Judgment

M. H. BEG, J. - We have before us a petition under Art. 32 of the Constitution and two appeals by special leave from the judgment of the High Court of Rajasthan between the same parties. The three cases before us raise the same question of law. It is: Do the goods called "Rayon tyre Cord Fabric" sold by the Delhi Cloth & General Mills Co. Ltd. to manufacturers of tyres, who use it for the purpose of impregnating it with rubber, fall under Entry 18 of the Schedule of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the Act)?

2. The schedule mentioned above gives a list of goods on the sale or purchase of which no tax is payable under the Act. The relevant Entry 18, which was omitted in 1973, reads as follows:

"18. All cotton fabrics, rayon or artificial silk fabrics, woollen fabrics, sugar and tobacco, 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, lays down:

"2 (c) the words and expressions sugar. tobacco, cotton fabrics, silk fabrics, woollen fabrics and rayon or artificial silk fabrics; shall have the meanings respectively assigned to them in Items Nos. 1, 4, 19, 20, 21 and 22 of the First Schedule to the Central Excise and Salt Act, 1944."

3. The writ petition of the Delhi Cloth and General Mills Co. Ltd. states that "rayon tyre cord fabric" is "manufactured out of rayon yarn and cord". It goes on to explain that this fabric is "a textile consisting of rayon threads in the warp and cotton threads in the weft and is manufactured on weaving looms in the same manner as in other ordinary textile", It is also stated there:

"The fabric consists of more than 60% by weight of rayon and is unprocessed. The weft threads are not used merely for tying the warp threads together for the purpose of convenient transport or storage but form an integral part of the whole fabric".

4. The petitioners state that the manufacturers of tyres to whom the fabric is supplied "impregnate the fabric with rubber and weave it into a fabric in the same way as is being done by the first petitioner." Thus, the petitioners allege that they manufacture "a textile" and also that it served as part of raw material for what ultimately also goes into the manufacture of a fabric.

5. After indicating the manner in which and the substance out of which "rayon tyre cord fabric" is made and its composition, the petition sets out Item 22 of the first schedule of the Central Excises and Salt Act, 1944 as the applicable entry covering the goods manufactured by the petitioner. This item reads as follows:

"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 the motifs and fabrics impregnated or derivatives or of other artificial plastic materials, but does not include any such fabrics-

(i) If it contains 40% or more by weight of wool.

(ii) If it contains 40% or more by weight of silk.

(iii) If it contains cotton and less than 60% by weight of rayon or artificial silk; or

(iv) If it contains no cotton and less than 40% by weight of wool and less than 40% by weight of rayon or artificial silk."

6. The petitioners assert that, from years 1966 to 1969, the respondent Commercial Tax Officer was not subjecting the goods of this description to sales tax and accepted the case of the petitioners that they were exempt from taxation. The reasoning of the Commercial Tax Officer, in exempting these goods, is also mentioned. It is then stated that, as some questions were put in the Rajasthan State Legislative Assembly, on or about 30th April, 1971, asking for the reason why this particular type of goods of the petitioners were exempted from sales tax, the Commissioner of Commercial Tax issued a letter to the Commercial Tax Officer to levy sales tax on the "rayon cord fabric" manufactured by the