The Hindu : No sales tax on silk sarees, rules Delhi High Court

Online edition of India's National Newspaper
Monday, Mar 01, 2004

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National

No sales tax on silk sarees, rules Delhi High Court

NEW DELHI, FEB. 29. Women have a reason to feel good now. The Delhi High Court has ruled against the imposition of sales tax on their most loved fabric — the silk saree.

The order came from a Division Bench of Chief Justice B. C. Patel and Justice B. D. Ahmed, which held that "silk sarees" are basically "silk fabric" and not "garments made of silk" and hence could not be subjected to sales tax.

``Merely because it is capable of being worn as a saree, it would not fall within the ambit of the words "garments made of silk." It would remain as "silk fabric," the bench said.

The Sales Tax Department had issued demand order/notice to 48 silk saree dealers, including Hoshyar Singh Suresh Chandra Sarees Pvt. Ltd., seeking to reopen their assessment, saying the sarees fell in the category of "garments made of silk" as distinguished from "silk fabric."

Aggrieved by this, the silk saree dealers approached the Court which quashed the Sales Tax Department's order.

The basic question before the court was whether silk sarees could be classified as "silk fabric" or "garments made of silk."

The petitioner's counsel, M.L. Lahoty, contended that the long practice of classifying "silk sarees" as "silk fabric" was the only correct method, in which case the provisions of sales tax would not apply to them. — PTI

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