Karnataka High Court
Nandi Printers Pvt. Ltd. vs State Of Karnataka on 15 January, 1997
Equivalent citations: [2001]122STC164(KAR)
Author: B.S. Sreenivasa Rao
Bench: B.S. Sreenivasa Rao
ORDER S. Rajendra Babu, J.
1. These matters arise under the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 (hereinafter referred to as "the Act") for the assessment years 1985-86 to 1988-89. The petitioner before us is a manufacturer of paper cartons and playing cards. For the purpose of its manufacture, it purchases paper boards and duplex boards from outside the State and brings the same into local area. For the assessment years in question, the petitioner filed returns under the Act claiming exemption with respect to paper boards and duplex boards on the basis that the expression "raw material, component parts and inputs" under Explanation II to entry 16B of the Schedule to the Act excludes "paper". Thus, it was contended that no tax could be levied under the Act now. The assessing authority did not agree with this contention for all these years. Matters were carried in appeal to the appellate authority. The appellate authority also affirmed the view of the assessing authority. Therefore, the matter was carried further by way of second appeal to the Tribunal. The Tribunal referred to entry 6 of the Schedule and stated that Explanation II was restrictive in scope and could not comprehend pulp boards and duplex boards which were being brought into the local area by the petitioner. It held that the expression "paper" must mean only that paper which is used for writing and would not include items like pulp boards and duplex boards which are used only for printing in that paper, cartons are not used as writing papers. Therefore, this revision petition is filed under Section 15A of the Act, raising the question as to whether pulp boards and duplex boards purchased by the petitioner and brought into the local area were "paper" within the meaning of Explanation II to entry 16B in the First Schedule to the Act, and therefore, they are not taxable for the purpose of the Act.
2. It is necessary to refer to the legislative history of this entry, that the tax levied on various items of goods referred to in the First Schedule on their entry into a local area for the purposes mentioned therein at the rates setforth there, Under item 16B of the Entry Tax Act certain items were added on which tax could be levied, which included all raw materials, component parts and inputs which are used in the manufacture of an intermediate or finished product and Explanation II was attached thereto, which defines certain expressions which are covered by entry 16B and the said Explanation reads as follows :
"Explanation II : The words 'raw materials, component parts and inputs' do not include agricultural produce, horticultural produce timber or wood of any species, silk cocoons, raw, throun or twisted silk, tobacco (whether raw or cured), cement, paper, electrical goods or such other inputs as may be notified by the State Government for purposes of exemption from tax under item 16B from time to time, but include aluminium ingots and ores of all kinds."
A notification was issued on June 19, 1985 in terms of Explanation II thereof which included certain items as falling outside the ambit of entry 16B and at item No. 5 paper is stated.
3. Now, Sri Sarangan, learned Senior Advocate for the petitioner submits that the expression "paper" used in Explanation II and the notification issued thereunder would include a paper board and therefore the turnover relating thereto is not subject to any tax. The Tribunal has taken a very narrow view of the expression "paper" confining it only to writing material. He submitted that the expression "paper" is understood a different kind of definition from stage to stage and to give it a narrow meaning as is available in common parlance would mean paper used in writing, printing or packing.
4. Learned High Court Government Pleader submitted that the expression "paper" as understood by the Tribunal is in order and does not call for any interference at our hands. The question for consideration is whether the expression used in Explanation II to entry 16B as was in force at the relevant time would include paper boards, pulp boards, and duplex boards. The expression used in entry 16B is only "paper". The legislative history indicates that the expression "paper" has been understood to include all kinds of paper including carbon paper, blotting paper, water proof 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, water proof paper, etc., but excluding certain other kinds of paper such as photographic paper, pulp boards, art boards, duplex boards, triplex boards, card boards, corrugated 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 included all kinds of paper. Examined from that angle, the view taken by the Tribunal does not stand on close scrutiny. We should not merely be guided either by taking a narrow or common parlance meaning to expression "paper" as being used only for purposes of writing or printing but in such circumstance, there is such legislative history or practice. It must be understood that the paper boards are a thicker variety of paper containing thin sheets of paper would not put it out of category of "paper" and therefore, would not cease to be paper and is covered by the expression used in explanation II to entry 16B. Thus the order made by the Tribunal affirming the view taken by the appellate authority in this regard is set aside. Respondents are directed to delete this turnover from the assessment made.
5. Petitions are allowed accordingly.