S.N. JHA, J. :- The petitioner seeks a declaration that hand loom bandage cloth is a sales tax free commodity and no tax thereon can be levied under the Bihar Finance Act, 1981. It further seeks quashing of assessment orders for the periods 1989-90, 1990-91, 1991-92 and 1992-93 to the extent sales tax has been levied on hand loom bandage cloth and the claim for exemption has been rejected. Quashing of the consequential demand notice pursuant to the impugned assessment orders is also sought.

2. The petitioner is a partnership firm engaged in the business of medicines and surgical goods at Dhanbad. In course of business it buys and sells handloom cloth for surgical purpose. The petitioner claims to be carrying on the business since the year 1975. According to it, the goods in question was always treated as tax free goods and no tax was levied on its sale.

3. It may be mentioned here that for the assessment period 1983-84 the petitioner was initially allowed exemption on sale of hand loom bandage cloth by the assessing officer, viz., Deputy Commissioner of Commercial Taxes, Urban Circle, Dhanbad, on 3.8.85. However, a fresh assessment order was passed on 17.5.93 in which the sale of the handloom bandage cloth was included as part of taxable turn-over. The petitioner preferred appeal before the Joint Commissioner of Commercial Taxes (Appeals) Dhanbad, which was rejected on 31.5.95. The petitioner has challenged the said two orders seeking similar declaration that hand loom bandage cloth is tax-free commodity in C.W.J.C. No. 8044 of 1995(R). We tentatively decided to deliver a common judgment. After considering the matter, we later decided to decide the two cases by separate judgments as the other case could be decided on a rather short point without going into the larger question as to whether handloom bandage cloth is sales tax free commodity under the Bihar Finance Act or not while in the present case that is the only point for consideration.

4. The case of the petitioner is that what the petitioner buys and sells is handloom cloth and not bandage. It buys the cloth by yards and sells the same by yards without cutting or rolling it into sizes or shapes. According to the petitioner, the goods cannot be used as bandage in the form it is sold without being cut to shape and size and being sterilized. Handloom cloth, it is submitted, can be used not only as bandage but for various other purposes, such as, binding or layering material for books, envelopes, shoes etc. It cannot, therefore, be said to be a surgical goods exigible to sales tax under the Bihar Finance Act. The petitioner has placed reliance on tile cases of Delhi Cloth and General Mills Ltd. v. Commercial Tax Officer: (1975) 36 STC 575, and Radhika v. State of Orissa: (1977) 39 STC 93.

5. The respondents have filed counter affidavit. They have firstly challenged the maintainability of the writ petition on the ground that the same has been preferred without exhausting the statutory remedy of appeal as was done with respect to assessment period 1983-84 giving rise to C.W.J.C. No. 8044 of 1955(R), and the same is therefore fit to be dismissed on this ground alone. On merit it has been stated that the State Government in exercise of power under section 7(3) of the Bihar Finance Act has specified the goods exempted from levy of sales tax. So far as cotton fabrics and handloom cloth vide entry 21 of the said notification are concerned, the exemption is available provided the goods have borne the incidence of duty' under the Additional Duties of Excise (Goods of Special Importance) Act 1957. Since the goods in question have not borne the incidence of duty under the said Act no exemption can be claimed under the notification. According to the respondents, the bandage cloth falls under the category "medicines and drugs" which has been specified in the notification dated 1.10.89 issued under section 12 of the Bihar Finance Act, and the same is taxable @ 7%. The respondents rely on a de

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