Karnataka High Court
Bharat Vijay Mills Ltd. vs Commissioner Of Commercial Taxes on 4 January, 1991
Equivalent citations: [1992]85STC23(KAR)
JUDGMENT K. Shiva Shankar Bhat, J.
1. The question for consideration in these writ petitions is whether sintex water drums fall within entry 118 of the Second Schedule (containers other than gunnies) or falls under entry 110 that is articles made of polythene. The rate of tax under entry 110 is 10 per cent while it is 4 per cent under entry 118. The petitioners sought clarification from the department and invited the trouble. The petitioners were told that these Sintex water drums are to be treated as articles made of polythene and are to be taxed accordingly.
2. According to the petitioners these water drums are to be taxed as "containers" because they are used to store water as a container.
3. In the instant case I find that there are two competing entries regarding Sintex water drums. It is possible to take the view that it is an article made of polythene and tax it under entry 110. At the same time it is also possible to consider it to be a "container". The item under entry 118 was simply "containers other than gunnies". If so, every container, that is, any article which is treated as a container will have to be taxed accordingly.
4. The question will have to be answered with reference to the principles of interpretation applicable to a taxing statute. In the decision reported in [1973] 88 ITR 192 (Commissioner of Income-tax v. Vegetable Products Ltd.), it was held by the Supreme Court that if there are two competing entries the entry which is beneficial to the assessee will have to be adopted. Though there is no equity in the taxing statute, the rule of interpretation that in the matter of competing interests, a citizen should be given the benefit as against the State is not excluded. The same idea is conveyed when it is said that if an article is to be taxed and the said article may fall within two entries, the entry which is more beneficial to the assessee will have to be accepted as applicable to the article in question. Following the aforesaid principle I am of the view that Sintex water drums would fall within entry 118 of Second Schedule and the view expressed by the respondent-Commissioner to the contra is not acceptable.
5. It may also be noted here that by Act No. 27 of 1985 with effect from August 1, 1985, entry 118(iii) was substituted to include polythene drums within the purview of entry 118, which indicates the legislative intention quite clearly.
6. For the above reasons, these writ petitions are allowed. Rule made absolute. No costs.
7. Writ petitions allowed.