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2014 (12) TMI 45 - KARNATAKA HIGH COURTRate of tax - classification of artificial flower petals - Karnataka Value Added Tax Act, 2003 - item No. 7 in entry 78 - Held that:- In so far as the question of understanding and interpreting entries is concerned, general rule of interpretation is if any particular item or goods fits into any one of the entries mentioned or figuring in any of the Schedules, it necessarily remains there and does not get into the residuary clause or goods of general description in respect of which a uniform rate of tax, viz., 12.5 per cent becomes applicable. It is because goods figuring in the Third Schedule to the Act attract tax at lower rate than general rate, a dealer or an assessee will be keen to get into any one of the entries if is possible and remain there, as tax liability is lower. A mere desire or inclination is not the criterion, but it is the nature of the goods and the description of the goods as figures in the Schedule. If the particular product which is having its origin in textiles or fabrics, but is marked in the shape of artificial flower petals is not so either shaped or marked, but sold as fabric and it remains as an exempted item. But, it has lost its characteristic of "cloth" and fabric or textile, because of being marketed as artificial flower petals and in a particular shape, though made of textiles or fabric. In the present case, the assessee himself having claimed that it is an item fitting into entry 78 figuring in the Third Schedule, we find no need to remand the matter but proceed to accept the submissions and the stand taken by the assessee that the item known as artificial flower petals is used extensively in readymade garments. In the wake of our examination as above, we find that artificial flower petals having its origin in textile or fabrics, necessarily fits into the description of "clothing accessories" figuring as item No. 2 in entry 78 of the Third Schedule to the Act. - Decided in favor of assessee.
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