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TMI Blog2006 (10) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax and subsequently from the value added tax also. While so, the Kerala Value Added Tax Act, 2003, was amended by the Kerala Value Added Tax (Amendment) Act, 2005 and silk fabrics and sarees made of natural silk were included as serial No. 116 in the Third Schedule to the KVAT Act. The result was that with effect from August 28, 2005, VAT at the rate of four per cent was payable on silk fabrics and sarees made of natural silk. The petitioners, aggrieved by the inclusion of the said item, as a taxable item under the KVAT Act, have filed this writ petition, seeking a declaration that the said amendment is unconstitutional and void. Normally, it is for the Government to decide which are the goods to be subjected to tax. The State is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. The same is evident from Second Schedule to the said Act. The relevant sections in the ADE Act are sections 3 and 4. They are quoted below for convenient reference: 3. Levy and collection of additional duties. (1) There shall be levied and collected in respect of the goods described in column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto, duties of excise at the rate or rates specified in column (4) of the said Schedule. (2) The duties of excise referred to in sub-section (1) in respect of the goods specified therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, 1956, the National Development Council, Planning Commission, Government of India, and the States agreed that the sales tax in respect of, inter alia, tobacco should be replaced by a surcharge on the Central excise duties, the income derived therefrom being distributed amongst States on the basis of consumption, subject to the income from the States being assured. Pursuant to this and the recommendation of the Finance Commission in its report dated September 30, 1957, the Additional Duties of Excise (Goods of Special Importance) Act, 1957, was passed by Parliament. The object of the Act was to impose additional duties of excise in replacement of the sales tax levied by the Union and the States on sugar, tobacco and mill-made textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the aforesaid Act. Having regard to the objective behind enacting the ADEA, it is apparent that cotton-based tarpaulin on which additional duty is levied under the ADEA was and continues to be exempt from sales tax. At this stage, it would be pertinent to refer to the exclusion clause in entry 11 in the Third Schedule to the KGST Act. The exclusion clause means that where duty has not been levied under the ADEA such goods would be excluded from the purview of entry 11; to put it simply, the goods would lose their exemption under the KGST Act. For this reason also, we hold that cotton-based tarpaulin is exempted from sales tax under the KGST Act. The counsel further added, admittedly, fabrics of silk and other related products are inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the ADE Act and article 286(3) of the Constitution of India, I feel that the contention of the petitioners is plainly untenable. The only point to be considered is whether the apex court has made any binding declaration, which compels this court to take a contrary view. Going by the decision in Godfrey Phillips India Ltd. [2005] 139 STC 537 (SC), relied on by the learned counsel for the petitioners, l feel that the same does not, in any way, support the case of the petitioners. On the contrary, the observations in paras 65 and 72 of the said judgment, wherein the apex court observed that if the State wants to take the benefit of the ADE Act, it should not impose any other levy on the goods concerned, support the respondents. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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