- (1.) THE petitioner by this writ petition has prayed that the notices Annexure 2,3,4,5,7,8,9 and 10 may be quashed and the respondents No. 2 and 3 may be directed to Consider the rate of tax payable by the petitioner on absorbent cotton wool LP. as 4% under item No. 16 of the notification dated 27. 6. 1990. It is also prayed that the judgement given in the case of Vishwas Surgical Industries, Sri Ganganagar vs. Asstt. Commercial Taxes Officer (1), may be quashed.
(2.) THE petitioner is a partnership firm registered under the provisions of the Indian Partnership Act. THE petitioner is carrying on the business of purchase and sale of cotton at Nokha in District Bikaner. THE petitioner is a registered dealer under the Rajasthan Sales Tax Act and the petitioner's Sales tax number is 1812/29. One of the commodities which the petitioner sells is absorbent cotton wool I. P. Initially this item was governed by Item No. 11 of the Notification dated 8. 3. 1988, which reads as under :- "11. Cotton that is to say, all kinds of cotton (indigenous or imported) in its manufactured or unmanufactured state, whether ginned or unginned, baled, pressed or otherwise, but not including cotton waste. " The petitioner was collecting tax from the purchasers according to the rates fixed for this item by the State Government under the provisions of the Rajasthan Sales Tax Act and the rules framed thereunder. The notification dated 8. 3. 1988 was superseded by the Notification dated 23. 3. 1989 and thereafter this notification dated 23. 3. 1989 was further superseded and amended vide notification dated 27. 6. 1990 which provided the rates of tax for cotton in Item No,16, which reads as under : - "16. Cotton, that is to say all kinds of cotton (4ndigenous or imported),. whether ginned or unginned, baled, pressed or otherwise including cotton waste. " After the issuance of the notification dated 27. 6. 1990 the petitioner approached the Commissioner, Commercial Taxes Rajasthan, Jaipur under Section 12-A of the Rajasthan Sales Tax Act, 1954 (referred to hereinafter as 'the Act of 1954') for determining the rate of tax payable by the petitioner after the amendment in the language of Item No. 16. The petitioner and two other parties moved applications under Section 12 A of the Act of 1954 before the Commissioner. All the three applications came to be decided by the Additional Commissioner, Commercial Taxes, Rajasthan, Jaipur on 25. 9. 1991 by a common judgement and it was determined that tax payable on the said absorbent cotton wool I. P. was at the rate of 4%. He also held that the commodity will be covered under Item No. 16 of the notification dated 27. 6. 1990. After this order of the Additional Commissioner dated 25. 9. 1991 the petitioner was collecting the tax on the sales effected of this commodity accordingly. Despite the decision given by the Additional Commissioner dated 25. 9. 1991, the Commercial Taxes Officer (Anti Evasion) issued notices dated 7. 8. 1992 to the petitioner relating to the assessment years 1991-92, 1992-93 under the Rajasthan Sales Tax Act as well as under the Central Sales Tax Act, the Copies whereof have been placed on the record as Annex. 2,3,4 and 5. Thereafter some more notices were received from the Department dated 25. 11. 1992 for the assessment years 1991-92 and 1992-93. They have been produced on the record as Annex. 7 and 8. Thereafter the premises of the petitioner was surveyed on 16. 1. 1993 and notices were issued under Sections 10, 7aa, 11b and 16 (1) (N) of the Rajasthan Sales Act in relation to the period 1989-90 and a notice dated 18. 1. 1993 in relation to the period 1. 4. 1992 to 31. 12. 1992, the copies thereof have been placed on the record as Annexs. 9 and 10. It is alleged that a judgement was rendered by the Rajasthan Sales Tax Tribunal, Ajmer in the case of Vishwas Surgical Industries, Sri Ganganagar vs. Assistant Commercial Taxes Officer was in relation to surgical cotton i. e. absorbent cotton or cotton wool. Copy of the judgement has been placed on the record as Annex. 11. All these notices have been issued on account of this judgement and a demand has been created for tax at the general rate of 10% on this item on account of the aforesaid judgement given by the Tribunal. Therefore, the petitioner has approached this Court by filing the present writ petition and submitted that no useful purpose would be served by submitting to the jurisdiction of the authorities in pursuance of the notice because the authorities are bound by the decision given by the Tribunal and they are not bound by the decision given by the Additional Collector, Commercial taxes under Section 12a of the Act of 1954 and as such there is no option left with the petitioner but to approach this Court for determination of the question whether this item is covered by the general rate of tax i. e. 10% or at the rate of 6% or at the rate of 4% as it is covered by item No. 16. A reply has also been filed by the respondent Commercial Taxes Department and it has been stated that the petitioner may appear before the authorities in pursuance of the notices and raise all these objections and let the authorities may decide the matter. Secondly, it is submitted that in view of the decision given by the Tribunal the petitioner is likely to be taxed at general rate. Therefore, in this back ground the controversy has to be resolved.
(3.) SO far as the first preliminary objection raised by the respondents that the petitioner should first approach the authorities in pursuance of the notices issued by the respondents is concerned, in this respect suffice it to say that this exercise will be a futile exercise because the authorities has already issued the notices in view of the decision of the Rajasthan Sales Tax Tribunal. Therefore, the fate of the petitioner stands sealed and it will not be proper now to direct the petitioner to appear before the authorities in pursuance of the notices and therefore, suffer an order and go through the agony of the hierarchy of the courts for reaching this Court again. In this view of the matter I overruled this objection raised by the respondents. Now, the question is whether the present item i. e. absorbent cotton wool I. P. is covered by item No. 16 of the Notification dated 27. 6. 1990 or not. If it is covered by item No. 16 of this Notification then automatically the petitioner will be governed at the rate of 4% so far as the tax liability of the petitioner is concerned. Item No. 16 as reproduced above says that cotton of all kinds whether indigenous or imported and whether ginned or unginned, baled, pressed or otherwise including cotton waste is covered by this item. Therefore, the cotton in all shades has been covered by item No. 16. As against this the previous entry was that there was an additional factor in the item No. 11 of the Notification dated 8. 3. 1988 that all kinds of cotton (Indigenous or imported in its manufactured or unmanufactured state was covered by this entry. The another factor was that in the previous entry in did not include cotton waste. But in this entry the cotton waste has also been included. Therefore, a simple reading of this entry means that cotton in all kinds namely, indigenous or imported whether ginned or unginned, baled, pressed or otherwise including cotton waste has been covered by this entry and tax payable is at the rate of 4%. Now, the question is whether the absorbent cotton wool I. P. is covered by this entry or not. In this connection, the Additional Commissioner, Commercial Taxes has taken the view when the matter was referred to him under Section 12-A which empowers the Additional Commissioner for determination of the disputed questions if referred and in exercise of this power and after hearing the petitioner as well as the departmental representative determined this question and held that this item will be covered by entry No. 16 of the Notification dated 27. 6. 1990 and shall be taxable at the rate of 4%. He has made a reference to the process and specification of this item as specified in Indian Pharma Copia and British Pharma Copia. Indian Pharma Copia prescribes the process as under : - "standards: Absorbent cotton wool consists of the trichomes or good quality new combers of tained from the seed-coat of various species of the genus Gossypium, linned, cleaned, purified and bleached. It does not contain any colouring matter. " British Pharma copia prescribes the standards as under : - "absorbent cotton wool is prepared from cotton, which consists of the epidermal trichomes of the seeds Gossypium Herbacum L. & other cultivated species of Gossypium (Family Malvaceas ). The seeds are removed mechanically loosened and separated to form a fleecy mass of soft while fillments which consists almost entirely of cellulose. Absorbent Cotton Wool absorbs water readily, but its absorbency may be considerably reduced by medication its absorbency may also be reduced by prolonged storage or by exposure to heat. It may be attacked by moulds when stored under conditions where the in the cotton wool exceeds. " So, this absorbent cotton wool I. P. is nothing but a cotton which is purified and which is made more absorbent of water. Certain procedure has been given as quoted above as to how it is prepared. It is only a very purified kind of cotton from which all kinds of seeds or epidermal trrichomes of seeds of Gossypium Harbacum are removed and it is made more readily absorbed of water. In the commercial parlance it is known as surgical wool. In this connection, he has also made a reference to various decisions, viz. M/s. United Indian Surgical Works (2), where a similar item came up for consideration and it was held that it is taxable at the rate of 4%. He has also made reference to the two decisions i. e. Commissioner of Sales Tax, Maharashtra State, Bombay vs. Fairdeal Corporation Ltd. , (3), and Sri Ram Products vs. The State of Tamil Nadu He has also referred to the argument of the Departmental Representative that when the cotton undergoes process of manufacture and a new product comes into being which different from cotton as the very name indicate Absorbent Cotton Wool and that is not covered by this entry. Therefore, it will be taxed at the general rate i. e. 10%. ;