The extended definition of 'cotton fabrics' in the Central Excises and Salt Act, 1944, should be imported into the Kerala General Sales Tax Act, 1963, as the latter Act would become unworkable and ineffectual without it.

GOPALAN NAMBIYAR, C.J.

These tax revision cases relate to the claim for exemption from sales tax under the Kerala General Sales Tax Act, 1963, in respect of the turnover on sales of "P.V.C. cloth" (Rexine). T.R.C. No. 61 of 1976 relates to the year 1971-72 and the claim is in respect of an amount of Rs. 1,33,840.34; T.R.C. No. 62 of 1976 is in respect of 1972-73 and the claim is for Rs. 1,56,181.04. The genesis and the statutory background of the claim is as follows :

Under article 286(3) of the Constitution of India :

"Any law of a State shall, in so far as it imposes, or authorities the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify."

In accordance with the above constitutional provision, the Central Sales Tax Act, 1956, was passed by Parliament. Section 14 declared goods of special importance in inter-State trade or commerce. Sub-clause (iia) of the said section is :

"Cotton fabrics, as defined in item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944)."

And item 19 of the First Schedule to the Central Excises and Salt Act, 1944, in so far as it is material, read :

"'Cotton fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton, and include dhoties, sarees, chadders, bed-sheets, bed-spreads, counter-panes and table-cloths, but do not include any such fabrics ................"

This was the definition till it was amended by the Finance Act of 1969. The amended definition (to notice only its relevant portion) reads :

"10. Cotton fabrics -

'Cotton fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties, sarees, chadders, bed-sheets, bed-spreads, counter-panes, table-clothes, embroidery in the piece, in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials but does not include any such fabric if it contains ............."

The underlined words are new. The claim for exemption has to be adjudged in the light of the above provisions.

2. This legislative device (by no means uncommon), of referring to the definition in another Act, is repeated in sub-clauses (vii), (viii) and (ix), all of which refer back to the definition of the relevant expressions contained in the Central Excises and Salt Act, 1944. The claim for exemption from sales tax was based on the provisions of sections 3 and 4 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, read with the Second Schedule, Parts II and III, of the said Act. Schedule III authorises the levy and collection in respect, inter alia, of cotton fabrics, rayon or artificial silk fabrics produced or manufactured in India, of duties of excise at the rates specified in the First Schedule. These are to be in addition to the duties of excise chargeable under the Central Excises and Salt Act, 1944. The provisions of the said Act of 1944 and the Rules thereunder, including those relating to refunds and exemptions are to apply in relation to the levy and collection of additional duties in the same way in which they apply to the levy and collection of duties of excise. Under section 4, during each financial year, payment is to be made out of Consolidated Fund of India to the States in accordance with the provisions of the Second Schedule, of such sums representing a part of the proceeds of the additional duties levied and collected during the financial year. Part III of the Second Schedule shows Rs. 38,00,000 (Rs. 38 lakhs) against Kerala. There is a proviso in clause (vi)(b)(ii) of Part III of the Second Schedule that, if during the financial year, there is levy and collection in any State specified (Kerala is one such State)