Change in the law and specific mention of handkerchiefs as apparel and clothing accessories excluded them from tax exemption under the Karnataka Sales Tax Act.

V. K. SINGHAL, J.

( 1 ) THESE petitions are disposed of by this common judgment since the controversy involved is also common. The dispute is with regard to levy of tax on sale of handkerchiefs which are claimed to be exempted under Entry 8a of the Fifth Schedule to the Karnataka Sales Tax Act. The said entry is as under :

"all varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon, whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths. " entry (ii-a) of Section 14 of the CST Act has declared the cotton fabric as commodity of special importance in inter-State trade and commerce. The entry reads as under : " (ii-a) cotton fabrics covered under Heading Nos. 52. 05, 52. 06, 52. 07, 52. 08, 52,09, 52. 10, 52. 11, 52. 12, 58. 01, 58. 02, 58. 03, 58. 04, 58. 05, 59. 01, 59. 03, 59. 05. 59. 06 and 60. 01 of the schedule to the Central Excise Tariff Act, 1985 (5 of 1986 ). "

Entry 12 of the Fourth Schedule is as under : textile (Sale by the first or earliest of 1-4-1992 to 31-3-1996 4% fabrics the successive dealers in the From 1-4-1996 2% state liable to tax under this act.) entry 7a in Part T of the Second Schedule is as under : 7a. Textile and fabrics but exclud- 1-4-1992 to 31-3-1996 4% ing such textiles and fabrics as From 1-4-1996 2% are covered, described or specified elsewhere in any of the Schedules.

( 2 ) SALE of handkerchiefs was exempt till March 31, 1992 as falling within the definition of "cotton fabric" under Entry 19 of the Central Excises and Salt Act, 1944. Clarification dated June 18,1987, September 29,1987 and November 29,1989 were also issued by the Commissioner in this regard. It is stated that amendment to entry 8a of the Fifth Schedule does not change the basic character or connotation of textile. Change in the Central Excise Act is stated to be on the basis of Modvat system. It is stated that there was no change under the Central Excise Act or additional Duties of Excise Act and therefore the interpretation which prevailed for a considerable time has to be adopted for the purpose of taxation of handkerchiefs. Change of view by the department is stated to be opposed to fair play. Reliance is placed on the decision given in the case of Deputy Commissioner of Sale Tax v. Mohammed Abdul Khader [ (1980) 46 STC 512 (Ker.)] wherein it was observed that handkerchiefs are manufactured wholly out of cotton and the mere fact that as part of the process of manufacture, the edges of the cloth have been stitched would not in any way affect the character of the handkerchief as a cotton fabric. Process of stitching was considered as essentially involved in the manufacture of several of the items enumerated in the inclusive portion of the definition of "cotton fabrics" contained in entry 19 of the First Schedule to the central Excises and Salt Act. Since the mill-made handkerchiefs were sold in the same condition in which they were supplied by the mill of which excise duty was paid they were held exempt under the Kerala General Sales Tax Act also. Reliance is also placed on the judgment given in the case of Bangalore Wood Industries v. Assistant Commissioner of Commercial Taxes, Assessment [1994 ]92 stc603 (Kar ) wherein it was held that the circular issued by the Commissioner has no relevance because the circulars were issued before the insertion of entry 8a in the Fifth schedule.

( 3 ) IT is also stated that cotton fabric is described in the Additional Duties of Excise (Goods of special Importance) Act, and is covered by entry Nos. 9,10,11 and 28 apart from entry 62. Entry 62 is stated to be relevant for the purpose of assessment under the Central Excise Act and the modvat scheme. In spite of the specification under entry 62. 02 it is stated that the handkerchiefs fall under Chapter 52 of the Central Excise Act and Additional Duties of Excise (Goods of special Importance) Act.

( 4 ) IN the First Schedule to the Additional Duties of Excise (Goods of Spe

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