Facts of the Case

The petitioner, M/s. Chilika Fishing Materials & Co., filed a revision petition challenging the order dated 1 August 2013 passed by the Sales Tax Appellate Tribunal, Cuttack. The Tribunal had allowed S.A. Nos. 52 and 53 (ET) of 2012-13 filed by the State against the common order dated 30 April 2012 passed by the Joint Commissioner of Sales Tax, Puri Range, Puri, in F.A. Nos. 36/OET and 37/OET.

The dispute related to the tax periods from 1 April 2005 to 31 March 2006 and from 1 April 2006 to 31 October 2006. The Joint Commissioner had reduced the demand raised by the Assessing Officer, Jatni Circle, through the assessment order dated 10 May 2007.

The principal controversy was whether entry tax could be imposed on scheduled goods such as fishing net, fishing twine and rope purchased from outside the State of Odisha. The assessee contended that such goods could not be brought within the scope of Serial No. 23 of Part I of the scheduled goods under the OET Act.

Issues Involved

The principal issues before the Court were:

  1. Whether fish nets, fishing twine and fishing rope made from High Density Poly Ethylene (HDPE) and Poly Propylene (PP) fall within Entry No. 23 of Part I of the Schedule to the OET Act.
  2. Whether such products, being secondary products or forms of HDPE and PP, are exigible to entry tax at the rate of 1%.
  3. Whether the Sales Tax Appellate Tribunal committed any error in holding that these goods were covered by Entry No. 23.

Petitioner’s Arguments

The petitioner-assessee questioned the Tribunal’s finding that fish net, fishing twine and rope were covered under Entry No. 23 of Part I of the Schedule to the OET Act.

The principal contention was that such goods could not be brought within the purview of Serial No. 23 merely because they were made from HDPE and PP. The assessee, therefore, challenged the Tribunal’s conclusion that the goods were scheduled goods liable to entry tax.

Respondent’s Arguments

The State supported the Tribunal’s order. The Tribunal had rejected the assessee’s contention after finding that fish net, fishing twine and rope were made from HDPE and PP and therefore stood covered under Entry No. 23 of Part I of the Schedule to the OET Act.

In reaching this conclusion, reference was made to the decision of the Supreme Court in Municipal Corporation Thane vs ASMACO Plastic Industries, (1999) 1 SCC 372.

Relevant Section

Entry No. 23 of Part I of the Schedule to the Orissa Entry Tax Act

The relevant entry covers:

“Polythene, High Density Poly Ethylene (HDPE), Poly Propylene (PP) including woven sack, Plastic Goods, moulded luggage excluding plastic or moulded furniture.”

The Court examined the breadth and scope of this scheduled entry while determining the taxability of fish nets, fish net twine and fish net rope manufactured from HDPE and PP.

Court’s Findings

The Orissa High Court held that Entry No. 23 is sufficiently wide to include all forms of goods made from HDPE or PP, including plastic goods.

The Court specifically observed that the word “including” indicates the wide range of products that can be brought within the scope of the entry. It further held that the expression “plastic goods” is wide enough to include all secondary products of plastic.

The Court noted that the specific exclusion under the entry is confined to furniture that is plastic or moulded.

Accordingly, the Court found no error in the Tribunal’s decision allowing the State’s appeal and holding that fish net, fish net twine and fish net rope, being made of HDPE materials and constituting secondary forms of HDPE and PP, are covered under Entry No. 23 of Part I of the Schedule to the OET Act.

The Court consequently held that such goods are exigible to entry tax at 1%.

Court Order

The High Court upheld the order of the Sales Tax Appellate Tribunal and declined to admit the reference.

Accordingly, STREV No. 114 of 2013 was disposed of.

Important Clarification

The ruling clarifies that the classification of goods under Entry No. 23 is not confined merely to HDPE or PP in their primary or raw material form. The wording of the entry is broad enough to encompass secondary products made from HDPE and PP.

Therefore, where fish nets, fish net twine and fish net rope are made from HDPE and PP, they remain covered by Entry No. 23 and are liable to entry tax at 1%.

The Court’s interpretation particularly emphasises that:

  • the expression “including” expands the range of products falling within the entry;
  • “plastic goods” is sufficiently broad to include secondary plastic products;
  • fish net, fish net twine and fish net rope made from HDPE/PP fall within the scheduled entry; and
  • the express exclusion is limited to plastic or moulded furniture.

Link to download the order-https://www.mytaxexpert.co.in/uploads/1783321467_1259compressed.pdf

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