1 IN THE HIGH COURT OFJUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 117 of 1998 WRIT PETITION NO. 117 of 1998 WRIT PETITION NO. 117 of 1998 JAYANTILAL TALAKCHAND SHAH ) trading in the name and style of ) Viral Trading Company, having its ) place of business at 30A Chakla ) Cross Lane, Mumbai-3. ).. Petitioner Vs. 1) THE STATE OF MAHARASHTRA ) having its office at Mantralaya ) Madam Cama Road, Mumbai-32, ) 2) SHRI SUBODH KUMAR ) the Commissiioner of Sales Tax ) having his office at Vikrikar ) Bhavan, Mazgaon, Mumbai-10. )..Respondents Mr. B.C.Joshi with Ms. Nikhita Badhekar i/b. Mrs. Sarla P. Sata for the petitioner. Mr. S.K.Nair, Panel Counsel for the respondents. CORAM: F.I.REBELLO AND CORAM: F.I.REBELLO AND CORAM: F.I.REBELLO AND J.H.BHATIA,JJ. J.H.BHATIA,JJ. J.H.BHATIA,JJ. 2 DATE: 24th April, 2009. DATE: 24th April, 2009. DATE: 24th April, 2009. JUDGMENT : (PER J.H.BHATIA,J.) JUDGMENT : (PER J.H.BHATIA,J.) JUDGMENT : (PER J.H.BHATIA,J.) 1. The petitioner is in the trade of purchase of cotton fabric and making handkerchief of the same by cutting and stitching the piece of cloth from all the four sides. The petitioner submitted an application under Section 52 of the Bombay Sales Tax Act to the Sales Tax Commissioner for determining the following questions :- (i) Whether the process of purchasing cloth and stitching four sides of pieces of cloth amounts to a process of manufacture?. (ii) If yes, what is the rate of tax on Cotton Poplin stitched four sides ? 2. The Commissioner held that the process of purchasing cloth stitching four sides of the same amounts to manufacture and sale of cotton poplin stitched four sides as evidenced by invoice No.34801 dated 22.2.1997 is a sale of handkerchief and is covered by the expression "other articles of personal wear" 3 falling under entry 45 of Part II of the Schedule ‘C’ of the Bombay Sales Tax Act, 1959 and is liable to tax at the rate of four paise in the rupee. This finding has been challenged in the present Writ Petition. It was contended on behalf of the petitioner that merely cutting the fabric into pieces and then stitching said piece from the four sides and selling those pieces as handkerchief does not amount to any process of manufacture and it cannot be taxable because fabric itself is not taxable. It is contended that several authorities in this respect, particularly the Judgment of this Court in Sathyavijay Commercial Company v/s. Sathyavijay Commercial Company v/s. Sathyavijay Commercial Company v/s. Commissioner of Sales Tax 55 STC 186 (Bom) Commissioner of Sales Tax 55 STC 186 (Bom) Commissioner of Sales Tax 55 STC 186 (Bom) have not been properly appreciated by the Commissioner. The petition was contested by filing a reply by the Deputy Commissioner of Sales Tax, Legal. 3. Even though the petition was initially contested on behalf of the State, at the time of hearing, the learned Counsel for the State fairly pointed out that entry No.76 to the Schedule under Section 41 of the Bombay Sales Tax Act was added by the Maharashtra Government as per GN.FD dated 29.4.1998 with effect from 1.5.1998 and the said entry was given effect from 1.10.1996 and in view of the said entry, whole of the tax on sale or purchase of Gandhi Top and handkerchief 4 by a dealer, effected on or after 1.10.1996 covered by entry No.45 of Part II of Schedule ‘C’ has been exempted. The said entry 76 reads as follows :- SCHEDULE ___________________________________________________________________________ Sr. Class of Sales Extent of Conditions Authority Period No. or Sales Exemption for Exemption (1) (2) (3) (4) (5) (6) __________________________________________________________________________ 76.Sales or pur- Whole of (i) The claimant G.N.F.D. 1.10.96 chases of tax. dealer has No.STA. to Gandhi Topi & not collected 1098/CR- date Handkerchievs tax separately 46/ by a dealer in the bill/ Taxation- effected on cash memo/ 2 dated or after 1st invoice 29.4.1998 October 1996 issued to covered by customer. entry 45 in Part II of (ii) Notwithstanding Schedule. anything contained in column (3), if the tax has been paid or otherwise recovered in part or full in respect of the period starting on the 1st October 1996 and ending on the 1st May 1998 (both days inclusive) then the exemption shall be subject to following conditions: (1) Where tax is paid or recovered in full then no exemption shall 5 be granted, or (2) Where tax is paid or recovered in part then the exemption shall be restricted to the extent of unpaid tax." The above entry was added to the Schedule on 29.4.1998 by Government Notification dated 29.4.9s8 i.e. after the impugned order was passed by the Sales Tax Commissioner. 4. In view of the entry 76, the impugned order passed by the Commissioner of Sales Tax is automatically superseded and stands set aside. 5. For the aforesaid reasons, the Writ Petition is allowed in terms of entry No.76 in the Schedule to the Bombay Sales Tax Act. (J.H.BHATIA,J.) (F.I.REBELLO,J.) (J.H.BHATIA,J.) (F.I.REBELLO,J.) (J.H.BHATIA,J.) (F.I.REBELLO,J.)