The Government of Madras vs Madurai Braided Cord and Tape Producers Co-operative Industrial Society

Veeraswami, J.—This case relates to the assessment year 1959-60 and to the turnover of Rs. 12,678.75. This turnover consists of inter-

State sales of braided cord, lamp wicks and braided ropes of the size of about 1/4"" diameter. The Tribunal considered :

They are braided by machinery and being a string that is also cord does not seem to take it out of the category of laces. In fact they are after

pressing them through another machine cut into small pieces and made into shoe-laces.

In its opinion, braided cords were laces within the meaning of item 4 of the Third Schedule to the Madras General Sales Tax Act, 1959. The

turnover was, therefore, held to be exempt from tax, u/s 8 read with item 4 of the Third Schedule to the Act. The State has come up to this Court,

the contention being that the exemption under the Third Schedule to the Madras General Sales Tax Act, 1959, is only applicable to local sales.

In T.C. No. 283 of 1964 (The Government of Madras v. Madurai Braided Cord and Tape Producers Co-operative Industrial Society,

Madurai) since reported at [1968] 21 S.T.C. 451 in which the assessee is the same, this Court held that braided cords will not be laces but a

variety of textile within the meaning of entry 4 in the Third Schedule to the Act. But the State appears to be correct in its contention that the

exemption allowed by Section 8, with reference to item 4 in the Third Schedule to the Madras General Sales Tax Act, 1959, will not enure to

exempt inter-State sales. This, however, does not conclude the matter in favour of the State. Section 14 of the Central Sales Tax Act, 1956,

defines goods of special importance in inter-State trade or commerce and item (ii-a) covers cotton fabrics as defined in item 19 of the First

Schedule to the Central Excises and Salt Act, 1944. ""Fabric"" means, as seen from the Concise Oxford Dictionary, ""thing put together ; woven

material; texture, tissue"". ""Textile"", in the dictionary, is stated to mean ""woven"" suitable for weaving as textile fabrics. It seems to us, therefore, that

cotton being the common factor, cotton textiles in item 4 in the Third Schedule to the Madras General Sales Tax Act, 1959, and cotton fabrics in

entry (ii-a) in Section 14 of the Central Sales Tax Act, 1956, bear the same content and appear to have a similar scope. Cotton fabrics, as defined

in item 19 as aforesaid, is an expression of a very wide scope. In our view, braided cord may well be described as cotton fabrics, within the

meaning of Section 14 of the Central Act. Entry (ii-a) itself would appear to have been introduced with effect from 1st October, 1958. Item No.

12 was substituted by item No. 19 by Act 14 of 1961 ; but in substance it did not affect the scope of the entry. The old entry, item No. 12, also

related to cotton fabrics. If braided cord, as we consider, is declared goods and its inter-State sales fall within the ambit of Section 8(2) of the

Central Sales Tax Act, 1956, they will be liable to charge at the rate applicable to the sale or purchase of such goods inside the appropriate State.

But, as we mentioned, inside sales of such goods are totally exempt from tax under entry 4 in the Third Schedule to the Madras General Sales Tax

Act, 1959. That means, inter-State sales of braided cords, though they come within the purview of Section 8(2)(a) of the Central Sales Tax Act,

1956, in view of the exemption obtaining in respect of local sales of similar goods, no tax will be exigible on inter-State sales Our attention is

invited to an exemption made by the State Government u/s 8(5) of the Central Act, which relates to textiles but confined to all varieties of cloth,

except cloth made of pure silk or staple fibre. It is not because of any exemption under the Central Act, inter-State sales of braided cord are not

chargeable to tax u/s 8(2)(a) of the Central Act. This is because, Section 8(2)(a) of the Central Act applies to inter-State sales of declared goods,

the rate applicable to sale or purchase of such goods inside the appropriate State and no rate is prescribed in local taxation in view of the

exemption. The tax case is dismissed. No costs.