STATE OF GUJARAT Vs. NEWAGE HOSE MANUFACTURING CO

JUDGEMENT

(1.) BY this reference under section 69 of the Gujarat Sales Tax Act, 1969, hereinafter to be referred to as "the said Act", the Tribunal has referred the following question for our decision : " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in its finding that 'rubberised cotton hose pipes' and 'rubberised cotton-cum-synthetic fibre hose pipes' produced and sold by the opponent-firm - Newage Hose Manufacturing Company, were comprised in the definition of 'cotton fabrics' as contained in item No. 19 in the First Schedule to the Central Excises and Salt Act, 1944 and, therefore, fell under entry 37 in Schedule I to the Gujarat Sales Tax Act, 1969, so that the sales thereof were free from all taxes leviable under the Gujarat Sales Tax Act, 1969. "

(2.) FACTS giving rise to the present reference, shortly stated, are as under : (i) The opponent is a registered dealer carrying on business of manufacturing and selling (a) rubberised cotton hose pipes and (b) rubberised cotton-synthetic fibre hose pipes. The opponent applied to the Deputy Commissioner of Sales Tax under section 62 of the said Act for determination of question as to whether sales of those products would be liable to tax and, if so, what would be the rate of tax. (ii) After hearing the parties, the Deputy Commissioner by his order, dated 11th April, 1979, held that the said two products manufactured and sold by the opponent would fall under residuary entry 13 in Schedule III to the said Act, and that their sales would be liable to tax at the rate specified in the said entry. It may be noted that before the Deputy Commissioner it was the case of the opponent that the said products would fall within entry 37 of Schedule I to the said Act so as to be exempted from the liability of sales tax. (iii) Being aggrieved by the judgment and order of the Deputy Commissioner, the opponent carried the matter in appeal to the Tribunal and, the Tribunal after considering the amended definition of "cotton fabric" as contained in item 19 of the First Schedule to the Central Excises and Salt Act, and also after considering the amended definition of the word "manufacture" as contained in section 2 (f) of the Central Excises and Salt Act came to conclusion that the products manufactured and sold by the opponent fell within the definition of "cotton fabric" as contained in item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944. (iv) Not satisfied with the judgment and order of the Tribunal, the State moved an application under section 69 of the said Act seeking reference of question of law arising out of the judgment and order of the Tribunal. The Tribunal, accordingly, framed question of law reproduced hereinabove for our decision.

(3.) IT is the finding of fact of lower authorities that cotton hose pipe manufactured by the opponent was wholly made from fabric which was manufactured wholly from cotton and contained less than 40 per cent of rubber. In the second product the cotton content was about 70 per cent.