HIMALAYA COTTON GINNING AND OIL INDUSTRIES Vs. STATE OF HIMACHAL PRADESH
LAWS(HPH)-1997-11-2
HIGH COURT OF HIMACHAL PRADESH
Decided on November 19,1997

HIMALAYA COTTON GINNING AND OIL INDUSTRIES Appellant
VERSUS
STATE OF HIMACHAL PRADESH Respondents




JUDGEMENT

M.N.RAO,J - (1.)THIS writ petition concerns the constitutionality of the notification issued by the Government of Himachal Pradesh, respondent No. 1 herein, on March 24, 1992, amending the ninth proviso to the notification issued earlier on May 29, 1974 in consequence of which the rate of tax on quilt was increased from 2 paise in a rupee to 8 paise. The petitioners are registered dealers under the Himachal Pradesh General Sales Tax Act, 1968 (hereinafter referred to as "the Act') carrying on business in "bedding articles" besides cloth and cotton. The general rate of tax under section 6 of the Act is 8 per cent other than the goods in respect of which by separate notification lower rate of tax was prescribed. The State Government on April 1, 1969 issued a notification prescribing tax at the rate of 2 per cent on "ready-made sewn garments made out of handloom or mill-made cloth excluding fur coats and garments prepared out of pure silk cloth but including umbrella cloth covers and pillow covers except when made out of pure silk cloth, shall be two paise in a rupee". The tax authority assessed the turnover relating to quilt or razai at the higher rate of 8 per cent on the view that the aforesaid notification did not comprehend the quilts or razais. The question was eventually resolved by a Division Bench of this Court in Sales Tax Reference No. 1 of 1986 dated January 8, 1991 by which it was held that the quilt or razai is a ready-made sewn garment and, therefore, "would clearly fall under the notification aforesaid and qualify for concessional rate of tax under the notification".
(2.)SUBSEQUENTLY , on March 24, 1992 an amendment was issued in order to take away quilts or razais from the concessional rate of tax of 2 per cent. By inserting the amendment at the appropriate place, the notification reads :
" the rate of tax on ready-made sewn garments (excluding quilt) made out of handloom or mill-made cloth excluding fur coats and garments prepared out of pure silk cloth but including umbrella cloth covers and pillow covers except when made out of pure silk cloth shall be two paise in a rupee. "

The petitioners are attacking the constitutionality of this notification on the ground that the classification made between quilt and other "ready-made garments" for the purpose of differential rate of taxation is arbitrary being violative of article 14 of the Constitution.

(3.)SHRI M. M. Khanna, learned counsel for the petitioners, has argued that the earlier division bench judgment of this Court in Sales Tax Reference No. 1 of 1986 dated January 8, 1991 has finally concluded the question that quilt is a ready-made sewn garment and any attempt to further classify ready-made sewn garments for the purpose of subjecting the same to different rates of taxation is forbidden by the equal protection clause enshrined in article 14 of the Constitution of India. Quilt is nothing but cotton stuffed in cloth bag and when the cotton and the cloth are separated, cotton being declared goods under section 14 of the Central Sales Tax Act, 1956, the tax in respect of which shall not exceed 4 per cent as mandated by section 15 of the Act and cloth is a tax-free item.


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