The Andhra Pradesh High Court held that Emery Cloth is cotton coated fabric and is eligible for sales tax exemption.
The Appellate Tribunal held that like rexine cloth, tarpaulin is also included in item-174 and stands in the same position as rexine cloth which was held to be completely exempt from tax by the Hon’ble Apex Court, consequently applying the said judgment, Tarpaulin would also be exempted and the entry-174 would make no difference.
The Government Pleader submitted that the emery cloth is based with sand and hence cannot be treated as cloth and that the emery cloth is for the purpose of shining the wood and other articles and the cloth is useless and of no importance.
It was also contended that the Tarpaulin being covered in item No.174 of the First Schedule, it was liable to be taxed and was rightly so taxed @ 4% by the Deputy Commissioner. The Appellate Tribunal erred in in interfering with the Order of the Deputy Commissioner.
The respondent’s counsel submitted that the Order impugned does not call for any interference and is perfectly justified as the items, in question are covered under Entry-5 of Fourth Schedule and exempted from tax.
Section 3 of the Additional Duties Act 1957 is the charging section and provides for levy and collection of additional duties on goods described in the First Schedule thereof at the rates therein specified. Headings and sub-headings and chapters within the Schedule mean headings, sub-headings and chapters in the schedule with the Central Excise Tariff Act 1985. By Section 5 of the APGST Act every dealer is required to pay tax on the quantum of his turnover at the rates specified in the schedule thereto.
A Division Bench of Justices Ravi Nath Tilhari and Harinath Nunepally observed that “The Appellate Tribunal rightly concluded that once tarpaulin falls under cotton fabrics in item-5 of the Fourth Schedule to the APGST Act, inclusion of it in item-174 of the First Schedule would make no difference. It could not be disputed by the learned Government Pleader that these two goods emery cloth and tarpaulin were covered in item-59.03 of the First Schedule to the Additional Duties Act.”
“A perusal of the Order of the Appellate Tribunal shows that the emery cloth was covered under item-59.03 and was exempted as the same was liable for additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957. Thus, considered, We do not find any illegality in the order of the Appellate Tribunal” the Court noted.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
