M/S Taratarini Rubber INDIA PVT LTD vs. State Of Odisha

Facts

The Petitioner, M/s. Taratarini Rubber India Pvt. Ltd., is challenging an order dated January 31, 2020, by the Odisha Sales Tax Tribunal and a consequent assessment order dated November 23, 2020, by the Deputy Commissioner of Sales Tax for the period 2003-04. The Petitioner manufactures HDPE/PP woven fabrics, bags, sacks, and tapes. For the period in question, the Petitioner filed returns classifying its products as 'packing materials' under Entry-129 of the OST Rate Chart, taxable at 4%. The State contended that the products fall under Entry-136, taxable at 8%, as HDPE woven sacks. The initial assessment by the Sales Tax Officer rejected the Petitioner's accounts, enhanced turnover based on alleged suppression, and levied tax at 8%. The Joint Commissioner partly allowed the appeal, limiting the enhancement but still doubting the tax rate. The Tribunal remanded the matter for fresh assessment, finding that the Petitioner had sold HDPE woven sacks within Odisha.

Held

The Court held that the commodity sold by the Petitioner was HDPE woven sacks, not HDPE bags. This conclusion was based on the clear wording of the relevant entries in the OST Rate Chart and a previous judgment of the High Court in State of Orissa v. M/s Auro Plastics, which established that HDPE bags and HDPE woven sacks are distinct products. The Court emphasized the principle of strict construction applicable to taxing statutes, stating there is no room for intendment or presumption, and only the clear meaning of the words should be considered, citing Hansraj Gordhandas v H. H. Dave and Commissioner of Customs (Import) v. M/s. Dilip Kumar & Company. Since HDPE woven sacks are explicitly mentioned in Entry-136 and are not the same as HDPE bags in Entry-129, the Petitioner's products are exigible to tax at 8%. The Court answered the framed question of law accordingly. The revision petition was dismissed, upholding the Tribunal's order and the consequent assessment order.

Key Issues

1. Whether the commodity sold by the Petitioner for the period 2003-04 was HDPE Bags or HDPE Woven Sacks, and consequently, whether it is exigible to tax at 4% or 8% respectively, as per the Odisha Sales Tax Act. Petitioner's arguments: The Petitioner argued that its products were HDPE bags used for packing, thus falling under Entry-129 (packing materials) taxable at 4%. It contended that the Tribunal erred in distinguishing between HDPE bags and HDPE woven sacks without supporting evidence, relying on an inadvertent statement in a delay condonation application and a dictionary definition. The Petitioner advocated for a purposive construction of the entry, emphasizing the 'packing' purpose, and relied on R. L. Arora v. State of Uttar Pradesh and Ayurveda Pharmacy v. State Of Tamil Nadu. Invoices were presented to support the plea. Revenue's arguments: The State argued that the distinction between HDPE woven sacks and HDPE bags was settled by this Court in State of Orissa v. M/s Auro Plastics, where it was held that 'bags can neither be fabrics nor be sacks'. The State submitted that the Tribunal correctly followed this precedent and that the remand for fresh assessment was appropriate.