1999 (3) TMI 273 - HC - VAT and Sales Tax

Summary

Issues:
Levy of tax on sale of handkerchiefs claimed to be exempted under Entry 8A of the Fifth Schedule to the Karnataka Sales Tax Act.

Analysis:
1. Interpretation of Entry 8A and Relevant Entries: The dispute revolves around the exemption of handkerchiefs under Entry 8A of the Fifth Schedule. The petitioner argues that handkerchiefs should be exempt based on historical interpretations and precedents. Reference is made to the Kerala General Sales Tax Act where mill-made handkerchiefs were considered exempt. The petitioner relies on judgments like Deputy Commissioner of Sale Tax v. Mohammed Abdul Khader and Bangalore Wood Industries v. Assistant Commissioner of Commercial Taxes to support their claim.

2. Classification under Central Excise Acts: The petitioner contends that handkerchiefs should be classified as cotton fabric under the Central Excise Acts, specifically referring to Entry 62. However, the court notes that handkerchiefs are considered articles of apparel and clothing accessories under Entry 62, which excludes them from the category of textile fabrics. The court emphasizes the definitions provided in different chapters of the Central Excise Tariff Act, 1985 to determine the classification.

3. Application of Central Excise Tariff Act: The court delves into the application of the Central Excise Tariff Act, 1985 in conjunction with the Additional Duties of Excise (Goods of Special Importance) Act, 1957. It highlights that the definitions provided in the Central Excise Tariff Act are adopted in the Additional Duties of Excise Act, thereby influencing the interpretation of textile items for taxation purposes.

4. Impact of Legal Changes: The court acknowledges the changes in law post the insertion of Entry 8A in the Fifth Schedule, emphasizing that previous judgments based on different legal provisions are no longer applicable. It underscores the importance of aligning with the current legal framework for tax assessments post the specified date.

5. Exclusion from Declared Goods: The court determines that handkerchiefs do not fall under the category of declared goods as defined in the CST Act, thereby disallowing the benefit of tax rates in the Fourth Schedule. The dismissal of the petitions is based on the lack of merit in the arguments presented by the petitioner.

In conclusion, the judgment upholds the tax levy on the sale of handkerchiefs, rejecting the petitioner's claims for exemption under Entry 8A of the Fifth Schedule. The court's analysis focuses on the specific definitions provided in the relevant Acts and the applicability of legal changes post the specified date, leading to the dismissal of the petitions.