The Judgment of the Court was delivered by

DESAI, J. - The assessee herein is a partnership firm. It is carrying on business of selling cloth, cosmetics, ready-made garments, hosiery, etc. In the assessment year S.Y. 2027, the assessee had purchased artificial silk cloth manufactured outside India from the customs department. The assessee sold the said cloth for a total value of Rs. 15,681. In the course of its assessment proceedings, the assessee raised three contentions : (1) that the goods in question were "artificial silk fabrics" within the meaning of entry 40 of Schedule I and that, therefore, the sale of those goods was free from all taxes under section 5 of the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act"), (2) that the transactions of sale of the goods in question were exempted from the whole of tax under entry 67 of the Schedule to the Government notification dated 29th April, 1970, issued in exercise of the power conferred upon the State Government by section 49(2) of the Act and (3) that, in any case, the sales of the goods in question were liable to tax at 3 per cent. because they were declared goods and not at the rate specified in residu