STATE OF GUJARAT Vs. GHANSHYAM STORES

JUDGEMENT

(1.) At the instance of the State of Gujarat, the following question is referred to us for our opinion under section 69(1) of the Gujarat Sales Tax Act, 1969 :

(2.) A few facts need be noticed in order to appreciate the rival contentions urged in connection with the aforesaid question. The opponent-firm carried on the business of collar cuttings from different types of cotton fabrics and selling the same. These collar cuttings are meant to be used as materials for stiffening the collars of the shirts, etc. These collar cuttings are, therefore, sold to tailors for their use as inter-materials for the collars of shirts, etc., as stated above. The opponent-firm made an application under section 62 of the Gujarat Sales Tax Act, 1969 , to the Deputy Commissioner for determination as to what would be the appropriate entry in the schedule under which these goods could be taxed. Two bills were produced with the application being bills Nos. 309 and 387 of 25th May, 1974, and 27th July, 1974, respectively. By bill No. 309 the material known as "inter-lining collar cuttings" were sold while by bill No. 387 the materials known as "inter-lining double collar cuttings" were sold. The former materials, namely, inter-lining collar cuttings, are prepared out of ordinary cotton cloth of a particular type manufactured by certain textile mills for this purpose. The cloth is required to be cut into shapes of different sizes of collars. The latter materials, namely, inter-lining double collar cuttings, are prepared from two types of cotton cloth; one type of cotton cloth is the same from which inter-lining collar cuttings are prepared whereas the other type of cotton cloth is a cloth superimposed with certain plastic materials on one side. This cloth is also cut into pieces of particular shape of different sizes of collars. The piece of collar cutting prepared from ordinary plain cloth and the piece of cloth superimposed with plastic materials on one side are joined by the process of heating or ironing whereby both the pieces get stuck to each other. It is common ground that no other process is applied or was in fact applied by the opponent-firm except that the cotton cloth was cut into required shapes of collars and that two pieces of different kinds of cloth were put together and joined by the process of heating or ironing. It has been also found that the two pieces joined together by the process of ironing or heating were such that they could be easily separated.

(3.) Before the Deputy Commissioner of Sales Tax, a contention was raised by the opponent-firm that the sales of these collar cuttings would fall under entry 51 of Schedule I to the Gujarat Sales Tax Act, 1969 , inasmuch as they are articles prepared from any textile or handloom fabrics and sold at a price not exceeding Rs. 10 per article. This contention of the opponent-firm did not find favour with the Deputy Commissioner who was of the opinion that the articles in question would be covered by the residuary entry 13 of Schedule III of the said Act. The opponent-firm being aggrieved by this order of the Deputy Commissioner carried the matter in appeal before the Tribunal.