The revision has been filed by the assessee-dealer against the order of the Commercial Tax Tribunal dated13.10.2009 regarding levy of entry tax under the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 (hereinafter referred to as the "U.P. Entry Tax Act") on duplex board treating it to be "Paper of all kind" at the rate of 4%.
In the instant revision preferred on behalf of the assessee-dealer the moot question which has been raised for answer is as under:
Whether duplex board is taxable under the Uttar Pradesh Tax on Entry of Goods into Local Areas Act in view of notification dated 31.10.2011 which provides for levy of entry tax on "Paper of all kind excluding newsprint"?
The assessee-dealer is a company under the Companies Act, 1956 and is engaged in the manufacture of craft paper and duplex board. The dispute in the present revision is confined to levy of entry tax on duplex board alone.
Section 4 of the U.P. Entry Tax Act provides for levy and collection of entry tax on the entry of goods specified in the Schedule into local areas at such rates, not exceeding 5% of the value of the goods. In the Schedule of the U.P. Entry Tax Act by notification dated 31.10.2001 "Paper of all kind excluding newsprint" has also been added. It is on the basis of the above entry made in the Schedule to the U.P. Entry Tax Act by the aforesaid notification that the respondents have imposed entry tax upon the duplex board manufactured by the assessee-dealer.
The submission of Sri Kunwar Saksena, learned counsel for the assessee-dealer is that the duplex board is a packing material and is not covered by the entry "Paper of all kind excluding newsprint" contained in the above notification and, as such, is outside the purview of the entry tax.
The word 'Paper' is not defined under the Act. Therefore, it has to be understood in its popular and commercial sense.
Collins Concise Dictionary defines 'Paper' as "a flexible material made in sheets from wood pulp or other fibres and used for writing on, decorating walls, or wrapping parcels".
Wikipedia encyclopaedia mentions that "Paper is a thin material mainly used for writing upon, printing upon or for packaging. It is produced by pressing together moist fibres, typically cellulose pulp derived from wood, rags or grasses and drying them into flexible sheets."
The Apex Court in State of Uttar Pradesh and another Vs. Kores (India) Ltd. 1977 UPTC 46 had an occasion to consider the meaning of the word 'Paper' in context with the notification under the U.P. Sales Tax Act, 1940. The Supreme Court after considering the dictionary meaning of the word 'Paper' as contained in various dictionaries including The Shorter Oxford English Dictionary (Volume 2) (Third Edition), Encyclopaedia Britannica and the Random House Dictionary of the English Language in paragraph 10 held as under:
"From the above definitions, it is clear that in popular parlance, the word "paper" is understood as meaning a substance which is used for bearing writing, or printing or for packing, or for drawing on, or for decorating, or covering the walls."
In view of the above decision of the Supreme Court the meaning of the word 'Paper' stand well defined.
"Duplex board" is generally understood to mean a paper with two plies or layers usually made by laminating two sheets of paper having different colour and finish or texture on either side. The 'board' is, therefore, an item made of paper and is generally used as a packing material.
The word "duplex board" was interpreted to mean as card board by a Division Bench of the Punjab and Haryana High Court in the case of Airon Printing Press Vs. State of Haryana 1998 NTN (Vol. 13) 790. The Court observed therein that the card board and duplex board are basically and primarily same items with minor difference that one is polished on both sides and the other on one side only but that would hardly make any basic difference between two items and, therefore, duplex board is nothing but a variety and category of the card board.
The core issue is whether the board or "duplex board" would fall within the meaning of "Paper of all kind".
A Division Bench of this Court in the case of M/s Mahabir Industries, Saharanpur Vs. State of U.P. and another 1986 UPTC 369 observed that answer to such question depends more on common sense and, therefore, the broad test to find out whether the product is paper is to see if a demand of paper is raised would it be able to satisfy the said demand. In other words, if a person is asked to bring a paper for ordinary use would he buy and bring the duplex board and whether the duplex board could act as a substitute for paper. If the answer is in negative then it would mean that the product i.e. duplex board cannot be used as a paper and satisfy its demand.
Applying the above analogy of the common parlance test, as the duplex board is ordinarily a packing material though may be made out of paper, it would not be paper falling withing meaning of entry "Paper of all kind".
In Commissioner of Sales Tax, U.P. Vs. Ram Paper Mills Ltd. (2004) 39 STR 349 His Lordship of this Court affirmed the finding of the tribunal that the duplex board is nothing but packing material and cannot be used as paper and thus dismissed the revision.
In view of the above decisions, even though the definition of paper is of wide import which may include anything which is macerated into a pulp, dried and pressed and is used for writing, printing, drawing, decorating, covering wall or for packing purposes but board whether card board or duplex board are different meant for packing purposes only and not for use as paper, as is understood in common parlance.
Accordingly, I am of the opinion that the "duplex board" which undoubtedly is a product of paper and is used for packing material would not be 'paper' covered by the entry of "Paper of all kinds" as contained in the above notification.
The question is answered accordingly in favour of the assessee-dealer and against the revenue.
The revision is allowed and in the impugned order of the Tribunal dated 13.10.2009 as well as those of the authorities below in so far as "Duplex Board" is concerned are set aside but with no order as to costs.
Order Date :- 22.5.2012 brizesh