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TMI Blog2004 (3) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... ,95,752, during the assessment period. He determined the sales turnover relating to terry towels as Rs. 5,43,345 by adding 9.6 per cent as gross profits to the purchase value. He held that the sales turnover relating to terry towels was not exempted from tax and subjected the sales turnover relating to terry towels to tax at 2 per cent under entry 7A of Part T of the Second Schedule to the KST Act. The appellant filed an appeal before the Joint Commissioner of Commercial Taxes (Appeals), Bangalore City Division-III. The appellate authority held that the goods in question would fall under the heading No. 52.07 or heading No. 58.02 in the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (for short, "the ADE Act") and therefore the goods were exempt from tax under section 8 read with entry 3 (old entry No. 8A) of the Fifth Schedule to the KST Act. He, therefore, allowed the appeal by order dated April 28, 2000 and deleted the taxable turnover determined as Rs. 5,43,345. The Additional Commissioner of Commercial Taxes, Zone-I, Bangalore, in exercise of his suo motu revisional power, passed an order dated April 28, 2000 setting aside the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and exceptions, if any, set out therein. Old entry No. 8A (corresponding to entry No. 3 from April 1, 1998 to March 31, 2002) of the Fifth Schedule to the KST Act read thus: "All varieties of textiles, namely, cotton, woollen or artificial silk including rayon or nylon, whether manufactured in mills, powerlooms or in handlooms and hosiery cloth in lengths (produced or manufactured in India) as described from time to time in column (2) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957." On the other hand "Textile and fabrics, but excluding such textiles and fabrics as are covered, described or specified elsewhere in any of the Schedules", are subjected to tax under entry 7A of Part T of the Second Schedule to the KST Act. Thus, if any textiles fell under entry No. 8A (later entry No. 3) of the Fifth Schedule, it got excluded from entry No. 7A of Part T of the Second Schedule. If any textiles or fabrics did not fall under either entry No. 8A (later entry No. 3) of the Fifth Schedule or any other entry in any Schedule, then it fell under entry No. 7A of Part T of the Second Schedule. [Note: Entry No. 3 (old entry No. 8A) of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -made fabrics), to be paid to each of the States including Karnataka. It is thus clear that the State Government wanted to exempt from sales tax, those categories of textiles which were subjected to additional excise duty under the ADE Act (a proportionate portion of which is received by the State Government under the provision of the ADE Act). It follows therefore that a "textile" which is not described in the First Schedule to the ADE Act and not therefore subject to additional excise duty under the ADE Act, is not eligible to exemption under entry No. 3 (old entry No. 8A) of the Fifth Schedule to the KST Act. 9.. If the intention of the Legislature was to exempt all textiles, entry No. 3 (old entry No. 8A) of the Fifth Schedule would have simply read "All varieties of textiles" or "all varieties of textiles, namely, cotton, woollen or artificial silk including rayon or nylon". By adding the words "as described from time to time in column (2) of the First Schedule to the ADE Act" to the description of textiles in the said exemption entry, the legislative intent not to exempt all textiles, was expressed. In fact entry No. 7A of the Second Schedule makes it clear textiles and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ics" under heading No. 52.08 or "other woven fabrics of cotton" under heading No. 52.09; and that similarly, terry towels will fall under the description "terry towelling and similar woven terry fabrics" under heading No. 58.02. But, a more detailed examination would show that the position is otherwise. 11. Headings, sub-headings and description of goods in the First Schedule to the ADE Act are extracted from the corresponding headings, sub-headings and descriptions in the Schedule to the Central Excise Tariff Act, 1985. In fact, the First Schedule to the ADE Act contains the following notes: "1. In this Schedule 'heading', 'sub-heading' and 'chapter' mean respectively a heading, sub-heading and chapter in the Schedule to the Central Excise Tariff Act, 1985. 2. The rules for the interpretation of the Schedule to the Central Excise Tariff Act, 1985, the section and Chapter notes and the General Explanatory Notes, of the said Schedule shall, as far as may be, apply to the interpretation of this Schedule." The rules for interpretation of the Excise Tariff Schedule makes it clear that where goods are, prima facie, classifiable under two or more headings, classification shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional duty. 13. Having regard to the rules of interpretation of the Schedule, that is, a more specific description should be preferred to a general description, if a particular goods falls under heading No. 63.02 because it happens to be a made up textile article, it will not fall under Heading No. 52.07 which deal with textiles of general description. Heading No. 63.02 in Chapter 63 relates to bed linen, table linen, toilet linen and kitchen linen. "Bed linen" refers to bedsheets and covers, bedspreads and pillow cases. "Table linen" refers to table cloth and napkins. "Toilet linen" refers to towels used in bathrooms and toilets. "Kitchen linen" refers to napkins, aprons, cleaning towels, etc., used in kitchens. Bedsheets and bedspreads are bed linen, and napkins are table linen, and terry towels are toilet linen. Goods falling under the Heading No. 63.02 are not mentioned in the First Schedule to the ADE Act and are not subjected to additional excise duty under the ADE Act. Bedsheets, bedspreads, napkins and terry towels, that is bed linen, table linen or toilet linen, are therefore not textiles which are described in column (2) of the First Schedule to the ADE Act. Wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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