MEHTA BRORS LABELLA SURAT Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE assessee herein is a partnership firm. It is carrying on business of selling cloth, cosmetics, ready-made garments, hosiery, etc. In the assessment year S. Y. 2027, the assessee had purchased artificial silk cloth manufactured outside India from the customs department. THE assessee sold the said cloth for a total value of Rs. 15,681. In the course of its assessment proceedings, the assessee raised three contentions : (1) that the goods in question were "artificial silk fabrics" within the meaning of entry 40 of Schedule I and that, therefore, the sale of those goods was free from all taxes under section 5 of the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act"), (2) that the transactions of sale of the goods in question were exempted from the whole of tax under entry 67 of the Schedule to the Government notification dated 29th April, 1970, issued in exercise of the power conferred upon the State Government by section 49 (2) of the Act and (3) that, in any case, the sales of the goods in question were liable to tax at 3 per cent. because they were declared goods and not at the rate specified in residuary entry 13 of Schedule III. THE Sales Tax Officer rejected all the contentions advanced on behalf of the assessee and sales tax and general sales tax were levied at the rate specified in entry 13 of Schedule III. THE assessee carried the matter in appeal before the Assistant Commissioner of Sales Tax, but the appeal failed. THE assessee thereupon carried the matter in further appeal before the Gujarat Sales Tax Tribunal (hereinafter called "the Tribunal") and, in that proceeding also, the assessee failed. At the instance of the assessee, however, the Tribunal has referred the following three questions for the opinion of this Court : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that entry 40 of Schedule I to the Gujarat Sales Tax Act, 1969, would apply to those fabrics which have been manufactured in India and not otherwise ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that entry 67 of the Government notification issued under section 49 of the Gujarat Sales Tax Act, 1969, would be applicable only to those fabrics which have been manufactured in India and not otherwise ? (3) Whether, the Tribunal was right in holding that the sales of imported artificial fabrics would be covered by residuary entry 13 of Schedule III to the Gujarat Sales Tax Act, 1969, as there was no entry applicable for the sale of the said goods ?"

(2.) WE propose to take up for consideration first question No. (1), for, that is the main question to be answered and, upon its answer, the answer to question No. (2) will automatically follow and question No. (3) will not require to be answered as the assessee has stated that it does not press the same.

(3.) AS would be apparent from what follows, we are not concerned with the remaining part of the definition and, therefore, we are not setting out the entire definition. It is manifest that this is an instance of legislation by adoption in that, the legislature for the purpose of defining rayon or artificial silk fabrics in entry 40 of Schedule I has adopted the definition of the said goods, as given in item 22 of the Excise Act. It is this legislative device adopted by the legislature which has given rise to the controversy which centres round question No. (1 ). To pinpoint the controversy and to resolve it against its proper background, it would be necessary at this stage to refer to the nature of the controversy and to the view of the taxing authorities on the point.