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TMI Blog2005 (10) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... mill-made cotton handkerchiefs and handloom cotton handkerchiefs by applying entry 7-A of Part T of the Second Schedule to the Act. Aggrieved by the orders of assessment so made, the assessee was before this court, inter alia, seeking a writ ofcertiorari to quash the orders of assessment on the ground that the same is illegal and is in violation of some of the constitutional provisions. The other prayer in the petitions was for a declaration that the mill-made cotton handkerchiefs and handloom cotton handkerchiefs are exempted under entry 8-A of the Fifth Schedule to the Act. In support of the reliefs sought in the writ petitions, it is averred that the Sales Tax Department right from the year 1958 up to March 31, 1992 had exempted the sales of mill-made cotton handkerchiefs and handloom cotton handkerchiefs under entry 8-A of the Fifth Schedule to the Act and the exemption was based on the ground that handkerchiefs are covered by entry 19 of the Central Excise Act and also the circular instructions issued by the Commissioner of Commercial Taxes from time to time. It is further averred that the amendment made to entry 8-A of the Fifth Schedule to the Act, with effect from Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force with effect from April 1, 1964 till December 31, 1969. The entry provided exemption of sales tax on all varieties of textiles enumerated in the entry itself. The entry read as under: 8-A. All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon, whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths. Entry 8-A was substituted by Act No. 3 of 1983. This was in force from January 1, 1970 to March 31, 1979. Under this entry, tyre-cord fabrics specified in Serial No. 7-A of the Fourth Schedule to the Act was excluded from the general expression all varieties of textiles . The entry read as under: 8-A. All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths, but excluding tyre-cord fabrics specified in Serial Number 7-A of the Fourth Schedule. By the very same amendment Act No. 3 of 1983, the original entry as it existed earlier was brought back into the statute book. That was for a period April 1, 1979 to March 28, 1981 and for the period March 29, 1981 to March 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time in column (2) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Therefore, in order to understand the meaning of the expression cloth in lengths , which finds a place in the entry, reference requires to be made to the description provided in the Additional Duties of Excise Act. To begin with, what requires to be noticed is, clause 1 of the notes appended to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ( the Act , for short), which makes a reference to the provisions of the Central Excise Tariff Act, 1985, for understanding the meaning of the expression heading , sub-heading and chapter in the Schedule. Clause 2 of the First Schedule to the Act also adopts the provisions of the Central Excise Tariff Act, for the purpose of interpretation of the section, Chapter Notes and the General Explanatory Notes of the said Schedule. Columns (1), (2), (3) and (4) of the First Schedule to the Additional Duties of Excise Act, 1957, provides for heading , sub-heading , description of the goods and the rate of additional duty payable , respectively. The Additional Duties of Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourth Schedule to the Act, the commodity should necessarily fall under section 14 of the CST Act. Sub-entry (ii-a) of section 14 of the CST Act has declared the cotton fabric as a commodity of special importance in inter-State trade and commerce. The sub-entry (ii-a) of section 14 of the CST Act reads as under: Clause (ii-a). Cotton fabrics covered under Heading Nos. 52.05, 52.06, 52.07, 52.08, 52.09, 52.10, 52.11, 52.12, 58.01, 58.02, 58.03, 58.04, 58.05, 59.01, 59.03, 59.05, 59.06 and 60.1 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). Fourth Schedule goods are declared goods in respect of which tax is leviable under section 5(4) of the Act. Entry 12 of the Fourth Schedule to the Act speaks of textiles and fabrics. For the purpose of this entry, reference requires to be made in respect of the goods enumerated under section 14 of the CST Act. Entry (ii-a) of section 14 of the CST Act provides for cotton fabrics as one of the goods of special importance. The entry without anything else only says, cotton fabrics covered under headings Nos. 52.05 to 60.01 of the Schedule to the Central Excise Tariff Act. Apparently, it does not include Chapter 62 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule thereto. The mere fact that as part of the process of manufacture the edges of the cloth have been stitched would not in any way affect the character of the handkerchief as a cotton fabric. The Madras High Court in the case of Deputy Commissioner (CT), Coimbatore Division v. South India Traders [1982] 50 STC 106, was again considering the question whether the mill-made handkerchiefs are cotton fabrics and exempt from payment of tax under the Tamil Nadu General Sales Tax Act, 1959? The court while answering the issue has stated: The expression fabric is of sufficient amplitude to cover not only a handkerchief woven as a fabric in its own size but also a handkerchief made out of a bigger dimension of fabric. Therefore, mill-made handkerchiefs are entitled to exemption under entry 4 of the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959. The learned counsel Sri B. P. Gandhi nextly relies on the observations made by the apex court in the case of Delhi Cloth General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256. In this decision, the question was whether the rayon tyre cord fabric manufactured by the assessee is a rayon fabric covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observations made by the apex court in the case of Porritts Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433. The question before the court was whether dryer felts manufactured by the dealer fell within the category of all varieties of cotton, woollen or silken textiles specified in item 30 of Schedule B of the Punjab General Sales Tax Act, 1948? and whether they would be exempt from sales tax both under the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956? The court while answering these issues has observed: Dryer felts made out of cotton or woollen yarn by the process of weaving according to the warp and woof pattern and commonly used as absorbents of moisture in the process of manufacture in paper manufacturing units fall within the ordinary and common parlance meaning of the word 'textiles' in item 30 of the Schedule 'B' to the Punjab General Sales Tax Act, 1948, and are exempt from tax. The word 'textiles' in item 30 of Schedule 'B' must be interpreted according to its popular sense, meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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