: Sandhawalia
Bench: S Sandhawalia, S Kang


Sandhawalia, C.J.

1. Whether “transmission rubber belting” is exempt from the incidence of sales tax by virtue of item 30-B of Schedule B to the Punjab General Sales Tax Act, 1948, is the issue which has now been sought to be reagitated in this set of five connected writ petitions. Learned counsel for the petitioner agree that the question of law being identical this judgment, will govern all of them.

2. Before adverting to the aforesaid question, it may be noticed at the outset that in some of the writ petitions two preliminary questions on the point of limitation had arisen when these cases first came up before a Division Bench. Considering the conflict of authority, these two questions were referred for decision by the order dated 21st February, 1979, to a larger Bench. Consequent thereto the Full Bench returned the answer to the legal issue of limitation and sent the case back for decision on merits.

3. Though the question before us is pristinely legal it is nevertheless apt to give the background of facts from those in C. W. P. No. 302 of 1978. Messrs. Northern India Rubber Mills deal in the sale and supply of “transmission rubber belting” and have been registered dealers under the Punjab General Sales Tax Act, 1948 (hereinafter called the Act). In the quarterly return filed by the petitioners for the assessment year 1973-74 they claimed that the “transmission rubber belting” was tax-free under Section 6 being covered by item 30-B of Schedule B to the Act. However, the Assessing Authority did not accept this plea holding that the “transmission rubber belting” was not covered by item 30-B of the Act. An appeal was carried against the order of the Assessing Authority to the Deputy Excise and Taxation Commissioner, Jullundur, who also upheld the stand of the revenue that the “transmission rubber belting” was taxable. Further appeal being carried to the Punjab Sales Tax Tribunal met the same fate on the finding that the goods were not covered by item 30-B of Schedule B to the Act. In holding so the Tribunal implicitly followed the Division Bench judgment of this Court in Laxmi Machinery Store v. State of Punjab [1977] 39 S.T.C. 87.

4. Now it appears to us that the solitary legal question raised in all these cases is concluded against the petitioners at least within this Court by the authoritative observations in the Laxmi Machinery Store’s case. If the matter were res integra it would perhaps have been of some relevance to notice the few contentions which were attempted to be raised on behalf of the petitioners by Mr. Sarwal. In the context of an existing precedent of this Court the core of the matter now is whether the judgment aforesaid calls for reconsideration.

5. To narrow down the controversy it first calls for notice that Mr. Sarwal herein has claimed exemption specifically under item 30-B of the schedule. For facility of reference this may first be quoted :

30-B. Such varieties of canvas cloth, tarpaulins and similar other products, manufactured with cloth as base, as are manufactured in textile mills, powerloom factories and processing factories.

In the Laxmi Machinery Store’s case [1977] 39 S.T.C. 87, an identical question arose with the added ground that item 30-C was also sought to be invoked. In fact in the said case a specific sales tax reference had been made by the Tribunal on the question whether the “rubber transmission belting” was covered by item 30-B of Schedule B to the Act so as to earn an exemption from the levy of tax. Chinnappa Reddy, Ag. C.J., who prepared the judgment of the Division Bench first noticed as follows:

In order to answer the questions, it is necessary to know what ‘rubber transmission belting’ is. The parties are agreed that the following description of ‘rubber transmission belting’ contained in the order of the Sales Tax Tribunal is correct :

Transmission belting is manufactured by laying thin layers of compound made by rubber chemicals, colouring, chalk and petrol on canvas and thereafter belting is prepared in different thicknesses by mere contact folding of the rubberised canvas.

From this description, it is clear that ‘rubber transmission belting’ is manufactured by the superimposition of rubber compound on either side of canvas. The question is, whether ‘rubber transmission belting’ is covered by entry 30-B or 30-C of Schedule B of the Punjab General Sales Tax Act so as to be exempt from the imposition of sales tax.

The learned Judge thereafter returned the answer to the question in the following categoric terms :

We may assume that ‘rubber transmission belting’ is manufactured in a ‘processing factory’. There is also no doubt that it is manufactured with cloth as a base. The question is whether it comes within the description of ‘similar other products’. The word ‘similar’ apparently refers to the expression ‘canvas cloth and tarpaulins’, which precede the expression ‘similar other products’. In order to be classified as a product similar to canvas cloth and tarpaulins, it must be of the same nature as canvas cloth and tarpaulins. The very different use to which canvas cloth and tarpaulin on the one hand and rubber transmission belting on the other are put clearly indicates that they cannot be considered similar in nature. That was the view which was taken by the Sales Tax Tribunal, Punjab, and we agree with that view.

6. It is plain that the aforesaid observations completely cover the present case. Unable to refer any meaningful criticism of the terse though impeccable reasoning of the Division Bench, Mr. Sarwal had attempted to argue that the same was no longer good law in view of the recent pronouncement of their Lordships of the Supreme Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana [1977] 39 S.T.C. 87. I am unable to agree. What fell for consideration in the Porritts & Spencer (Asia) Ltd.’s case [1978] 42 S.T.C. 433 (S.C.) was whether “dryer felts” were within the category of the phrase “all varieties of cotton, woollen or silken textiles” as used in item 30 of Schedule B to the Punjab General Sales Tax Act. It would, therefore, be manifest that both the items of the schedule and the nature of the article under consideration before their Lordships of the Supreme Court were radically and substantially different from what falls for consideration here. Even on a close perusal of the Supreme Court judgment, I find nothing therein which would necessarily override the observations in the Laxmi Machinery Store’s case [1977] 39 S.T.C. 87.

7. Clutching at a straw Mr. Sarwal had then contended that in the Porntts & Spencer (Asia) Ltd.’s case [1978] 42 S.T.C. 433 (S.C.), their Lordships had tilted to the view that the user of an article was not conclusive or material and the common parlance rule was the more appropriate to be applied. Even assuming it to be so, I take the view that the reasoning in the Laxmi Machinery Store’s case [1977] 39 S.T.C. 87 is in no way whittled down. In fact the learned Judges of the Division Bench were fully alive to the common parlance rule and expressly applied it in construing entry 30-C with the following observations:

In order to come within entry 30-C, rubber transmission belting must first be capable of being described as a fabric. In common parlance, fabric means ‘a woven, felted or a knitted material for wear or ornament, as cloth, felt, hosiery or lace’. In a broad sense, it may mean anything that is fabricated or put together. From a reading of entry 30-C, it has to be held that it is used in the former sense and not in the latter sense. The expression ‘leather cloth, imitation leather cloth and cotton fabric’ found in entry 30-C gives the necessary colour and meaning to the word ‘fabrics’.

8. To conclude, I would hold that the Laxmi Machinery Store’s case [1977] 39 S.T.C. 87 still holds the field and reaffirming the same, I would return the answer to the question posed at the very outset in the negative, i.e., that “transmission rubber belting” is not exempt under item 30-B of Schedule B to the Punjab General Sales Tax Act, 1948.

9. Once it is held as above that the issue is covered on all fours against the petitioners by the binding precedent, it is unnecessary and indeed would be wasteful to advert to any other point.

10. The writ petitions are without merit and are hereby dismissed with costs.

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