1. In the instant case the main controversy is over the nature of waterproof cotton canvas cloth. Applicant No. 1, a partnership firm, and applicant No. 2, one of its partner, are engaged in manufacture and sale of waterproof cotton canvas cloth, cotton canvas tarpaulins, bulking sheets, etc., and are registered dealers under the Bengal Finance (Sales Tax) Act, 1941 (in short, "the 1941 Act") and the Central Sales Tax Act, 1956 (in short, "the Central Act"). The Commercial Tax Officer while making assessment for the period of four quarters ending on October 23, 1984 (Kartick Bodi, 14th 2041) charged tax on the entire sale price of waterproof cotton canvas. According to the applicant, waterproof cotton canvas cloth being "textile fabric" within the meaning of Rule 3(28)(a) of the Bengal Sales Tax Rules, 1941 (in short, "the 1941 Rules") is not exigible to tax and on the said ground they (the applicants) have not collected sales tax from their purchasers. They further contended that cotton canvas cloth even after being subjected to the waterproofing process by application of wax, resin and colours does not lose its character as the cotton fabric. The applicants allege that while assessing officer has himself made mistake in calculating the measurements of the product, he has rejected the books of accounts on the plea that the applicants' calculation of the measurements of the product was erroneous. On appeal against the impugned assessment, the appellate authority, Assistant Commissioner of Commercial Taxes (respondent No. 2) has endorsed the view of the assessing authority that "cotton canvas" and "cotton canvas waterproof" are two distinct commodities and rejected the appeal. The revision application filed before the West Bengal Commercial Taxes Appellate and Revisional Board (in short, "the Board") was disposed of upholding the view of the assessing authority as regards the waterproof canvas cloth.
According to the applicant, all processed cloths excepting "rubberised cloth" were brought within the ambit of the expression "textile fabrics" within the meaning of the Rule 3(28)(a) of the 1941 Rules.
They further aver that the respondents Nos. 2, 3 and the Board have erred in holding that the sales of waterproof canvas cloth are exigible to tax and also in making measurement of such clothes. They pray for quashing the assessment order and the orders of the respondent No. 2 and the Board, and for restraining them from giving effect to such orders.
2. The contention of the respondents as canvassed in the affidavit-in-opposition is that under Rule 3(28)(a) of the 1941 Rules, as it stood at the time of the impugned assessment, waterproof canvas cloth was not a "textile fabric" and hence not exempted from tax.
According to them, levy of tax on sales is not dependent on collection of such tax by a dealer from his purchaser and hence the applicants cannot evade tax liability on the ground of non-collection of tax by them. They further claim that cotton canvas, the base material, having been converted into waterproof cloth, underwent a basic change and emerged as a distinct commercial commodity and that the respondent No.3 rightly levied tax on the sales of such product. On the same ground the respondents defend the appellate order and the revisional order.
Their further contentions are that the assessing authority made no mistake in calculating measurements of the waterproof cotton canvas produced by the applicants and that there is no arbitrariness in the assessment of the respondent No. 3, 3. The text of the affidavit-in-reply filed by the applicants is no departure from what has been asserted in the main application. In this reply the main emphasis has been laid on the interpretation of Rule 3(28)(a) with reference to the notifications which modified its text from time to time.
4. The issue that falls for decision here is whether waterproof cotton canvas is covered by expression "all varieties of textile fabric" as defined in Rule 3(28)(a) of the 1941 Rules.
5. Rule 3 of the 1941 Rules gives the list of goods turnovers whereof are deductible from the gross turnover of a dealer in calculating the taxable turnover. One such item is "textile fabrics" as described in sub-clause (a) of clause (28) of the said Rule. After the amendment effective from April 1, 1975 the text of the said Rule was thus : "3(28)(a) Sales of all varieties of textile fabrics (other than satranchi, carpets and druggets) made wholly or partly of cotton, staple fibre, rayon, artificial silk or wool including handkerchiefs, towels, bedsheets, bed spreads, table cloths, napkins, dusters, cotton velvets, and velveteen, tapes, niwars and laces.
Explanation.--In this sub-clause the expression 'textile fabrics' includes embroidered textile fabrics, but does not include pure silk cloth, canvas cloth, rubberised cloth, plasticised, rexine or waterproof cloth, belting and pipes including hose pipes." By Notification No. 2443-F.T., dated May 27, 1975 the Government amended, with effect from April 7, 1975, sub-clause (a) of clause (28) of the said Rules by omitting the words "canvas cloth" from the explanation to the said sub-clause. Thereafter, by Notification No.3434-F.T., dated August 2, 1975 substituted in the explanation to the sub-clause, the words "rubberised cloth" for the words "rubberised, plasticised, rexine or waterproof cloth". Therefore, at the relevant period that is from November 4, 1983 to October 23, 1984 the text of the sub-clause stood as follows : "3(28)(a). Sale of all varieties of textile fabrics (other than satranchi, carpets and druggets) made wholly or partly of cotton, staple fibre, rayon, artificial silk or wool including handkerchiefs, towels, bedsheets, bedspreads, table cloths, napkins, dusters, cotton velvets and velveteen, tapes, niwars and laces.
Explanation.--In this sub-clause the expression 'textile fabric' includes embroidered textile fabrics, but does not include pure silk cloth, rubberised cloth, belting and pipes including hose pipes." 6. It is apposite to mention that the Legislature by prescribing a definition of any expression for a taxing statute is competent to make departure from the general sense of the expression and confer a restricted meaning to it. The Legislature is also competent to extend the meaning of a definition to certain items which would not ordinarily be understood by the expression, and to also exclude from the defined meaning of the expression some items which would ordinarily be understood by it.
7. The term "textile fabric" generally means woven material or woven tissues. In the words of Justice Bhagwati, the word "textiles" is derived from the Latin "texere" which means "to weave" and it means any woven fabric. When yarn, whether cotton, silk, Woollen, rayon, nylon or of any other description or made out of any other material is woven into a fabric, what comes into being is a "textile" and it is known as such". [1978] 42 STC 433 (SC) [Porritts & Spencer (Asia) Ltd. v. State of Haryana]. Therefore, in general terms any material made of woven tissue of any type would have been "textile fabrics". But the scope of Rule 3(28)(a) has got certain distinctive features worth-mentioning.
Firstly, Rule 3(28)(a) has kept its scope restricted to woven material made partly or wholly of only (i) cotton fabric; (ii) staple fabric ; (iii) rayon fabric ; (iv) artificial silk fabric, or (v) woollen fabric. Secondly, by specific mention the rule takes out of its ambit satranchi, carpet and druggets, though they may be made of any of the fibres already mentioned. Thirdly, the definition by express terms includes handkerchiefs, towels, bedsheets, etc. This is only clarificatory and is intended to mean that textile fabric which are sold by specified names or descriptions are not excluded from the definition. Fourthly, the explanation to the rule excludes "pure silk" from the scope of the expression "textile fabric" though in the general sense of the term the expression would have included it. Fifthly, explanation includes "embroidered textile fabric" though it is not textile fabric simpliciter because after woven into textile it is subjected to embroidery work. Sixthly, by express term rubberised cloth, belting and pipes including hose pipes have been excluded from the scope of "textile fabric". Of these "rubberised cloth" is the item which has been subjected to other processing (i.e., rubberisation) after woven into textile. Thus, when we consider the language of the rule in its totality we find that though the expression "all varieties of textile fabrics" has been used in rule, in effect the scope of the expression has been greatly narrowed down. Therefore, the words "all varieties" are not controlling in their total scope the expression "textile fabric".
8. Again, in the absence of any specific provisions to the contrary (like the referential legislation of the Bombay Sales Tax Act, 1953 adopting the definition of cotton fabric as given in item 19 of the Central Excises and Salt Act, 1944), the expression "textile fabric, made wholly or partly of cotton", should be considered to be the product which is the direct outcome of the process of weaving (knitting, felting or braiding) of the cotton fabric. A process of super-imposition of the films or layers of wax and resin on the canvas cloth, which itself is a completely manufactured textile fabric, cannot be said to be the direct outcome of the weaving process.
9. Mr. M.L. Bhattacharyya, learned advocate for the applicant, advances two-fold reasons in support of the applicant's case. Firstly, he contends that the expression "all varieties of textile fabrics" is comprehensive enough to include "waterproof cotton canvas" ; but we have already seen that Rule 3(28)(a) is not as comprehensive as Mr.
Bhattacharyya argues to be. By its own text this rule read with the explanation appended to it has imparted a very specific meaning of the expression, both restricting and also extending to some extent. We shall see now that the restricted meaning of the expression, as it stood at the relevant point of time, keeps out of its domain a textile fabric converted subsequently to waterproof canvas.
10. Mr. Bhattacharyya's second contention is based on the effect of amendment of Rule 3(28)(a) effective from April 7, 1975. He points out that previous to this amendment the items "rubberised, plasticised, rexine or waterproof cloth" remained excluded from the expression "textile fabric" and that by the said amendment the expression "rubberised, plasticised, rexine, or waterproof cloth" was substituted by the expression "rubberised cloth". According to him, the effect of this amendment is that items "plasticised, rexine and waterproof cloth" remained no more excluded from the expression "textile fabric", but stands included into it within the meaning of the rule and thus such items became exempted from tax. But when such items, viz., plasticised, rexine and waterproof cloth which were earlier expressly declared excluded from being "textile fabrics", are altogether omitted from Rule 3(28)(a) by way of amendment, the Legislature or delegated legislative authority does not thereby necessarily mean that omission from the specified exclusion-list amounts to inclusion of the item into the expression "textile fabrics". The effect of such omission is atmost to make the Rule 3(28)(a) non-speaking on these items. Therefore, in order to consider the position of any such item vis-a-vis Rule 3(28)(a) after the amendment, we shall have to examine the item in the light of the rule and explanation appended to it as they stand after the amendment and then to decide if the expression "textile fabrics" even in its amended form takes such item within its fold.11. It may be seen that embroidered textile fabric by a special mention has been included within the scope of "textile fabric". It indicates that the Legislature did not consider such embroidered textile fabric as part of "textile fabrics" and to include it within the meaning of "textile fabrics" they had to make a special mention in the explanation appended to Rule 3(28)(a). The only conceivable disqualification of this item (embroidered textile fabric) for being dislodged from the expression "textile fabric" is the ornamentation by embroidery work to which its base material, a textile fabric, is subjected, after it is manufactured as textile fabric. So, it is clarificatory to avoid any confusion due to such extra-ornamentation work. Thus, where the Legislature has attached a special meaning to an expression appearing in a statute the ordinary or dictionary meaning of the expression will cease to have application in deciding the meaning of the expression. We have seen that here a special meaning has been attributed to the expression "textile fabric".
12. In the opinion of Mr. Bhattacharyya from the all encompassing expression "all varieties of textile fabrics" only specified items, viz., pure silk, rubberised cloth, belting and pipes including hose-pipes are to be excluded from the scope of textile fabrics. Pure silk, belting and pipes inspite of being textile fabrics have been specifically excluded. It has been contended by Mr. Bhattacharyya that if an item having textile fabric as base material but subsequently processed is intended by the Legislature to be taken out from the scope of "textile fabric" there was no necessity to exclude "rubberised cloth" by a special mention of the same. Mr. K.K. Saha, learned Advocate for the respondents, submits that because of certain decisions of various High Courts declaring rubberised cloth as textile fabrics, the item "rubberised cloth" has been specially mentioned for the purpose of exclusion to avoid confusion. That apart, if we are to accept that whatever item has been manufactured with textile fabric as core material shall be an item within the scope of textile fabric under the 1941 Act unless the same is by express words eliminated from its scope, we shall be led to a very queer situation. If such reasoning is accepted, a car tyre will be a textile fabric because it has got a woven cord, a textile fabric, coated with layers of rubber on both sides, but nobody will conceive a motor car tyre as a textile fabric.
Moreover, the exclusion of an item from the scope of a statutory definition by specific mention of the item in the explanation to the definition is at most "ex abundanti cautela" and is not of much significance, when the language of the definition itself by necessary implication has already excluded such item.
13. We shall now view the position from the common parlance angle.
Application of wax, resin and colour to the textile fabric in making the waterproof canvas cloth not only changes the look and colour of the textile fabric but altogether transforms it into a different commercial commodity making it fit for special use. Because of its waterproof quality its utility and use are distinct from textile fabric from which it is made. Mr. Bhattacharyya submits that even after being converted into waterproof canvas cloth it remains to be a textile fabric and retains the quality of a textile fabric because once resin and wax are removed, the base cloth which is a textile fabric can be seen intact.
But its base cloth is incapable of being used for the purpose for which waterproof canvas cloth can be put to. After conversion of the base cloth into waterproof cloth the latter assumes a distinct name, character and utility as a different commercial commodity. A person interested in purchasing waterproof canvas cloth because of its special utility as a waterproof cloth will never be interested to purchase an ordinary textile fabric. The waterproof canvas cloth and ordinary canvas cloth cannot be substitute for each other in the domain of their respective special utility which they are made for. We should consider the matter in the light of "users" test as adopted by the Supreme Court in the case of State of Gujarat v. Prakash Trading Co. [1972] 30 STC 348 for determining the character of an article as understood in the common parlance. It is appropriate to refer to the case of Kilburn & Co. Ltd. v. Commissioner of Sales Tax, U.P., Lucknow [1973] 31 STC 625 (All.). In that case the question for decision was whether ammonia paper and ferro paper used for obtaining prints and sketches of site plans could be considered as "paper" in the general sense of the term.
The Allahabad High Court has held that ammonia paper and ferro paper are not "papers" as understood in the ordinary parlance. The High Court observed that it is only the chemical coating on the paper which makes it a commodity distinct from paper, otherwise it is nothing but an ordinary rough base paper and that because of specific use, such papers are not papers in the general sense of the term. Again, in the case of Kores (India) Limited v. State of Uttar Pradesh [1970] 26 STC 126 (All.), the question for decision was whether carbon paper could be considered as "paper" in the general sense of the term for the purpose of taxation. The same High Court in giving its decision has observed that "paper" refers generally to the material used for writing, printing or wrapping, but the important element involved in the use of carbon paper is not the paper itself but the chemical medium with which it is coated and the paper on which such coating is sprayed is of secondary importance inasmuch as it constitutes merely a convenient base for the coating. It has further observed that when carbon paper is sold it is not sold as tissue paper but as a material whose value and significance lies entirely in the chemical coating and hence carbon paper cannot be considered to be a paper.
14. This Tribunal has also got occasion to deal with a similar issue in the case of Neo-Technico (Graphic) Sales Pvt. Ltd. v. I.C.T., Chichira Check-post (RN-127 of 1997 Reported in [2000] 117 STC 141 (WBTT)).
There the question was whether pre-sensitised plates (in short, P.S.plates) were aluminium plates covered by item 3 of Part A of Schedule IV of the West Bengal Sales Tax Act, 1994. P.S. plates are manufactured by subjecting aluminium coils to micro-graining and micro-finishing processes and to various other chemical processing and eventual imparting on it a layer of photo-sensitive coating. According to the Revenue, because of photo sensitive coating on aluminium plates, the P.S. plates do not cease to be aluminium plates. This Tribunal while deciding the issue has taken into consideration how the P.S. plates are accepted in the common parlance by those dealing with them and observed that in the trade parlance nobody will think of an aluminium plate while in need of a P.S. plate. This Tribunal has also pointed out that though in manufacturing P.S. plate, base material is the aluminium plate, the process to which the base material is subjected converts the same into altogether a different commercial commodity having special field of use.
15. The case as is presently before us is very similar to the case of State of Tamil Nadu v. East India Rubber Works, Madras-1 [1974] 33 STC 399 (Mad.). In that case what fell for consideration of the Madras High Court was whether waterproof cloth, as dealt with by the assessee of that case, would come under item 4 of Schedule III of the Madras General Sales Tax Act, 1959, and would be exempted from tax.
Undisputedly, waterproof cloth is made with cotton cloth as base. In manufacturing such waterproof cloth, the base cloth is spread over rollers and the solution of coloured poly-vinyl chloride (PVC) or liquid rubber melted on hot plate is applied on the roller cloth uniformly. The material is then pressed and dried to get waterproof cloth. The application of rubber or PVC imparts to the base cloth the quality of waterproofing. The Madras High Court held in the case that waterproof cloth was not "cotton textile" within the meaning of item 4 of Schedule III. In giving its decision High Court has observed as follows : "But it is not possible for us to import the definition of 'cotton fabrics' in item 19 of the Central Excises and Salt Act, 1944, and the various tariff notifications issued in the context of that definition in interpreting item 4 of Schedule III unless that definition of 'cotton fabrics' is specifically made applicable by the provisions of the Madras General Sales Tax Act as in the case of the Bombay Sales Tax Act where entry 15 of Schedule A in terms refers to item 19 of the Central Excises and Salt Act, 1944. We have to, therefore, construe item 4 of Schedule III independent of any definition given under any other statute." Hence the High Court held that waterproof canvas cloth was not cotton textile. Be it mentioned here that in the case before us Rule 3(28){a) of the 1941 Rules, as it stood at the relevant point of time, made no reference to item No. 19 of the Central Excises and Salt Act, 1944. The Madras High Court has also considered the common parlance identity of the waterproof cloth and observed : "The processed articles are not sold as cloth but as a material whose use, value and significance lie entirely in the rubber or P.V.C. coating spread thereon." 16. The above observation squarely applies to the waterproof canvas cloth which is the subject-matter of dispute before us. Accordingly, after due consideration of all the aspects we are of the opinion that waterproof cotton canvas cloth does not come within the scope of the text of Rule 3(28)(a), nor can it be considered as textile fabric in the common parlance meaning, because of its distinct use, value and significance as waterproof sheets.
17. To derive support to his contention Mr. Bhattacharyya has relied on the decision in the cases of (i) State of A.P. v. Goodyear India Ltd. [1989] 74 STC 47 (AP), (ii) Delhi Cloth & General Mills Co. Ltd, v.State of RajasthanPorritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433 (SC), (iv) Saifuddin Ebrahimbhai Vadnagarwalla v. Assistant Commissioner of Commercial Taxes [1976] 38 STC 463 (Cal) and (v) Pokardas & Brothers v. State of Gujarat [1982] 51 STC 88 (Guj). We shall now see that all these decisions are in the context of legal and factual positions which are quite distinct from what are before us.
18. In the first case [1989] 74 STC 47 (AP) (State of A.P. v. Goodyear India Ltd.) the contentious issue was whether transmission belting, which is made of cotton superimposed with rubber, is "cotton fabric" within the meaning of entry 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act, 1957 and if it is exempted from tax. The High Court of Andhra Pradesh held that it was "cotton fabric". But this decision was made in view of what has been specifically referred in the explanation to the Fourth Schedule. The explanation runs thus : "Explanation".--The expressions in items 5, 6 and 7 shall have the same meanings assigned to them in Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)." Again, the text of item 19(1)(b) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 runs as follows : (b) Cotton fabrics, subjected to the process of bleaching, mercerising, dyeing, printing, waterproofing, rubberising, shrink-proofing, organdie processing or any other process or any two or more of these processes." Thus, the Andhra Pradesh General Sales Tax Act, 1957, itself by specific reference to the Central Act (Act 58 of 1957) recognises rubberised cotton cloth as "cotton fabric", but in the case before us the position is entirely different.
19. In the second case, under the Rajasthan Sales Tax Act, 1954, the question for decision was whether "rayon tyre cord fabric" manufactured by the assessee for use in manufacture of tyre was a rayon fabric within the meaning of item 18 of the Schedule to the said Act and was exempted from sales tax under the Central Sales Tax Act, 1956. The Supreme Court answered the question in affirmative. In giving its decision the Supreme Court has considered the nature of "rayon tyre cord fabric" and observed as follows : "Rayon fibre is spun into rayon and twisted into cord. The cords are arranged lengthwise, and are commonly described as the 'warp'. They are packed 25 to the inch. By a process of weaving, cotton threads are wefted through a loom across the cords. The wefts are thinner and fewer than the cords, being not more than two to five per inch.
The cord component comprises the major content of the product. The unprocessed rayon tyre cord fabric so produced is sold in the form of rolls in the market." Thus, the woven cord simpliciter, before it is subjected to process of rubberising for making the tyre, was the goods involved in the Rajasthan case. But in the case before us goods involved is not cotton canvas simpliciter but a product that emerges after the cotton canvas is processed with resin, wax and colouring. Moreover, the Supreme Court gave the decision on another ground. The said Rajasthan Act by referring to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 clearly includes "all varieties of fabrics". This can be seen from the fact that Section 4(1) of the Rajasthan Act provides for exemption from sales tax of goods specified in the Schedule to that Act. Item 18, inserted in the Schedule by the Amending Act of 1957, included "rayon fabric" as defined in the Additional Duties of Excise (Goods of Special Importance) Act, 1957. "Rayon fabrics" are mentioned in the Schedule to that 1957 Act and are classified by reference to item 22 in the First Schedule to the Central Excises and Salt Act, 1944. Supreme Court points out that item 22 of the First Schedule to the Central Excises and Salt Act, 1944 speaks of "all varieties of fabrics", a language wide enough to include the rayon tyre cord fabric (but not tyre) manufactured by the appellant in that case. But in our case, as already observed, there is no such scope to include waterproof cotton canvas cloth either by specific reference to the said Central Act of 1957 or by any necessary implication.Porritts & Spencer (Asia) Ltd. v. State of Haryana] the question before the Supreme Court for determination was whether dryer felts, made out of cotton or woollen yarn by the process of weaving and used as absorbents of moisture in paper manufacturing factory, fell within the meaning of the word "textile" in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948. The Supreme Court has held that dryer felts were textiles. In coming to its decision the court made the following observations : "The word 'textiles' is derived from the Latin 'texere', which means 'to weave' and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material is woven into a fabric, what comes into being is a 'textile' and it is known as such........................
Whatever be the mode of weaving employed, woven fabric would be 'textiles'. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric..............................
'The raw material used by the company is cotton and woollen yarn which they themselves manufacture from raw cotton and wool, and the finished product, called "felts", are manufactured on powerlooms from cotton and woollen yarn.' 'Dryer felts' are, therefore, clearly woven fabrics and must be held to fall within the ordinary meaning of word 'textiles'." Thus, the goods involved in controversy is the direct end-product of weaving process and is "textile fabric" simpliciter without being subjected to any further processing. So, this decision does not have any relevance in deciding whether textile fabric, which is subjected to further processing for converting it into a commodity having special use and identity in the common parlance, is distinct from its base material, i.e., a textile fabric simpliciter. Be it mentioned here that where product is the outcome of such weaving it is "textile fabric" irrespective of domain of its use.
21. The fourth case [19761 38 STC 463 (Saifuddin Ebrahimbhai Vadnagarwalla v. Assistant Commissioner of Commercial Taxes), has been decided by the High Court of Calcutta. This case is no doubt under the 1941 Act and the question involved was whether "rubberised cotton fabrics", obtained by mixing cotton and rubber, could be considered to be an item covered by the definition given in Rule 3(28). Court has no doubt answered the question in affirmative, but has done so in the context of a legal position altogether different from what we are now concerned with. The decision was in relation to the text of Rule 3(28), as it stood prior to April 7, 1975. This rule, at that point of time, permitted tax exempted on (a) sales of cotton fabric, rayon or artificial silk fabrics, woollen fabrics and some other specified goods ; (b) sales of any such fabric when dyed or printed after they come out of the mill ; and (c) sales of mill-made cotton fabrics embroidered after they come out from the mill. The explanation appended to the rule is very significant and runs thus : "Explanation.--In this clause, the expressions 'cotton fabrics', 'rayon or artificial silk fabrics', 'woollen fabrics' and 'tobacco' respectively have the same meaning as in items 19, 22, 21 and 4 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944)." Again, item 19 of the said Central Act (hereinafter referred to as the "Excise Act") is as follows : "19. Cotton fabrics.--'Cotton fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton, and include dhoties, sarees, chadars, bed-sheets, bed-spreads, counterpanes and table-cloths, but do not include any such fabrics-- (c) if it contains 60 per cent or more by weight of rayon or artificial silk ;".
"It has to be noticed that the expression 'cotton fabrics' as defined by item 19 of the First Schedule to the Central Excises and Salt Act, 1944, has been incorporated in the definition of 'cotton fabrics' as provided under Rule 3(28) of the Bengal Sales Tax Rules, 1941. Whatever be the meaning of 'cotton fabrics' in the said Act of 1944, the same would attach to the definition of 'cotton fabrics' as provided by the Bengal Sales Tax Rules, 1941. ............The opening words of the definition are : 'means all varieties of fabrics' and significantly such fabrics must be manufactured fabrics. It is to be noticed that the expression 'either wholly or partly from cotton' would signify that the fabrics so manufactured must contain some portion of cotton. The required percentage has not been mentioned there. But, in respect of certain fabrics, where cotton would be mixed with wool, silk, rayon or artificial silk, they must not exceed the percentage of such wool, silk, etc., as specified thereafter........... It is an artificial definition in the sense that a special meaning has been attached to the expression 'cotton, fabrics' and, as such, the ordinary common sense or dictionary meaning would not be applicable to find out the meaning of the expression 'cotton fabrics'. Accordingly, it would be of little consequence that superimposition of cotton cloth with rubber would make it a different commodity or not as considered by the authorities concerned." Finally, the court has concluded, "it has to be borne in mind that if the manufactured article comes within the definition of 'cotton fabrics', as defined under item 19, then whether or not the manufactured fabric would change its character or would be transformed into another substance would be of little consequence".
Therefore, it is the definition given in item 19 of the First Schedule of the Excise Act that settled the issue in that case. But in the case before us we are concerned with Rule 3(28)(a) which has undergone a sea-change. The rule now defines "textile fabrics" and not "cotton fabrics" and that too without any bearing with item 19 of the First Schedule of the Excise Act. The rule as it stood at the point of time relevant for us is not only independent of said item 19, it gives also a very restricted meaning to the expression "textile fabric". In item 19 of the expression "all varieties of fabrics of cotton" had the full play of its normal meaning subject only to the restriction that in the case of cotton fabrics blending with such other types of fabrics, the percentage of such other fabrics could not have exceeded the prescribed limit, and beyond that there was no other limit or restriction; but the definition of "textile fabrics" as contained in the amended Rule 3(28)(a) read with the explanation appended to it gives a very restricted meaning as discussed in paragraph 7 above. The specific inclusion of embroidered textile fabrics, which is a textile fabric with subsequent processing, is clearly not intended to be covered by the definition in the normal course.
22. In the last case [1982] 51 STC 88 (Guj) (Pokardas & Brothers v.State of Gujarat) the contentious issue was whether tarpaulins were cotton fabrics. This case was also decided because of adoption of the definition of "cotton fabrics" as given in item 19 of the First Schedule to the Central Excises and Salt Act, 1944 as well as the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980. Detailed discussion on the point is not necessary because of the discussions made above. This would suffice to say that Rule 3(28)(a) of the 1941 Rule makes no reference to the said two Central Acts.
23. In view of the discussions above we do not consider that any of the decisions on which Mr. Bhattacharyya has put reliance is applicable to the case before us. We have already held that neither Rule 3(28)(a), in terms of its own language, covers "waterproof canvas cloth" nor can by necessary implication this item be included into the rule nor can in common parlance it be treated as a canvas cloth simpliciter.
24. As regards the applicant's claim about miscalculation of the measurements of the cotton canvas used for manufacturing the products and the sale proceeds of the products during the year in question, Mr.
Bhattacharyya points out, (1) that at page 2 of the assessment order the C.T.O. has used the expression "Rs." (abbreviation of word rupees) before the measurement of the cotton canvas used and the quantity of product sold, creating confusion ; (2) that the C.T.O. has taken measurement in terms of square metres though the measurement should be in terms of running metres ; (3) that the C.T.O. committed mistake in connecting the raw materials used during the year in question and sale of product during that period and failed to appreciate that whatever was sold during the year was not the product of the same year and the opening stock of the product for the year was not taken into consideration ; and (4) that while calculating the salable value of the product sold, the C.T.O. assumed the profit at the rate of 25.7 per cent but multiplied the cost price of the product by 125.7 instead of by 1.257 to find the gross sale price.
As regards the first point we find that abbreviation "Rs." has been used before the measurement figures of the base material, i.e., canvas cloth used for the production, as well as before the measurement of the products sold. It is clearly a mistake and confusing too and should be corrected.
As regards the second point it is not clear what is the unit of measurement, either running metre or a square metre. This being the factual aspect we do not give any finding. If any mistake has been committed the same must be rectified.
As regards the third point, we find much substance in the contention of Mr. Bhattacharyya. The C.T.O. has disbelieved the account books on the ground that there was discrepancy between the measure of base material, i.e., canvas cloth used for the manufacture of the products and the measure of the products actually sold. He proceeded with an assumption that whatever has been sold in course of year was nothing but whatever has been manufactured in course of the period. It is not necessary that sale in the course of the year should be confined only to whatever has been manufactured in course of only that year. A part of the previous year's products may also be included in the sale of the year in question. It is not the case that the opening stock of products for the concerned year was nil. This matter requires reconsideration by the competent authority.
As regards the fourth point, we find that though in the assessment order the C.T.O. appears to have multiplied the figure of cost of production of the quantity of goods sold by the factor 125.7, actually he has multiplied it 1.257 and so the final calculation is correct.
However, this calculation will be very much dependent on the outcome of the reconsideration of the issue in regard to the third point above.
25. Therefore, correction of the abovementioned mistakes and reconsideration of the matter as observed above is necessary and the same can be competently done by the appellate authority.
26. In the result, as we have already observed, it cannot be held that the assessing authority erred in levying tax on the sale of waterproof canvas cloth. On the same ground it cannot be said that the orders of the appellate as well as revisional authorities are bad in law.
However, as already pointed out, for reconsideration of certain matters and for correction of mistakes the case should go back on remand to the appellate authority.
27. The application is, thus, allowed in part. The impugned orders of the appellate authority and the revisional authority are hereby set aside. The case shall go back on remand for rehearing of the matter by the appellate authority in the light of the observations made above.
The appeal should be disposed of within four months from the date of this order. We make no order as to costs.