TMI Blog2006 (3) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... m sales tax under the KGST Act to the cotton based tarpaulin manufactured by the appellant. - Civil Appeal No. 6621-6634 of 2000, - - - Dated:- 30-3-2006 - RUMA PAL, SRIKRISHNA B.N. AND DALVEER BHANDARI JJ. Joseph Vellapally, Senior Advocate (Premjit Nagendran and M.P. Vinod, Advocate, with him) for the appellant. T.L. Viswanatha Iyer, Senior Advocate (K. Sasiprabhu, Advocate with him) for the respondent. -------------------------------------------------- ORDER The order of the Court was made by B.N. SRIKRISHNA J. The issue involved in these appeals is identical and hence they can be decided by a common judgment. We shall take the facts in Civil Appeal No. 6621 of 2000 for deciding the issue. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was eight per cent at the point of first sale. This situation continued till July 31, 1991. By the Kerala Finance Act, 1991, the commodity "P. V. C. cloth" was deleted from the First Schedule with effect from August 1, 1991 from the relevant entry. This situation continued till March 31, 1992. Under the Kerala Finance Act, 1992 a new entry 106 read as "Rain coat, tarpaulin and products of water-proof cloth, rexine and PVC cloth" was added. The rate of tax was also increased to 10 per cent without any change in the point of levy. According to the Revenue, "tarpaulin" falls under entry 100-C or 152, as the case may be, and is taxable at 8 per cent at the first point of sale from April 1, 1984 to March 31, 1992 and from April 1, 1992 it f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound against which this enactment was brought on to the statute book has been considered and explained by this court in the judgment in Godfrey Phillips India Ltd. v. State of U. P. [2005] 2 SCC 515 See [2005] 139 STC 537., vide paragraph 63. Shorn of details, the reason for bringing this Act on the statute book was to discourage different States levying sales tax at different points at different rates on goods considered to be of special importance and simultaneously to ensure that the States did not lose revenue, by charging an additional excise duty under the ADEA, which would be shared with the States. Consistent with this basic philosophy, the Act specified under First Schedule the taxability of the commodities and provided under Secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view. By way of an alternative argument, the appellant contended that, "cotton fabrics" being goods declared to be of special importance in inter- State trade or commerce vide section 14 of the Central Sales Tax Act, 1956, sales tax levied on cotton based tarpaulin cannot, in any event, exceed four per cent, as stipulated in section 15 of the Central Sales Tax Act, 1956. On the other hand, it was urged by the Revenue before the High Court and before us that as far as cotton based tarpaulin is concerned, in relation to the KGST Act, "tarpaulin" being the more specific entry as opposed to "cotton fabrics" which is the more general entry; it must be held to fall under the former in the First Schedule and hence be held to be exigible to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Tariff Act, 1985. Thus, undoubtedly cotton based tarpaulin was always covered by the term "cotton fabrics"; which was initially specified as entry 19 of the First Schedule to the Central Excises and Salt Act, 1944 (renamed to "The Central Excise Act, 1944 in 1996"); and after the coming into force of the Central Excise Tariff Act, 1985 and the simultaneous repeal of the First Schedule to the Central Excises and Salt Act, 1944, as entry 52.06 in the Central Excise Tarrif Act. The High Court seems to have brushed aside the argument of the appellant by merely focusing on the general principle that when there are two taxing entries one general and the other specific then the specific entry would have to be given priority as comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that the exemption operating in favour of cotton based tarpaulin as covered by "cotton fabrics" in the Third Schedule continues as no corresponding change has been made therein by the Legislature even after the amendment of the First Schedule by the introduction of "tarpaulin". The legal result, consequently, is that cotton based tarpaulin would continue to be leviable to tax under the ADEA, and by reason of entry 7/entry 11 of the Third Schedule the said goods would be exempted from exigibility to sales tax under the KGST Act. This legal result would follow irrespective of whatever might have been the presumed intention of the Legislature in amending the First Schedule. The intention of the Legislature has to be gathered from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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