In view of the judgment given by the Supreme Court in the case of M s Gujarat Woollen Mills A.I.R. 1977 1548 SC that the companypressed woollen felts are number woollen fabrics, Compressed Woollen Felt manufactured by you will number be exempt under entry 6 of Schedule I of the M.P. General Sales Act, 1958 but will be companyered under entry 1 of Part VI of Schedule II appended to the said Act, and will attract tax 10.
me companybed fibres in the shape of a web layer are then subjected to the process of hardening in a machine having an eccentric motion the carded webs re put through two layers of cloth and passed through a steam chest.
While matters stood thus, the Commissioner of Sales Tax, Madhya Pradesh issued the following letter Annexure II to the appellants on March 4, 1982 OFFICE OF THE COMMISSIONER SALES TAX MADHYA PRADESH No.
For this purpose, the sheet is put in a machine, which has two rows of companytra rotating rollers to provlde the necessary felting action to the sheet.
Feeling aggrieved by the revised stand taken by the Commissioner of Sales Tax that the felt manufactured in the appellants factory is number eliglble for exemption and will attract tax at lO, the appellants filed an application before the Commissioner of Sales Tax under Section 42 B of the Act for a determination of the question of taxability of the goods in question.
The appellants produced before the Commissioner as many as 26 samples of felt of varying hardness, density and thickness along with a statement showing details of each sample.
The sheets run in the machine till the desired shrinkage and density are achleved.
m is results in the web wool layer being companyverted in the form of a sheet, which is then subjected to the process of milling to impart to it necessary tensile strength and shrinkage.
Commissioner Tech for Commissioner of Sales Tax Madhya Pradesh.
me resultant product is felt.
Section 42 B is in the following terms Section 42 B. Deter in tion of diaputed question If any question is raised by a dealer in respect of the rate o tax on any goods, the Commissioner shall, in accordance with such procedure as may be prescribed, make an order determining the rate of tax on such goods.
Sir, With reference to your letter dated 25.3.1971, it is stated thae specimen of felt submitted by you, being woollen fabric, is exempt under M.P. General Sales Tax Act, 1958, under Entry 6 of its Schedule I. Yours faithfully, Sd K. PILLAI Additional Commissioner for Commissioner of Sales Tax Madhya Pradesh.
It is a number woven material.
4.3.1982 To M s Filterco, Garden 51, Neemuch MP Sub Lew of sales tax on companypressed woollen Felt.
From the Judgment Order dated 31.3.83 of the Madhya Pradesh High Court in Misc.
After affording full hearing to the appellants, the Commissioner of Sales Tax passed an order dated January 25, 1983 expressing the view that though the expression cloth will take in number woven material inclusive of felt, pliability is an essentlal attribute of cloth and only those varieties of felt manufactured by the appellants which satisfy the test of pliability can be legitimately classified as cloth.
Aggrieved by the said decision of the High Court the appellants have filed this appeal after obtaining special leave.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The High Court dismissed the Writ Petition without entering into the merits by stating thus It is number the case of the petitioners that in passing the impugned order, the Commissioner, therefore has acted companytrary to the procedure pres cribed by the Act or the Rules made thereunder.
From the above description it is clear that the woollen felt manufactured by the appellants is a material obtained by companypressing woollen fibres and subjecting the same to heat and moisture.
The petitioners having referred the dispute to the Commissioner, he had jurisdiction to pass the impugned order.
Applying the said test, the Commissioner held that only 5 out of the 26 specimens produced by the appellants namely, those marked by the Co d ssioner as A 1, A 2, A 3, A 4 and A 19 companyld be classified as cloth and granted exemption from tax under Entry 6 of Schedule I of the Act and that the remaining 21 samples would number fall within the scope of the said entrY and are, therefore, taxable at the rate of lO. The appellants filed a Writ Petition in the High Court of Madhya Pradesh challenging the aforesaid order passed by the Commissioner in so far as it went against them.
Clarification given to you in this office letter No.
Any order passed by the Commissioner under subsection 1 shall be binding on the authorities referred to in Section 3 in all proceedings under the Act except appeals.
Petition No.
the raw material companysisting of woollen fibres is first mixed thoroughly and thereafter carded on a carding machine, which process results in the laying of the fibres in a companybed companydition in a uniform direction.
After this the sheet is dried and trimmed at the ends and thereafter subjected to the process of calendering and for this purpose it is passed through steam heated companytrarotating rollers.
It is companymon ground that apparently on the basis of the said letter of the Commissioner of Sales Tax, the turnover of the appellants pertsining to the sales of companypressed woollen felt was number subjected to tax during the period from 1971 to 1982.
298 of 1983.
Govindan Nair, S.K. Gambhir for the Appellants.
The process of manufacture of felt adopted in the appellants factory has been described in the order of the Coroissioner of Sales Tax dated January 25, 1983.
K. Sanghi for the Respondents.
8548 of 1983.
On March 25, 1971, the appellants addressed a companymunicatlon to the Commissioner of Sales Tax forwarding a specimen of the felt manufactured in their factory and requesting that the same may be treated as exempt from tax under Entry 6 of Schedule I. In reply thereto the Commissioner of Sales Tax sent the following companymunication Annexure I to the appellants OFFICE OF THE SALES TAX COMMISSIONER MADHYA PRADESH NO.Wick F/32/71/12317 Indore, dated 7.8.1971 To Filterco Garden 51, Neemuch Madhya Pradesh .
The Judgment of the Court wa3 delivered by BALAKRISHNA ERADI, J. The short but interesting question that arises for our companysideration in this appeal by special leave is whether the Compressed Woollen Felts manufactured in the samll scale industry unit of the appellants can be said to companystitute cloth so as to fall within the scope of Entry 6 of Schedule I of the Madhya Pradesh General Sales Tax Act, 1958 for short the Act , which is in the following terms All varieties of Cloth manufactured in mills or on powerlooms or handlooms including processed cloth, but excluding hessian cloth so as to eligible for exemption of sales tax under Section lO of the said Act.
Yours faithfully, Sd Asstt.
I/26/32/71 12317, dated 7.8.1971 is hereby cancelled.
