The
Assistant Commissioner of Sales Tax, Kerala. Vs. M/S P. Kesavan & Co [1995]
INSC 678 (14 November 1995)
Bharucha
S.P. (J) Bharucha S.P. (J) Faizan Uddin (J) Majmudar S.B. (J)
CITATION:
1995 SCC Supl. (4) 709 1995 SCALE (6)473
ACT:
HEAD NOTE:
O R D
E R
The
appeals, by certificate, arise upon the common judgment of a Division Bench of
the Kerala High Court whereby writ petitions filed by the respondents were
allowed.
The
respondents were sellers of Caristrap Rayon Cord Strapping. According to them,
the said strapping was exempted from taxation under the Kerala General Sales
Tax Act, 1963. They felied in this behalf upon Entry-7 of Schedule-III to the
said Act. Schedule-III sets out the goods which are exempted from sales tax
under Section-9 of the said Act. Entry-7 thereof reads thus:
"Cotton
fabrics, woolen fabrics and rayon or artificial silk fabrics as defined in
Items Nos. 19, 21 and 22 respectively of the First Schedule to the Central
Excise and Salt Act, 1944." Item No.22 of the First Schedule to the
Central Excise and Salt Act, 1944, so far as it is relevant, read as follows:
Rayon
or Artificial Silk Fabrics - "Rayon or artificial silk fabrics include all
variteties of fabrics manufactured either wholly or partly from rayon or
artificial silk." The said strapping, according to the writ petitions, is
a fabric made purely from rayon yarns. The rayon yarns are used with bonding
agents in fabricating the said strapping.
The
percentage of the bonding agent used for fabricating the said strapping is
negligible. Sample of the said strapping with its literature was annexed to the
writ petitions. Upon this basis it was contended that the refusal by the
assessing authority of exemption under Entry-7 of Schedule- III of the said Act
was erroneous. The appellants filed an affidavit to counter the averments in
the writ petitions.
They
submitted that the writ petitions were not maintainable in that the writ
petitioners had not chosen to agitate the issue before the appropriate sales
tax authorities in appeal and revision. The counter also submitted that the
said strapping was a different and distinct commercial commodity and it was so
understood in the commercial world and by persons using the same. The writ
petitions were rejected by the learned single judge, who found that the
requirements of Entry-7 of Schedule-III to the Act were not satisfied. The
Division Bench allowed the appeals filed against his decision, observing that
all articles produced and manufactured by the use of rayon would be rayon fabrics.
Before
the learned single judge and the Division Bench the appellants, that is to say,
the sales tax authorities, strenuously contended that technical matters were
involved and that the appropriate authorities to go into and appreciate such
technical matters were the authorities provided for in the said Act. Both the
learned single judge and the Division Bench negatived this contention.
These
appeals had come up earlier for hearing and the bench of two learned judges
came to the conclusion that they should be heard by a bench of three judges in
view of the fact that new techniques had been evolved for making fabric out of
yarn and it might be inadvisable to confine the weaving process to the warp and
woof method.
What
has to be seen, having regard to Entry-7 of Schedule-III of the said Act read
with Item No.22 of the First Schedule of the Central Excise and Salt Act, 1944,
is whether the said strapping is a fabric, manufactured, either wholly or
partly, from rayon. As aforestated, the only material placed by the respondents
before the court was the bare statement that the said strapping was made purely
from rayon yarns and the percentage of bonding agent used in fabricating the
said strapping was negligible. The brochure which was annexed to the writ petition
is before us. It describes the various uses to which the said strapping can be
put; it does not describe the process of manufacture or fabrication of the said
strapping, the inputs therein and the percentage of the bonding agent used. The
principal question is whether the said strapping is a fabric made from rayon
yarn and no material was placed before the court in the writ petition to show
that it was. In view thereof, we think that the writ petitions ought not to
have been entertained and the respondents ought to have been drected to agitate
their grievances before the authorities under the Act. These authorities would
have been in a better position to seek and appreciate the necessary evidence
and determine whether or not the said strapping was something that fell within
the scope of Entry-7 of Schedule-III to the Act.
Where
technical matters are involved, and particularly when processes of manufacture
have become increasingly complicated, it is appropriate that the authorities
best competent to deal with such matters should be allowed to do so. The
learned single judge was swayed by the fact that some time had already elapsed
since the writ petition was admitted. Far less time had elapsed then than has
elapsed now. The Division Bench cited judgments in support of the view that it
was not necessary to refer the respondents to the authorities under the Act. It
does not appear to have appreciated that regard must be had to the facts of
each case. Where sufficient evidence is placed before the writ court for an
unambiguous conclusion upon technical matters to be reached, those authorities
might be apposite, but we must stress that where intricate technical processes
are involved, it is proper that the writ court should direct writ petitioners
to agitate their grievances before statutory authorities who are more competent
to assess the merits thereof.
We are
satisfied that the decision of the Division Bench was given upon inadequate
material. This decision must be set aside and the respondents relegated to such
remedy as they may have under the provisions of the said Act.
The
appeals are allowed. The judgment and order under appeal is set aside. The
respondents shall be at literty to adopt appropriate proceedings under the Kerala
General Sales Tax Act, 1963, to claim exemption for the said strapping for the
years 1970-71 and 1971-72. If the appropriate proceedings are adopted by 1st January, 1996, the same shall be decided without
taking the aspect of limitation into account. There shall be no order as to costs.
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