TMI Blog1980 (5) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ls within Item 18 of the Schedule to the Rajasthan Sales Tax Act which exempts from sales tax and purchase tax - "All cotton fabrics, rayon or artificial silk fabric, woollen fabrics as defined in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)." Section 2(c) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 declares that the expression "rayon or artificial silk fabrics" shall have the meaning assigned to it in Item 22 of the First Schedule to the Central Excises and Salt Act, 1944. Item 22 reads :- "Rayon or artificial silk fabrics" means all varieties of fabrics manufactured either wholly or partly from rayon or artificial silk and includes embroidery in the piece, in strips or in motifs and fabrics impregnated or coated with preparations of callulose derivatives or of other artificial plastic materials, ....... 3. The appellant was assessed to sales tax by the Commercial Tax Officer for the years 1969-70 and 1970-71 on the turnover of rayon tyre cord fabric. The plea that the product was exempt from sales tax was not accepted. Two writ petitions were filed by the appellant in the Rajasthan High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 25 to the inch. By a process of weaving, cotton threads are wefted through a loom across the cords. The wefts are thinner and fewer than the cords, being not more than two to five per inch. The cord component comprises the major content of the product. The unprocessed rayon tyre cord fabric so produced is sold in the form of rolls in the market. After initial chemical treatment it is put through a process of rubberizing in the tyre manufacturing plant. The rayon tyre cord fabric is used as a re-inforcing base in the manufacture of tyres. It is a product generally intended for industrial use. The rayon tyre cord employed as a component in the manufacture of rayon tyre cord fabric is also sold directly as such. It is sold packed on cones, somewhat like yarn is sold. Tyre cord is purchased directly by some tyre manufactures, who by applying the same process of putting in the wefts, convert it into a tyre cord fabric for use in the tyre. 6. In holding that the rayon tyre cord fabric is not a fabric, the Board has noted that the tyre body or carcass consists of a series of layers of cord fabric in the form of plies buried in rubber, and that the significant factor in the tyre cord f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Textiles (1959) says that fabric is "a cloth that is woven or knit, braided, netted, with any textile fibre.....," and "textile" is said to refer to "a broad classification of any material that can be worked into fabric, such as fibres and yarns including woven and knitted fabric, felt, netted fabric, lace and crouched goods". In "Textile Terms and Definitions" (1960) the words cloth is defined as "a generic term embracing all textile fabrics and laminar felts" and "textile" is applied in its modern sense "to any manufacture from fibres, filaments, or yarns, natural or artificial, obtained by interlacing". The 1967 Annual Book of ASTM Standards defines cloth as "any textile fabric but specially one designed for approval domestic or industrial use," and textile fabric as "a planer structure consisting of interlaced yarns or fibres". The 1973 Annual Book of ASTM Standards reproduced those definitions. 10. We may now examine whether a tyre cord fabric has been understood as a fabric. A publication IS : 4910 (Para VI) - 1970, put out by the Indian Standards Institution, defines a "tyre cord fabric" as "a fabric consisting of tyre cord warp with widely spaced weft threads". Anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious Departments, looks at tyre cord fabrics. The Revised Indian Trade Classification (1965) published by the Central Government in the Department of Commercial Intelligence and Statistics lists Viscose tyre fabric (Code 653-6125) under the classification Group 653 - "Textile Fabrics, Woven (not including narrow or special fabrics), other than cotton and jute fabrics." The Ministry of Foreign Trade Resolution dated 27th February, 1971 refers separately to rayon tyre yarn, cord and fabric, and speaks of tyre cord units producing both twisted cords and woven fabric. And the Indian Customs Tariff Guide (11th Edition) shows as Item 53 in the Tariff Schedule : "Rayon tyre fabrics, a loosely woven material with extremely thin cotton threads running breadthwise and introduced merely for keeping the artificial silk threads running lengthwise in position." The item is inserted in the same terms in the Tariff Schedule to the Indian Customs Tariff Guide (13th Edition). The Table appended to the Customs and Central Excise Duties Drawback Rules lists "Viscose tyre cord fabric" (2621) under Serial No. 26 "Textile Fabrics and Hosiery". 12. On a comprehensive consideration of the material befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Importance) Act, 1957 was enacted Parliament could not have intended the expression "rayon fabric" to include rayon tyre cord fabric. It is pointed out that the Statement of Objects and Reasons pertinent to the Act refers to mill-made textiles, and the submission is that the item in the First Schedule to that Act refers to fabric which affects the common man, which finds place in a popular market and is intended for popular use, an does not refer to a commodity which caters to the needs of a special category of consumers and is devoted to a particular use only. Now, the tyre manufacturing industry is of growing importance and had an increasingly important role to play in everyday life. That is evident from the overwhelming expansion of automobile traffic prompted by the complex needs of a constantly enlarging economy. The daily life of an average citizen is profoundly affected by the automobile, be it passenger bus or a goods truck or the ubiquitous scooter. Tyres are needed for all. In rural areas tyres are now coming into use for bullock carts. It is futile to suggest that the tyre plays a less substantial role than other popular commodities in modern life. And, therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals, we are concerned with a claim to exemption from sales tax, and in order to consider the contention of the Revenue that no such exemption was available to the appellant because he had not paid any additional excise duty on rayon tyre cord fabric it is necessary to determine whether indeed the exemption from sales tax was subject to the condition of payment of additional excise duty. 18. Section 4(2) of the Rajasthan Sales Tax Act, 1954 empowers the State Government, by notification in the Official Gazette, to exempt from tax the sale of any goods or class of goods on such conditions as may be specified in the notification. By a notification dated 1st July, 1958, the Rajasthan Government unconditionally exempted all varieties of textiles made wholly or partly of rayon from 1st July, 1958. Section 4(1) of the Rajasthan Sales Tax Act, 1954 provides for exemption from sales tax of the goods specified in the Schedule to that Act provided the conditions mentioned in the Schedule are satisfied. Item 18, inserted in the Schedule by the Rajasthan Taxation Laws (Amendment) Act, 1964, included "rayon fabrics" as defined in the Additional Duties of Excise (Goods of Special Importanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied as a rayon fabric and, therefore, this Court should not interfere in these appeals. It is also pointed out that under Section 15 of the Rajasthan Sales Tax Act a proceeding by way of reference is available to the appellant and this Court, even if it were to consider these appeals on the merits, should exercise no wider jurisdiction than that available to it if it had entertained a reference. We are unable to agree that the question is one of fact. It is a question which concerns the construction of Item 22 of the Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. If the rayon tyre cord fabric manufactured by the appellant is covered by that item it is exempt from sales tax and there is no jurisdiction in the sales tax authorities to assess the appellant on its turnover. The question is one of substantial importance, and having regard to the circumstances there is good reason for entertaining the appeals and deciding them on the merits. 21. In the result the appeals are allowed, the assessments in respect of the turnover of rayon tyre cord fabric manufactured by the appellant relating to the assessment years 1969-70, 1970-71, 1971-72 and the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
