R.V. Raveendran, J.
1. This revision petition under Section 23(1) of the Karnataka Sales Tax Act, 1957 (for short, 'the Act') is filed by the State. The respondent is a registered dealer under the Act. It is engaged in the business of printing and selling of newspapers. For the assessment year 1995-96, an order of assessment was made by the assessing authority on January 12, 1998. Under the said order, the turnover relating to 'waste paper', i.e., cut waste paper, reel paper, rubbish paper and printed waste paper, was subject to tax as unscheduled goods under Section 5(1) of the Act, the rate of tax being 10 per cent.
2. Feeling aggrieved by the said assessment order, the assessee filed an appeal before the Joint Commissioner of Commercial Taxes (Appeals), Bangalore City Division-I, Bangalore (hereinafter referred to as 'the first appellate authority'). The assessing authority relied on the decision of the Supreme Court in State of Uttar Pradesh v. Kores (India) Ltd. : [1977]1SCR837 , wherein it was held that the word 'paper', not having been defined, has to be understood in the sense in which persons dealing in and using the article understand it ; and the said word in common parlance or in the commercial sense would mean paper, which is used for printing, writing or packing purpose. Consequently, the Supreme Court held that carbon paper is not 'paper'. The first appellate authority dismissed the appeal by order dated October 30, 1998, holding that cut waste papers, reel paper and rubbish paper and printed waste papers cannot be used for the purposes for which generally paper is used, i.e., for writing, printing or packing and therefore, waste paper was not 'paper'.
3. Feeling aggrieved, the assessee filed a second appeal before the Karnataka Appellate Tribunal, Bangalore. The Tribunal by its judgment dated August 27, 1999 allowed the appeal and set aside the order of the first appellate authority, and modified the order of assessment by treating the sale transactions relating to waste paper as liable to tax under entry at Sl. No. 3, Part P of the Second Schedule to the Act, accepting the contention of the assessee. The Tribunal held that the decision in Kores (India)'s case : [1977]1SCR837 was inapplicable. The Supreme Court was not considering an entry similar to SI. No. 3 of Part 'P' of the Second Schedule to the Act.
4. Feeling aggrieved, the State has filed this revision petition under Section 23(1) of the Act. The applicant has raised the following two contentions in this revision : (a) waste paper is not 'paper' falling under entry 3 of Part P of the Second Schedule to the Act and therefore, it should be treated as unscheduled goods, subject to 10 per cent tax under Section 5(1) of the Act ; and (b) during the earlier years, respondent-assesses had accepted the assessment of waste paper under Section 5(1) of the Act and therefore, it could not now contend that waste paper fell under entry 3 of Part P of the Second Schedule to the Act, merely to avail the lesser rate of tax at 8 per cent. According to the petitioner the following two questions of law arise for consideration in this matter :
(i) Whether Tribunal was justified in holding that waste paper sold by the assessee would be 'paper' falling under entry 3 of Part P of the Second Schedule to the Act ;
(ii) Whether Tribunal ought to have held that waste paper, reel paper, rubbish paper and printed waste paper were not 'paper' as the assessee could not use such paper for writing, printing or packing.
5. Section 5(1) of the Act provides that every dealer shall pay for each year, tax on his taxable turnover at the rate of 10 per cent, at the point of first sale. Section 5(3)(a) of the Act provides that notwithstanding anything contained in Sub-section (1), the tax under the Act shall be levied in the case of sale of any of the goods mentioned in column (2) of the Second Schedule, by the first or the earliest successive dealers in the State, who is liable to tax under the said section, a tax at the rate specified in the corresponding entry of column (3) of the said Schedule, on the taxable turnover of sales of such dealer in each year relating to such goods. During the relevant year, entry 3 of Part P of the Second Schedule to the Act read as follows :
'Paper (all kinds) including carbon paper, blotting paper, waterproof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper, but excluding photographic paper, pulp boards, art boards, duplex boards, triplex boards, card boards, corrugated boards and the like ; cellophane.'
6. If a commodity falls under any of the entries in the Second Schedule, it cannot be subjected to duty under Section 5(1) of the Act. In this behalf, it may be relevant to refer to the following observations of the Supreme Court in Bharat Forge & Press Industries (P) Ltd. v. Collector of Central Excise, Baroda, Gujarat [1992] 84 STC 414 :
'The question before us is whether the department is right in claiming that the items in question are dutiable under tariff entry No. 68. This, as mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item.'
7. The description of 'paper' in entry 3 of Part P of the Second Schedule includes paper of all kinds including carbon paper, which was held to be not 'paper' in Kores case : [1977]1SCR837 . The description of paper in entry 3 is exhaustive and is an inclusive and exclusive definition. Firstly it refers to paper of all kinds. Secondly, it specifies the items, which but for the specific inclusion may not be treated as paper. It also specifies the items which should not be considered as 'paper' for purpose of the entry. It does not exclude waste paper. Therefore, 'waste paper' would fall under entry 3 of Part P of the Second Schedule. The decision in Kores' case : [1977]1SCR837 relied on by the Revenue is not applicable, as that decision, as noticed above, merely dealt with the general meaning of the word 'paper', in common parlance or commercial sense, that is paper which is used for printing, writing or packing purposes. The Supreme Court did not deal with an entry similar to entry 3 of Part P of the Second Schedule.
8. In this connection, the following observations of a division Bench of this Court in Skrinivasa Traders v. Commissioner of Commercial Taxes-cum-Entry Tax, Karnataka [1999] 115 STC 540 ; (1999) 46 KLJ 557, are relevant :
'Paper in its ordinary meaning would include all sorts of paper unless specifically excluded or classified by the Legislature itself....... If the Legislature had intended to make a distinction between the waste paper and the paper or any other paper, it would have been definitely specified and reflected its intention either in the entry or the explanation attached to it.'
9. In Nandi Printers Pvt. Ltd. v. State of Karnataka C.R.P. Nos. 2919--22 of 1995 decided on January 15, 1997) a division Bench of this Court, while interpreting the provisions of an entry under the Karnataka Tax on Entry of Goods into Local Areas for Consumption Use or Sale Therein Act, 1979, held thus :
'The legislative history indicates that the expression 'paper' has been understood to include all kinds of paper including carbon paper, blotting paper, waterproof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper and the like. It is only by an amendment made to the Act on May 1, 1992, entry No. 65 provides that paper (all kinds) including carbon paper, blotting paper, waterproof paper, etc., but excluding certain other kinds of paper such as photographic paper, pulp boards, art boards, duplex boards, triplex boards and cellophane. This legislative practice itself would indicate that the expression 'paper' was meant to include all kinds of paper but whenever they included or excluded certain types of paper, it was made clear by appropriate provision. In the absence of any inclusion or exclusion in the expression 'paper' it must be held that it includes all kinds of paper.'
10. In Commissioner of Sales Tax, Maharashtra State, Bombay v. C. Abhaykumar & Co. [1995] 98 STC 212, the Bombay High Court interpreted the expression 'paper of all kinds' in entry 24(2) of Schedule C to the Bombay Sales Tax Act, 1959. It held that the said expression is wide enough to include within its ambit paper of every kind, whether used for printing, writing or any other purpose. It further held that the user of the goods (that is paper in question) is not material or relevant for determining whether it fell within item (2) of entry 24 or not, particularly having regard to the fact that entry relating to 'paper of all kinds' included sand paper, etc., which were not used for writing, printing or packing. A similar view was taken by the Madras High Court in Viny Pap Sales Depot v. State of Tamil Nadu [1977] 40 STC 317. We are in respectful agreement with the said view of the Bombay and Madras High Courts.
11. In this case, the assessee is engaged in the business of printing and selling newspapers. For the purpose of printing newspaper, it gets paper rolls and whatever is cut and found not suitable by it to undertake large scale printing of newspaper, or for writing or packing, is sold as waste paper. Some of the waste paper may be printed waste paper. The Tribunal has found that the paper that is sold by the assessee as waste paper, though considered as 'waste paper' for the purpose of the assessee's business, can nevertheless be used for printing or writing or packing by others, that is, small dealers or printers or actual users. This apart, 'paper' does not cease to be a paper merely because it is printed or is of a smaller size than what could be used for the printing of newspapers. So long as any paper, even waste paper, can be used for any purpose for which paper is normally used, it will continue to be paper. Thus even by applying the user test laid down in Kores case [19771 39 STC 8 (SO, the waste paper in question will be 'paper'.
12. Entry 3 of Part P of the Second Schedule to the Act includes blotting paper, waterproof paper, ammonia paper, stencil paper and carbon paper, which are not used for writing, printing or packing purpose. Further the said entry specifically includes paper of all kinds. Hence, it has to be held that even if waste paper is not capable of being used for writing, printing or packing, it would still fall under entry 3 of Part P of the Second Schedule, so long as it is 'paper'.
13. In view of the above, the decision of the Tribunal does not suffer from any error. This petition is therefore dismissed.