The judgment of the court was delivered by

DESAI, J. - The facts leading to this reference are that Shree Ram Industries, the applicant herein, is a partnership-firm doing the business of manufacturing for sale art silk saris and also reselling saris. The firm sells saris either in the same condition in which they are manufactured or, in some cases, after embroidering butta or attaching zalar to such saris. The total turnover of the sales of the firm for the period between 29th October, 1962, to 17th October, 1963, was Rs. 35,41,358. Sales to the extent of Rs. 3,24,262 were held by the Sales Tax Officer as sales of tax-free goods covered by entry 41 of Schedule A to the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act). Sales of Rs. 85,641 were held to be covered by entry 11A or entry 19 of Schedule E to the Act. Out of these sales for Rs. 85,641, sales for Rs. 45,216 were sales of saris either embroidered or decorated with butta, while sales for Rs. 40,425 were in respect of saris to which zalars were attached. The dispute before the Tribunal was confined only to sales of saris with zalars amounting to Rs. 40,425, and the question that arose before the Tribunal was whether the said turnover could not be considered for the purpose of taxation, in view of the contention that the saris to which zalars were attached were covered by entry 41 of Schedule A with the consequence that their sale was free from any taxation. The Tribunal following the decision of this court in the case of Pravin Bros. v. The State of Gujarat ([1964] 15 S.T.C. 478.), came to the conclusion that the saris to which zalars were attached was a different commodity and was covered by entry 11A or 19 to Schedule E to the Act, and hence the turnover in that respect was liable for taxation under the Act. At the instance of the partnership-firm, the Tribunal has referred 3 questions to us for our answers and they are :

"(1) Whether, on the facts and in the circumstances of the case, the sales of saris of art silk fabrics to which zalars, that is, borders are attached by stiching them to saris after the process of manufacture are covered by entry 41 of Schedule A and, therefore, exempt from tax under sub-section (1) of section 5 of the Bombay Sales Tax Act, 1959 ?

(2) If the answer to the first question is in the negative, whether, on the facts and in the circumstances of the case, saris of art silk fabrics to which zalars, that is, borders are attached by stitching them to saris after the process of manufacture are art silk fabrics within the meaning of sub-section (7) of section 14 of the Central Sales Tax Act, 1956 ?

(3) If the answer to the second question is in the affirmative, whether, on the facts and in the circumstances of the case and having regard to the provisions of sub-section (7) of section 14 and section 15 of the Central Sales Tax Act, 1956, the rate shown against entry 11A and entry 19 of Schedule E to the Bombay Sales Tax Act, 1959, should be not more than 2 per cent of the sale price instead of the rate shown against that entry ?"

The short question which arises for our determination is whether the saris to which zalars have been attached are covered by entry 41 of Schedule A or by entry 11A or 19 to Schedule E to the Act. Entry 41 in Schedule A is in the following terms :

"41. Rayon or artificial silk fabrics as defined in item No. 22 of the First Schedule to the Central Excises and Salt Act, 1944."

Item 22 of the First Schedule to the Central Excises and Salt Act, 1944, is as follows :

"22. Rayon or artificial silk fabrics : 'Rayon or artificial silk fabrics' include all varieties of fabrics manufactured either wholly or partly from rayon or artificial silk, but do not include any such fabrics -

(i) if it contains 40 per cent or more by weight of wool;

(ii) if it contains 40 per cent or more by weight of silk;

(iii) if it contains cotton and less than 60 per cent by weight of rayon or artificial silk;

(iv) if it contains