Full Judgment Text
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PETITIONER:
COMMISSIONER OF SALES TAX, U.P.
Vs.
RESPONDENT:
MASNEILL AND BARRY LTD., KANPUR
DATE OF JUDGMENT19/11/1985
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
TULZAPURKAR, V.D.
CITATION:
1986 AIR 386 1985 SCR Supl. (3) 739
1986 SCC (1) 23 1985 SCALE (2)1093
CITATOR INFO :
RF 1986 SC1730 (8)
ACT:
U.P. Sales Tax Act, 1948 & Notification No. ST 3124/X-
1012 (4) - 1964, dated July l, 1966 - Sales Tax - Levy of -
’Ammonia Paper’ and’ ferro paper ’ - Whether "paper other
than hand made paper."
HEADNOTE:
The respondent-assessee, a dealer in stationery and
drawing material, sells ammonia paper and ferro paper. In
assessment proceedings under the U.P. Sales Tax Act, 1948
for the assessment year 1966-67 the assessee claimed that
ammonia paper and ferro paper were liable to tax as
unclassified goods at the rate of two per cent prescribed by
8.3 of the Act. The Sales Tax Officer rejected the claim
holding that ammonia paper and ferro paper fell under the
entry "paper other than hand made paper" included in
notification no.ST-3124/X-1012(4) - 1965 dated July 1, 1966
and its turnover was, therefore, liable to tax at six per
cent.
The appeal as well as the revision petition of the
assessee were dismissed.
At the instance of the assessee a reference was made to
the High Court, which held that "ammonia paper and ferro
paper do not fall within the category of paper".
Dismissing the Appeal of the Commissioner of Sales Tax,
^
HELD: 1. Ammonia paper and ferro paper do not fall
within the entry "paper other than hand made paper" in the
notification dated July 1, 1966 issued under the U.P. Sales
Tax Act, 1948. [743 D]
2. Ammonia paper and ferro paper are used for preparing
prints and sketches of site plans. An impression of the
print or sketch is made on the paper, and it is then exposed
to light for a period of time during which the chemical
evaporates resulting in the emergence of the print or sketch
of the site plan. Therefore, ammonia paper and ferro paper
cannot be regarded as paper in the popular sense of that
term. Paper is used for
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printing or writing or for packing. Ammonia paper and ferro
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paper are not employed for any of the purposes and subjected
to any of the processes for which paper, as commonly
understood, is generally used. [742 C-E]
State of Uttar Pradesh and Anr. v. Kores (India) Ltd.,
(1977) . 8 and State of Orissa v. Gestetner Duplicators (P)
Ltd.. (1974) 33 S.T.C. 333, relied upon.
Maharaja Book Depot v. State of Gujarat, [1979] 2
S.C.R. 138, distinguished.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 133R of
1973.
From the Judgment and Order dated 19.2.1973 of the
Allahabad high Court in sales Tax Reference No. 357 of 1971.
S.C. Manchanda, R.A. Gupta and Ujjal Singh for the
Appellant.
S.T. Desai, H,K. Puri, M.N. Tandon and Randhir Chawla
for the Respondent.
The Judgment of the Court was delivered by
PATHAK, J. The short question in this appeal by special
leave is whether ammonia paper and ferro paper can be
described as "paper other than hand made paper" for the
purposes of the notification No. ST-3124/X-1012(4) - 1965
dated July 1, 1966 issued under the U.P. Sales Tax Act,
194&.
The respondent assessee is a dealer in stationery and
drawing material, and sells ammonia paper and ferro paper.
In assessment proceedings under the U.P. Sales Tax Act, 1948
for the assessment year 1966-67 the assessee claimed that
ammonia paper and ferro paper were liable to tax as
unclassified goods at the rate of two per cent prescribed by
s.3 of the Act. The claim was not accepted by the Sales Tax
Officer who hold that ammonia paper and ferro paper fell
under the entry "paper other than had made paper’ included
in notification No. ST-3124/X-1012(4) - 1965 dated July 1,
1966 and its turnover was, therefore, liable to tax at six
per cent. Against the assessment 80 made the assessee
appealed, but his appeal was dismissed by the Assistant
Commissioner (Judicial), Sales lax. A revision petition by
the
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assessee thereafter was dismissed by the Revising Authority.
At the instance of the assessee a reference was made to the
Allahabad High Court for its opinion on the following
question :
"Whether ammonia paper and ferro paper fall within
the category of paper?"
The High Court has expressed the view that ammonia
paper and ferro paper, being chemically coated paper used
for obtaining prints and sketches of site plans, were paper
to which a chemical process had been applied and a chemical
coating had been given, and were not paper in the popular
sense of the word, and therefore did not fall within the
entry in the aforesaid notification of July 1, 1966.
Accordingly it answered the question referred to it in the
negative, in favour of the assessee and against the
Commissioner of Sales Tax.
In this appeal, the entire contention on behalf of the
Commissioner of Sales Tax is that the opinion expressed by
the High Court to, erroneous and that upon a proper view
ammonia paper and ferro paper must be regarded as "paper
other than hand made paper" within the meaning of the
aforesaid notification of July 1, 1966.
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Section 3 of the U.P. Sales Tax Act charges sales tax
on goods sold by a dealer at a specified rate, the charge
being imposed on every sale in the series of sales through
which the commodity may pass, commencing from the
manufacturer to the ultimate retail dealer. It imposes a
multi-point tax. Section 3 A of the act, however, provides
for the imposition of sales tax on one only of the sales of
the commodity in the series of sales, the single point being
specified by notification by the State Government. If
ammonia and ferro paper fall under the entry "paper other
than hand made paper "mentioned in notification ST-3124/-
X1012(4) - 1965 dated July 1, 1966 the turnover of ammonia
and ferro paper sold by the assessee is liable to tax at six
per cent. The charge is imposed on the sale either by the
manufacturer or by the importer. Presumably, the assessee is
either the manufacturer of ammonia paper or ferro paper or
their importer. If ammonia paper and ferro paper do not fall
within the aforesaid notification the turnover of such paper
is liable to sales tax under s.3 of the U.P. Sales Tax Act
at two per cent on every sale in the series of sales through
which the goods pass.
According to the facts admitted between the parties,
the following extract set forth in the assessee’s revision
petition explains accurately the nature of ammonia paper and
ferro paper :
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"The ferro and ammonia paper is made of paper of
rough and special texture by applying a chemical
process and giving chemical coating thereon. The
chemicals which are used are dye, tartaric acid,
therein, ethylene, glycole and some other
chemicals. These chemicals are absorbed by the
base paper and the coated paper is again passed
through another set of rollers so that the
chemicals are properly and evenly impregnated in
the base paper. It is only this chemical coating
which is important for making the use of ammonia
and ferro paper, otherwise it is nothing but an
ordinary rough base paper. This ferro and ammonia
paper has got only this specific use of obtaining
prints and sketches of site plans and it cannot be
used as an ordinary paper because of these special
texture and its chemical properties".
The paper is used for preparing prints and sketches of
site plans. An impression of the print or sketch is made on
the paper, and it is then exposed to light for a period of
time during which the chemical evaporates resulting in the
emergence of the print or sketch of the site plan. Plainly,
ammonia paper and ferro paper cannot be regarded as paper in
the popular sense of that term. Paper is used for printing
or writing or for packing. Ammonia paper and ferro paper are
not employed for any of the purposes and subjected to any of
the processes for which a paper, as commonly understood, is
generally uses. In State of Uttar Pradesh and Anr. v. Kores
(India) Ltd., [1977] 39 S.T.C. 8, this Court held that
carbon paper was not paper as envisaged by the relevant
entry in notification no. ST-3124/X-1012(4) - 1965 dated
July 1, 1966, and referred to the fact that carbon paper was
manufactured by coating tissue paper with a thermosetting
ink based mainly on wax, non-drying oils, pigments and dyes
by means of a suitable coating roller and equalising rod and
then passing it through chilled rolls. It is used between
two sheets of plain paper in order to reproduce on the lower
sheet that which is written or typed on the upper sheet,
making a replica or carbon copy of the original document.
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The learned Judges observed that carbon paper could not be
applied to the same uses to which paper, as generally
understood, was used, that is to say, for preparing, writing
or printing or for packing or drawing on or for decorating
or covering the walls of a room. Indeed, the learned Judges
appear to have approved of this very judgment under appeal
when considering the question whether carbon paper could be
regarded as paper within the aforesaid notification.
743
Learned counsel for the Commissioner of Sales Tax has
invited our attention to Maharaja Book Depot v. State of
Gujarat, [1979] 2 S.C.R. 138, where this Court laid down
that exercise books were included within the term "paper"
mentioned in sub-cl. (vii) of Cl. (a) of s. 2 of the
Essential Commodities Act, 1955 and in Item 13 of Schedule I
to the Gujarat Essential Articles Dealer (Regulation) order
1971. The learned Judges supported their conclusion by
reference to the object and purpose of the Act and the
Regulation order. That case in our opinion, is
distinguishable from the instant case. On the contrary, more
to the point is the decision of the Orissa High Court in
State of Orissa v. Gestetner Duplicators (P) Ltd., [1974] 33
S.T.C. 333, where it was held that stencil paper was not
paper within the meaning of serial No. 7A of the Schedule to
the notification issued by the State Government under the
first proviso to sub-s. (1) of s.5 of the Orissa Sales Tax
Act, 1947.
Accordingly, we agree with the High Court that ammonia
paper and ferro paper does not fall within the entry "paper
other than hand made paper" in notification No. ST-3124/X-
1012(4) - 1965 dated July 1, 1966.
The appeal is dismissed with costs.
A.P.J. Appeal dismissed.
744