1980 (7) TMI 235 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 38-A of the Fifth Schedule to the Karnataka Sales Tax Act, 1957 regarding exemption of tax on pierced cocoons.

Detailed Analysis:

1. Background and Facts: The State filed eleven revision petitions under section 23(1) of the Karnataka Sales Tax Act, 1957 against the Karnataka Appellate Tribunal's order. The main issue was whether pierced cocoons fall within entry 38-A of the Fifth Schedule to the Act and are exempt from tax.

2. Legal Provisions: Section 5(1) of the Act requires dealers to pay tax on taxable turnover unless exempted under different schedules. The relevant entries were entry 16 for silkworm cocoons and entry 38-A for raw silk, thrown silk, or twisted silk.

3. Arguments: The State contended that pierced cocoons did not fall under entry 38-A, while the assessee argued that they were considered raw silk under the same entry. The Tribunal supported the assessee's view based on various correspondences and publications.

4. Interpretation of Pierced Cocoons: Pierced cocoons are explained as the shells left after the silkworm metamorphoses into a moth and emerges from the cocoon. The process of producing silk thread from pierced cocoons is distinct from reeling silk from intact cocoons.

5. Production of Silk Thread: Two types of silk thread production were discussed: reeling silk from intact cocoons before the moth emerges and spinning silk thread from pierced cocoons. The latter method involves using waste silk from inferior cocoons and pierced cocoons to create spun silk.

6. Definition of "Raw Silk": The Concise Oxford Dictionary defines "raw" as unwrought or not completely manufactured. Pierced cocoons, being in a natural state capable of being used for manufacturing spun silk, are considered raw silk under entry 38-A.

7. Judgment: The Court upheld the Tribunal's decision, stating that pierced cocoons are raw silk used in manufacturing spun silk and fall under entry 38-A. Consequently, the revision petitions were dismissed, and the respondent was awarded costs.

This detailed analysis highlights the interpretation of the law, the nature of pierced cocoons, the production processes involved, and the reasoning behind the Court's decision to uphold the exemption of tax on pierced cocoons under entry 38-A of the Fifth Schedule to the Act.