The exemption from sales tax under entry 4 of the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959 is not subject to the condition that the cotton, woollen, rayon, or artificial silk fabrics must have been manufactured in India and borne Central excise.

Balasubrahmanyan, J.

1. Section 8 of the Tamil Nadu General Sales Tax Act, 1959, is a provision relating to exemption from sales tax. The section declares that any dealer who deals in the goods specified in the Third Schedule to the Act shall not be liable to pay any sales tax under the Act. The section, however, enacts that this exemption is subject to such restrictions and conditions as may be prescribed.

2. The Third Schedule to the Act specifies certain goods, by description, and sets them down, seriatim, in various entries. Entry 4 of this Schedule specifies the following goods :

"Cotton fabrics, woollen fabrics and rayon or artificial silk fabrics, as defined in items 19, 21 and 22 respectively of the First Schedule to the Central Excises and Salt Act, 1944 (Central Act 1 of 1944)."

3. The assessee in this case is a consumers' co-operative society dealing in all kinds of things, including foreign-made and Indian-made textiles. In the year 1974-75, the assessee came by a quantity of confiscated smuggled foreign woollen and artificial silk fabrics. It sold them to its customers for Rs. 32,063.81. In its assessment to sales tax, the assessee claimed exemption for this turnover under section 8 of the Act read with entry 4 of the Third Schedule. The exemption was refused right through from the assessing authority onwards upto and including the Sales Tax Appellate Tribunal.

4. The view of the Tribunal and the other authorities was that only cotton, woollen and artificial silk fabrics which were excisable under the Central Excises Act are eligible for exemption from sales tax under entry 4 of the Third Schedule to the Sales Tax Act. Since the assessee in this case dealt in foreign fabrics, which were not manufactured in India and hence not excisable under the Central Excises Act, it was held that the assessee's sales turnover was not entitled to exemption.

5. This decision is challenged by the assessee in this revision. Mr. Natarajan, for the assessee, urges that the view of the Tribunal is based on a misconstruction of entry 4 of the Third Schedule to the Sales Tax Act. He said that it is not a condition for exemption from sales tax that cotton, woollen, rayon and artificial silk fabrics must have paid excise duty. Learned counsel relied on a decision of the Gujarat High Court in Mehta Brothers v. State of Gujarat [1979] 43 STC 208.

6. In that case, the Gujarat High Court had to decide whether the sale or purchase of imported artificial silk fabrics are exempt from sales tax as falling within the scope of the expression "rayon or artificial silk fabrics as defined in item No. 22 of the First Schedule to the Central Excises and Salt Act, 1944".

7. The court held that even imported fabrics were included within this exempted category. The court observed that a reference to item 22 of the First Schedule to the Central Excises and Salt Act, 1944, showed that the only stipulation in that schedule was that the artificial silk fabrics must have been "manufactured". The court proceeded to observe that the Schedule to the Central Excises Act did not carry a further stipulation that the fabrics in question must have been manufactured in India. The learned Judges expressed the view that for the strict purpose of construing the nature of the exempted goods under the Sales Tax Act, it was not pertinent to go into the body of the Central Excises Act and find the nature of the charge to Central Excise and the purpose for which the goods were classified and set out in the schedule to the said Act. It would seem that if the First Schedule to the Central Excises Act had used the words "manufactured in India" instead of merely "manufactured" by way of referring to the goods specified in the said First Schedule, the decision of the Gujarat High Court might well have been the opposite of what they had come to in the case reported.

8. The statutory scheme and the exemption provision of the Gujarat Sales Tax Act are in pari materia with the Tamil Nadu