STATE Vs. SAHACHARI UDHYOG MANDIR

JUDGEMENT

(1.) THESE are five connected references under section 15(1) of the Rajasthan Sales Tax Act, 1954 (No. 29 of 1954) (for short "the Act"), and the Board of Revenue, Ajmer ("the Board" herein), has referred the following questions of law for our decision : "(1) Whether, on the facts and circumstances of the case, the cutting and stitching of umbrella cloth so as to make umbrella covers is a process which converts the said cloth into different commodity and it ceases to come within the definition of textile fabrics and to be eligible for exemption from tax ? (2) Whether, on the facts and circumstances of cases Nos. 16, 17 and 19, the orders of the assessing authority taxing the turnover as escaped turnover are in conformity with the provisions of section 12 of the Rajasthan Sales Tax Act ?"

(2.) IT is not necessary to state the facts for the reasons that the learned counsel for the parties are in agreement that in the three cases proceedings for reassessment under section 12 of the Act were initiated and orders were passed. So far as the other two cases are concerned the assessment was made under section 10 of the Act. The assessee-respondent (dealer) deals in cloth, umbrella parts and umbrellas and prepares umbrella covers from umbrella cloth after cutting and stitching the same. The assessee (dealer) ran an umbrella processing or umbrella industry. The contention of the assessee (dealer) is that even after the process of cutting and stitching the umbrella cloth, the umbrella cover so made is not a different commodity and it falls within the article "textile fabrics" and therefore it is eligible for exemption from tax; whereas the argument of the department is that after cutting and stitching of umbrella cloth, when it is converted into an umbrella cover; a different commodity comes into existence and the exemption available to the textile fabrics is not available. The Commercial Taxes Officer was of the opinion that the assessee (dealer) ran an umbrella processing or umbrella industry and as such in accordance with rule 42(3) of the Rajasthan Sales Tax Rules, he ought to have maintained stock book regarding raw materials of finished goods, which was not done. He also found that the sales of umbrella covers were taxable in the assessee's hands and he, therefore, allowed deductions for the sale of cloth only. On appeal the Deputy Commissioner (Appeals), Commercial Taxes, Udaipur, found that umbrella covers are articles meant for a definite use, if attached with the ribs and handle of the umbrella and that they cannot be used for any other purpose as they are made of different pieces of cloth and are stitched for no other use except umbrella cover. Thus according to the Deputy Commissioner (Appeals) the characteristics of being an umbrella cloth were lost. He, therefore, maintained the order of the assessing authority. Revisions were filed and the Board opined that umbrella covers come within the definition of textile fabrics and are exempt from sales tax. The Board, therefore accepted the revision petitions, and set aside the orders of the Deputy Commissioner (Appeals) in so far as they relate to the taxing of umbrella covers. In these circumstances, the aforesaid questions have been referred to us for decision. "Umbrella cover" being an expression of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it". IT is to be understood in common parlance. Reference may usefully be made to Ramavatar Budhaiprasad v. Assistant Sales Tax Officer [1961] 12 STC 286 (SC). Before we decide the questions referred we shall refer to the authorities cited by the learned Additional Advocate-General as well as the learned counsel for the dealer-assessee.

(3.) IT is held that after cutting and stitching of umbrella cloth so as to make umbrella covers a different commodity (umbrella cover) comes into existence and it ceases to be textile fabrics so as to be eligible for exemption from tax. Our answer to the first question is in affirmative, in favour of the department and against the assessee (dealer). As we have answered the first question in favour of the department and against the assessee (dealer) it necessarily follows that the assessing authority was right and justified in taxing the escaped turnover and therefore the provisions of section 12 of the act were rightly invoked. The answer to the second question is also in affirmative and in favour of the department and against the assessee.