MADURA MILLS COMPANY LIMITED Vs. GOVERNMENT OF MADRAS

JUDGEMENT

(1.) THE Madura Mills Company, Limited, Madurai, the assessee-petitioner herein, was assessed for the assessment year 1959-60 both under the Madras General Sales Tax Act, 1959 (hereinafter referred to as the M.G.S.T. Act) and also under the Central Sales Tax Act, 1956 (hereinafter referred to as the C.S.T. Act). We are not here concerned with the assessment under the M.G.S.T. Act. A turnover of Rs. 7, 96, 61, 509.04 was adopted as the turnover of purposes of the C.S.T. Act. After allowing certain exemptions and deductions the taxable turnover was determined by the assessing authority at Rs. 7, 87, 77, 857.26. On the ground that a turnover of Rs. 5, 32, 910.05 out of the determined turnover was not covered by 'C' Forms, the same was subject to the non-concessional rate of 7 per cent. and the petitioner was assessed to Central sales tax. In the turnover so excluded so excluded from the benefit of the statutory concession, it is claimed that a sum of Rs. 4, 68, 399.54 represented the sales turnover of cotton tyre cord warp sheet. This is however subject to verification. THE petitioner's further case is that in so far as the turnover of Rs. 5, 29, 652.57 out of Rs. 5, 32, 910.05 is concerned it did produce the 'C' Forms, not along with the return, but at some later point of time, either before or immediately after the final assessment order. THE assessing officer rejected the claim of the assessee to be taxed at the lower rate of 1 per cent. because the 'C' Forms were not filed in time and due diligence was not exercised in the matter of their filing. On appeal it was expressly contended that cotton tyre cord warp sheet is not a woven fabric but is really cotton yarn. It was further argued that for the turnover of Rs. 11, 159.75 included in the disputed turnover the assessee's case is that the 'C' Forms were filed along with the returns. Ultimately they were not traced in the office of the department.

(2.) IT could not therefore get relief before the assessing officer. Before the Appellate Assistant Commissioner, however, duplicate 'C' Forms were obtained and filed before the appellate authority on 24th January, 1964.(b) Regarding the turnover of Rs. 2, 52, 311.80 forming part of the disputed turnover, the 'C' Forms were filed after pre-assessment notices were issued by the assessing authority and before it passed the order. (c) Regarding the turnover of Rs. 1, 53, 154.90 forming part of the disputed turnover, the 'C' Forms are purported to have been filed after the order was passed but before it was received. (d) Regarding the turnover of Rs. 1, 13, 026.12 forming part of the disputed turnover, the 'C' Forms were filed after the receipt of the order but they were returned and not entertained by the appellate authority even when tendered before it.

(3.) THE Appellate Assistant Commissioner rejected the appeal in toto. On a further appeal to the Tribunal, it was of the view that the cotton tyre cord warp sheet was neither yarn nor fabric, but is a species of its own, uncovered by the provisions of the C.S.T. Act it was of the view that cotton tyre cord warp sheet (hereinafter referred to as cord) is an independent item of goods coming within the general purview of goods and as such goods are assessable to multi-point levy under the M.G.S.T. Act, they are liable to Central sales tax at the rate of 2 per cent. possibly by the operation of section 8(2-A) read with section 9(3) of the C.S.T. Act. It finds that "cord" means twisted thread but, as yarn is spun thread, "cord" cannot include yarn. It however incorrectly observed that no objection was raised by the petitioner to the effect that "cord" should be classified as cotton yarn. As a matter of fact, this was the burden of the song of the assessee. On the other question, the Tribunal was of the view, relying on Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar Brothers that the 'C' Forms were not filed strictly in accordance with the statutory provisions under the C.S.T. Act. THE Tribunal found that the petitioner did not furnish the 'C' Forms before the prescribed authority before the 25th of the succeeding month nor did it maintain a register in Form No. 9 and submit the forms with its last return. Such non-compliance, according to the Tribunal, was enough to reject the contention that the petitioner was entitled to the concessional rate of levy. Against the said order of dismissal of the appeal by the Tribunal, the present tax case has been filed.Mr. Rangarajan, learned counsel for the petitioner, states that "cord" is classifiable as textile or cloth and hence exempt from taxation. He would urge that the view in Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar Brothers is no longer good law in view of the later pronouncement of the Supreme court and the decisions of this court. He has produced before us the "cord" and urged that the material is not even corded and certainly not a textile fabric. It is at best cotton yarn, which is distinctly understood as a separate commodity in commercial circles.