GOKAK MILLS Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) In these two matters the questions raised for consideration are :

(2.) The petitioner is a dealer under the Karnataka Sales Tax Act, 1957 (for short, "the Act") having a mill in Gokak taluk of Belgaum district. One of its activities is manufacture of cotton tyre cord, which is also known as tyre cord warp sheet. Tyre cord was used to be assessed to sales tax under entry No. 7 of the Fourth Schedule to the Act. Tyre cord was also assessed to Central excise duty under the provisions of the Central Excises and Salt Act, 1944.

(3.) In Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256 the Supreme Court held that tyre cord was a fabric and not a yarn. Therefore, the question that arises for consideration is, whether the action of the sales tax authorities under the Central Sales Tax Act and under the Act should continue to treat it as clothes or should assess as yarn ?