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PETITIONER: DELHI CLOTH AND GENERAL MILLS CO. LTD.

       Vs.

RESPONDENT: STATE OF RAJASTHAN AND ORS.

DATE OF JUDGMENT08/05/1980

BENCH: PATHAK, R.S. BENCH: PATHAK, R.S. UNTWALIA, N.L.

CITATION:  1980 AIR 1552            1980 SCR  (3)1109  1980 SCC  (4)  71  CITATOR INFO :  D          1985 SC1201  (12)  RF         1986 SC1730  (8)

ACT:      Exemption from  Sales Tax  under the  Central Sales Tax Act,-"Rayon Tyre Cord Fabric", whether covered by item 18 of the Schedule  to the Rajasthan Sales Tax Act, 1954, so as to qualify for  exemption under the Central Sales Tax Act,-Item 18 of  the Schedule  to the  Rajasthan Sales Tax Act, 1954,- Whether assessment  and payment  of excise  duties under the Additional Duties  of Excise  (Goods of  Special Importance) Act, 1957,  a precondition  for claiming exemption under the Rajasthan Sales  Tax Act  and therefore  under  the  Central Sales Tax Act.      Interference by  Supreme Court  under Art,  136 of  the Constitution, whether  barred by Section 15 of the Rajasthan Sales Tax Act.

HEADNOTE:      Section 4(2)  of the  Rajasthan General  Sales Tax Act, 1954 empowers  the State  Government, by notification in the Official Gazette,  to exempt  from tax the sale of any goods or class  of goods on such conditions as may be specified in the notification.  By a  notification dated  1st July, 1958, the  Rajasthan   Government  unconditionally   exempted  all varieties of  textiles made  wholly or  partly of rayon from 1st July, 1958. S. 4(1) of the Rajasthan Sales Tax Act, 1954 provides for exemption from Sales Tax of the goods specified in  the   Schedule  to  that  Act  provided  the  conditions mentioned in  the Schedule  are satisfied. Item 18, inserted in the  Schedule by  the Rajasthan Taxation Laws (Amendment) Act, 1964,  included  "rayon  fabrics"  as  defined  in  the Additional Duties  of Excise  (Goods of  Special Importance) Act, 1957. On this, the notification dated 1st July 1958 was withdrawn as  redundant. When  Item 18  was inserted  in the Schedule,  no   conditions  were   specified  therein  as  a qualification for the exemption. The unconditional exemption from sales tax granted on the sale of rayon fabrics, that is to say,  without the  condition that  additional excise duty was  paid   by  the   manufacturer,  was   withdrawn  by   a notification dated  5th March,  1973 made  by the  Rajasthan State Government  under s.  4(2) of  the Rajasthan Sales Tax

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Act.  The   notification  provided   that  in  the  case  of unprocessed rayon  and artificial silk fabrics the exemption from sales  tax would  apply only  if the additional duty is leviable on  them under  the  Additional  Duties  of  Excise (Goods of  Special Importance)  Act, 1957 and such goods had not specifically  been exempted  from the  said duty and the dealers thereof  furnished proof  to the satisfaction of the assessing authority that such duty had been paid.      Item 18  of the  Schedule to  the Rajasthan  Sales  Tax exempts from  Sales Tax and purchase tax "all cotton fabrics rayon or artificial silk fabrics, woollen fabrics as defined in  the  Additional  Duties  of  Excise  (Goods  of  Special Importance) Act, 1957 (Central Act 58 of 1957)".      Section 2(c)  of the Additional Duties of Excise (Goods of  Special   Importance)  Act,   1956  declares   that  the expression "rayon or artificial silk 1110 fabrics" shall have the meaning assigned to it in Item 22 of the First Schedule to the Central Excise and Salt Act, 1944, which reads :           "Rayon  or  artificial  silk  fabrics"  means  all      varieties of  fabrics  manufactured  either  wholly  or      partly from  rayon  or  artificial  silk  and  includes      embroidery in  the piece,  in strips  or in  metifs and      Fabrics impregnated  or  coated  with  preparations  of      cellulose derivatives  or of  other artificial  plastic      material...."      The appellant  owns an industrial unit, Shriram Rayons, situated at  Kota in the State of Rajasthan. It manufactures a product described as "Rayon Tyre Cord Fabric". Rayon fibre is spun  into rayon  and twisted  into cord.  The cords  are arranged lengthwise,  and  are  commonly  described  as  the "warp". They  are packed  25 to  the inch.  By a  process of weaving, cotton  thread are wefted through a loom across the cords. The wefts are thinner and fewer than the cords, being not more  than two  to five  per inch.  The  cord  component comprises the  major content of the product. The unprocessed rayon tyre  cord fabric  so produced  is sold in the form of rolls in  the market. After initial chemical treatment it is put  through   a  process   of  rubberizing   in  the   tyre manufacturing plant. The rayon tyre cord fabric is used as a reinforcing base  in the  manufacture  of  tyres.  It  is  a product generally  intended for  industrial use.  The  rayon tyre cord  employed as  a component  in the  manufacture  of rayon tyre  cord fabric is also sold directly as such. It is sold packed  or cones, somewhat like yarn is sold. Tyre cord is purchased  directly by  some tyre  manufacturers, who  by applying the  same process  of putting in the wefts, convert it into a tyre cord fabric for use in the tyre.      The  appellant   was  assessed  to  sales  tax  by  the Commercial Tax  Officer for the years 1969-70 and 1970-71 on the turnover  of rayon  tyre cord  fabric. The plea that the product fell  within the  item 8  of  the  Schedule  to  the Rajasthan Sales  Tax Act and therefore was exempt from sales tax was  not accepted.  The matter  came up for adjudication upto the  Supreme Court.  By its judgment dated 3rd May 1976 reported in 38 S.T.C. 113 (Delhi Cloth and General Mills Co. Ltd. and  Ors. v.  B. R. Gupta and Ors.), the Court observed that the  controversy "requires careful consideration of the technical processes  of manufacturing, of the composition of the ‘tyre  cord fabric’,  and an  evaluation of  opinions of experts on  the subject,  to be  able to decide the question satisfactorily", as  well as "some examination of commercial usage and terminology or the language of the market in goods of this type", and that the matter was one for determination

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by the taxing authorities.      The Deputy  Commissioner (Appeals) was meanwhile seized of not  only the  two appeals  pertaining to  the assessment years 1969-70  and 1970-71  but  also  appeals  against  the assessment order  for 1971-72  and a  provisional assessment for the  first six  months of  the assessment  year 1972-73. When the  appeals were  taken up  by the Deputy Commissioner (Appeals) voluminous  evidence, both  oral and  documentary, was  led   before  him.   The  appeals  were,  nevertheless, dismissed. Thereafter,  the appellant applied in revision to the Board  of Revenue  for Rajasthan,  but again met with no success. The  Board expressed  the view that the product was not a  fabric and  dismissed the revision petitions by their order dated  6th October,  1977.  The  present  appeals  are directed against that order. 1111      Allowing the appeals, the Court. ^      HELD :  1. In determining the meaning or connotation of words and expressions describing an article or commodity the turnover of  which is  taxed in  a sales  tax enactment,  if there is  one principle  fairly well-settled  it is that the words or expressions must be construed in the sense in which they are  understood in  the trade,  by the  dealer and  the consumer. It  is they  who are  concerned with it, and it is the sense  in which  they understand it that constitutes the definitive index  of  the  Legislative  intention  when  the statute was enacted. As sales tax the liability falls on the seller, who  in his  turn passes  it on  to the consumer; as purchase tax, the liability falls directly on the purchaser. [1115 A-C]      Porritts and  Spencer (Asia)  Ltd. v.  State of Haryana [1978] 42 S.T.C. 433; followed.      2. On  a comprehensive  consideration of the materials, it is clear that by and large a tyre cord fabric is regarded as a textile fabric. The peculiar feature that the tyre cord constitutes the  dominating element  indicating the  use  to which the fabric is put and the close concentration in which it is packed in contrast to the light density with which the weft thread  is woven  does not  detract from the conclusion that what  we  have  is  a  textile  fabric.  It  is  wholly immaterial that  once tyre  cord fabric has, in the hands of the tyre  manufacturer, undergone the process of rubberizing and is  embedded in  the tyre  body the  significance of the weft thread  is greatly  reduced. It may also be that in the more modern  process of  manufacturing tyres what is used is cabled rayon  with hawser twists with the cords assembled in parallel  order  and  rubberized  without  the  intermediate process of  weaving on  a loom.  The material on the record, however, indicates  that the  product  manufactured  by  the appellant does  not fall  in that  category. It  is a  woven fabric in which the intermediate process of weaving the weft thread  across  the  warp  cord  is  an  integral  stage  of manufacture. When  the purchaser buys the product, it is the entire integrated  woven fabric  which he  buys, it  is  not merely the tyre cord by itself. If tyre cord was all that he desired, he  would purchase that commodity, which is readily available, and  not tyre  cord fabric.  Item 22 of the First Schedule to  the Central Excises and Salt Act speaks of "all varieties of  fabrics", language  wide enough to include the rayon tyre  cord fabric manufactured by the appellant. [1117 E-H, 1118 A]      3. Item  22 of the First schedule to the Central Excise and Salt Act does comprehend "industrial fabrics" as well as the item  refers to "all varieties of fabrics". Further Item

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22(3)  speaks   of  fabrics   impregnated  or   coated  with preparations of cellulose derivatives or of other artificial plastic materials  which  would  include  rubberized  cloth, tarpaulin cloth,  P.V.C. cloth,  water proof  cloth and tent cloth. A whole range of fabric is included. [1118 B-C]      4. It  is futile  to suggest that the tyre plays a less substantial role  than other  popular commodities  in modern life.  The   tyre  manufacturing   industry  is  of  growing importance and has an increasingly important role to play in everyday  life.   That  is  evident  from  the  overwhelming expansion of  automobile traffic  prompted  by  the  complex needs of  a constantly  enlarging economy. The daily life of the  average   citizen  is   profoundly  effected   by   the automobile, be  it passenger  bus or  a goods  truck or  the ubiquitous scooter. Tyres are needed for all. In rural areas tyres are now coming into use for bullock carts. 1112 And, therefore,  it is  but a  short step to recognising the status of what goes into the manufacture of a tyre-the rayon tyre cord fabric as "goods of special importance". It may be that unlike the cotton, silk, woollen and rayon fabrics used as wearing  apparel or  furnishing material  the rayon  tyre cord fabric is not directly employed for the satisfaction of a domestic  need. Nonetheless,  as  an  integral  and  vital constituent of  an automobile tyre it is intimately involved in the diurnal activity of human life. [1118 E-G]      5. Whether  Parliament understood  the word "fabric" to include tyre  cord fabric  must be  gathered  from  all  the relevant material  and with  reference to tests and criteria accepted  in   law  rather   on  the   basis  of   a  single notification, like  the circular  dated 11th  February  1957 issued by the Revenue Board laying down that tyre and fabric could not be described as "fabric". [1119 A-B]      6. In respect of the assessment years 1969-70, 1970-71, 1971-72 and the first six months of 1972-73, the turnover of rayon tyre  and fabric  was clearly  exempt from  sales  tax under the Rajasthan Sales Tax Act and there was no condition in that  Act until  4th March  1973 that  the exemption  was dependent on  payment of  additional excise  duty under  the provisions of  Additional Duties of Excise (Goods of Special Importance) Act,  1957. Since  from 5th March, 1973 only the exemption from  tax under  the Rajasthan  Sales Tax  Act was available only  if additional  excise duty  was leviable,  a dealer was  entitled to  exemption from  sales tax  upto 4th March. 1973  without  the  requirement  of  payment  of  the additional excise duty. [1120 B-C, E-F]      7. The question in the instant case is not one of fact. It is  a question which concerns the construction of Item 22 of the Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. If the rayon tyre cord fabric manufactured by  the appellant is covered by that item it is exempt from  sales tax  and there  is no jurisdiction in the sales  tax  authorities  to  assess  the  appellant  on  its turnover. The question is one of substantial importance, and having regard  to the circumstances there is good reason for entertaining the  appeals and  deciding them  on the merits. The Supreme Court is entitled to entertain appeals directly, not withstanding  that  a  reference  is  open  against  the impugned orders  before the  High Court  under Section 15 of the Rajasthan Sales Tax Act. [1120 G-H, 1021 A-C]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2453-

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2456 of 1977.      Appeals by  Special Leave  from the  Judgment and Order dated the  6th October,  1977 passed by the Board of Revenue for Rajasthan  at Ajmer,  in revisions for the years 1969-70 1970-71, 1971-72 and 1972-73.      F. S. Nariman and H. K. Puri for the Appellant.      Lal Narain  Sinha and  S. C.  Bhandari, Sohbag Mal Jain and P. P. Singh for the Respondents.      The Judgment of the Court was delivered by      PATHAK, J.  The question  raised in  these  appeals  is whether the  "Rayon Tyre  Cord Fabric"  manufactured by  the appellant is a rayon 1113 fabric covered  by item  18 of the Schedule to the Rajasthan Sales Tax  Act, 1954,  and therefore  exempt from  sales tax under the Central Sales Tax Act.      The appellant  owns an industrial unit, Shriram Rayons, situated at  Kota in the State of Rajasthan. It manufactures a  product  described  as  "Rayon  Tyre  Cord  Fabric."  The appellant claims  that the  product falls  within item 18 of the Schedule  to the  Rajasthan Sales  Tax Act which exempts from sales tax and purchase tax:-           "All cotton  fabrics,  rayon  or  artificial  silk      fabrics, woollen  fabrics as  defined in the Additional      Duties of  Excise (Goods  of Special  Importance)  Act,      1957 (Central Act 58 of 1957)." Section 2(c)  of the  Additional Duties  of Excise (Goods of Special Importance)  Act, 1957  declares that the expression "rayon or  artificial silk  fabrics" shall  have the meaning assigned to  it in  Item 22  of the  First Schedule  to  the Central Excise and Salt Act, 1944. Item 22 reads:-           "Rayon  or  artificial  silk  fabrics"  means  all      varieties of  fabrics  manufactured  either  wholly  or      partly from  rayon  or  artificial  silk  and  includes      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, .... ..... ..... .... .... .... ......"      The  appellant   was  assessed  to  sales  tax  by  the Commercial Tax  Officer for the years 1969-70 and 1970-71 on the turnover  of rayon  tyre cord  fabric. The plea that the product was exempt from sales tax was not accepted. Two writ petitions were  filed by the appellant in the Rajasthan High Court against  the assessments while appeals were also filed before the Deputy Commissioner (Appeals). The Rajasthan High Court dismissed  the  writ  petitions  on  the  ground  that disputed questions  of fact were involved in the controversy and recourse  should be  had to the remedy by way of appeal. Against the  order of  the High Court the appellant obtained from the Supreme Court special leave to appeal under Article 136 of  the  Constitution.  Meanwhile,  the  Commercial  Tax Officer made  a provisional  assessment on  the turnover  of rayon tyre  cord fabric  for the period 1971-72. Against the assessment the  appellant filed  a writ petition directly in this Court  under Article  32 of  the Constitution.  The two appeals and  the writ  petition were dismissed by this Court on 3rd May, 1976. 1114 The Court  observed that  the controversy  "requires careful consideration of  the technical  processes of manufacturing, of the  composition  of  the  ’tyre  cord  fabric,’  and  an evaluation of opinions of experts on the subject, to be able to decide  the question  satisfactorily," as  well as  "some examination of  commercial  usage  and  terminology  or  the language of the market in goods of this type." It upheld the

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view taken  by the  High Court  that the  matter was one for determination by the taxing authorities.      The Deputy  Commissioner (Appeals) was meanwhile seized of not  only the  two appeals  pertaining to  the assessment years 1969-70  and 1970-71  but  also  appeals  against  the assessment order  for 1971-72  and a  provisional assessment for the  first six  months of  the assessment  year 1972-73. When the  appeals were  taken up  by the Deputy Commissioner (Appeals) voluminous  evidence, both  oral and  documentary, was  led   before  him.   The  appeals  were,  nevertheless, dismissed. Thereafter,  the appellant applied in revision to the Board  of Revenue  for Rajasthan,  but again met with no success. The  Board expressed  the view that the product was not a  fabric and  dismissed the revision petitions by their order dated  6th October,  1977.  The  present  appeals  are directed against that order.      Some   undisputed    facts   concerning   the   product manufactured by the appellant may be set out. Rayon fibre is spun into  rayon  and  twisted  into  cord.  The  cords  are arranged lengthwise,  and  are  commonly  described  as  the "warp". They  are packed  25 to  the inch.  By a  process of weaving, cotton threads are wefted through a loom across the cords. The wefts are thinner and fewer than the cords, being not more  than two  to five  per inch.  The  cord  component comprises the  major content of the product. The unprocessed rayon tyre  cord fabric  so produced  is sold in the form of rolls in  the market. After initial chemical treatment it is put  through   a  process   of  rubberizing   in  the   tyre manufacturing plant. The rayon tyre cord fabric is used as a reinforcing base  in the  manufacture  of  tyres.  It  is  a product generally  intended for  industrial use.  The  rayon tyre cord  employed as  a component  in the  manufacture  of rayon tyre  cord fabric is also sold directly as such. It is sold packed  on cones, somewhat like yarn is sold. Tyre cord is purchased  directly by  some tyre  manufacturers, who  by applying the  same process  of putting in the wefts, convert it into a tyre cord fabric for use in the tyre.      In holding  that the  rayon tyre  cord fabric  is not a fabric, the  Board has  noted that  the tyre body or carcass consists of a series of layers of cord fabric in the form of plies buried  in rubber,  and that the significant factor in the tyre  cord fabric  is represented  by the tyre cord. The properties and characteristics of the fibre constituting the 1115 tyre cord,  it is said, determines the tyre performance. The weft in  the fabric,  it is  pointed out,  merely plays  the subsidiary role  of holding  the cord  in place  before  the process of tyre manufacturing is commenced.      Now, in determining the meaning or connotation of words and expressions  describing  an  article  or  commodity  the turnover of  which is  taxed in  a sales  tax enactment,  if there is  one principle  fairly well  settled it is that the words or expressions must be construed in the sense in which they are  understood in  the trade,  by the  dealer and  the consumer. It  is they  who are  concerned with it, and it is the sense  in which  they understand it that constitutes the definitive index  of  the  legislative  intention  when  the statute was enacted. As sales tax the liability falls on the seller, who  in his  turn passes  it on  to the consumer. As purchase tax, the liability falls directly on the purchaser. A long  train of authorities supports that view, and we need refer only  to the recent Judgment of this Court in Porritts and Spencer  (Asia) Ltd.  v.  State  of  Haryana,  in  which reference has been made to some of them.      In the  record before  us, a wide range of material has

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been incorporated  for determining how those who manufacture and deal  in fabrics  and, in  particular, tyre cord fabric, understand them.  And so, a brief reference to that material is appropriate at this point.      What is  a fabric?  The "Mercury" Dictionary of Textile Terms defines  "fabric" as a term which covers "all textiles no matter  how constructed,  how manufactured, or the nature of  the  material  from  which  made,"  and  the  expression "textile" is  described as  "any product  manufactured  from fibres through  twisting, interlacing,  bonding, looping, or any other  means, in  such a  manner that  the  flexibility, strength,  and   other  characteristic   properties  of  the individual fibres  are not suppressed." The Man-Made Textile Encyclopaedia (1959)  defines fabric  as "a  collective term applied to  cloth no  matter how constructed or manufactured and regardless  of the  kind of  fibre from  which made.  In structure it is planar produced by interlacing yarns, fibres or  filaments.   Textile  fabrics   include  the   following varieties, bonding, felted, knitted, braided and woven." The Fairchild’s Dictionary  of Textiles  (1959) says that fabric is "a cloth that is woven or knit, braided, netted, with any textile fibre.....",  and "textile"  is said  to refer to "a broad classification of any material that can be worked into fabric, such as fibres and yarns including woven and knitted fabric, felt,  netted fabric,  lace and  croched goods."  In "Textile Terms  and Definitions"  (1960) the  word cloth  is defined as "a 1116 generic term  embracing  all  textile  fabrics  and  laminar felts" and "textile" is applied in its modern sense" to "any manufacture from  fibres, filaments,  or yarns,  natural  or artificial, obtained  by interlacing."  The 1967 Annual Book of ASTM  Standards defines  cloth as "any textile fabric but specially one  designed for  apparel domestic  or industrial use," and  textile fabric  as "a planar structure consisting of interlaced yarns or fibres." The 1973 Annual Book of ASTM Standards reproduces those definitions.      We may  now examine whether a tyre cord fabric has been understood as  a fabric.  A publication  IS: 4910 (Part VI)- 1970, put out by the Indian Standards Institution, defines a "tyre cord fabric" as "a fabric consisting of tyre cord warp with widely  spaced weft  threads". Another  publication IS: 1324-1966 of  the same  institution gives  the definition of tyre cord  fabrics  as  "fabrics  which  comprise  the  main carcass of pneumatic tyres constructed predominantly of warp cords (cabled  yarns) with  light wefts.  The latter  merely serve to  hold  the  cords  together  for  processing".  The "Mercury" Dictionary  of Textile  Terms  defines  cord  tyre fabric as  a "cloth  made with  strong corded sheets for the warp with  as little  weft as possible....the warp takes all the strain.....".  The Fairchild’s  Dictionary  of  Textiles declares that a tyre cord fabric is not a true fabric today, but originally  a square woven fabric was employed in making the pneumatic  automobile tyre.  "The modern  tyre fabric is not woven  or knitted,  but consists  of cabled  yarns  with hawser twists  formerly mostly  cotton, now  usually of high tenacity viscose rayon or nylon. These cords are arranged in parallel  order   and  rubberized."  The  tyre  cord  fabric manufactured by  the appellant  admittedly consists  of warp and weft and therefore this definition, which does not refer to  an   interlaced  structure,  would  not  apply.  On  the contrary, the  further definition  in the  same  publication appears to  be more  pertinent. It  says: "When  these  tyre cords were  first made  they were  assembled as  a warp on a loom and  held in  place until  rubberized by  an occasional

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fine single  filling yarn,  and it  is probably  due to this that the  term "fabric"  has remained in use". Some doubt is created by  the  definitions  included  in  Linton’s  Modern Textile Dictionary  and River’s Dictionary of Textile Terms. But tyre cord fabric is clearly described as a fabric by the 1973 Annual  Book of  ASTM Standards  the Textile  Terms and Definitions (1960),  and in  India by  the  Indian  Standard Glossary of  Textile Terms  Relating  to  Man-Made  Fibre  & Fabric Industry.  The Man-Made  Textile Encyclopaedia in its chapter on Industrial Fabrics gives a structural description of tyre  fabrics and  refers to the series of layers of cord fabric buried  in rubber  in the  tyre body  or carcass. The Wellingtion Sears Hand Book of Industrial Textiles describes in some detail the process of manufactur- 1117 ing tyre  cord fabrics.  It states  that "the tyre cords are woven into  a ’fabric’  with a  very fine  cotton  or  rayon filling yarn,  just strong enough to hold the cords together during subsequent handling."      Now let  us see  how the Government of India itself, in its various  departments, looks  at tyre  cord fabrics.  The Revised Indian  Trade Classification (1965) published by the Central  Government   in  the   Department   of   Commercial Intelligence and  Statistics lists Viscose tyre fabric (Code 653.6125)  under   the  classification   Group  653-"Textile Fabrics, Woven  (not including  narrow or  special fabrics), other than cotton and jute fabrics." The Ministry of Foreign Trade Resolution dated 27th February, 1971 refers separately to rayon tyre yarn, cord and fabric, and speaks of tyre cord units producing both twisted cords and woven fabric. And the Indian Customs  Tariff Guide (11th Edition) shows as item 53 in the Tariff Schedule: "Rayon tyre fabrics, a loosely woven material  with   extremely  thin   cotton  threads   running breadthwise and introduced merely for keeping the artificial silk threads  running lengthwise  in position."  The item is repeated in  the same  terms in  the Tariff  Schedule to the Indian  Customs  Tariff  Guide  (13th  Edition).  The  Table appended to  the Customs  and Central Excise Duties Drawback Rules lists  "Viscose tyre  cord fabric" (2621) under Serial No. 26 "Textile Fabrics and Hosiery".      On a comprehensive consideration of the material before us, there is no escape from the conclusion that by and large a tyre  cord fabric  is regarded  as a  textile fabric.  The peculiar  feature   that  the   tyre  cord  constitutes  the dominating element indicating the use to which the fabric is put and  the close  concentration in  which it  is packed in contrast to  the light density with which the weft thread is woven does not detract from the conclusion that what we have is a  textile fabric.  We are  concerned  with  the  product manufactured  and  sold  by  the  appellant.  It  is  wholly immaterial that  once tyre  cord fabric has, in the hands of the tyre  manufacturer, undergone the process of rubberizing and is  embedded in  the tyre  body the  significance of the weft thread  is greatly  reduced. It may also be that in the more modern  process of  manufacturing tyres what is used is cabled rayon  with hawser twists with the cords assembled in parallel  order  and  rubberized  without  the  intermediate process of  weaving on  a loom.  The material on the record, however, indicates  that the  product  manufactured  by  the appellant does  not fall  in that  category. It  is a  woven fabric in which the intermediate process of weaving the weft thread  across  the  warp  cord  is  an  integral  stage  of manufacture. When  the purchaser buys the product, it is the entire integrated  woven fabric  which he  buys, it  is  not merely the tyre cord by itself. If tyre cord was all that he

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desired, he  would purchase that commodity, which is readily available, and not tyre cord fabric. We 1118 may also point out that Item 22 of the First Schedule to the Central Excises  and Salt  Act speaks  of "all  varieties of fabrics", language  wide enough  to include  the rayon  tyre cord fabric manufactured by the appellant.      It  was   contended  by  Shri  L.  N.  Sinha,  for  the respondents,  that  industrial  fabrics  are  not  envisaged within the expression "rayon fabric" in Item 22 of the First Schedule to  the Central  Excise and  Salt Act.  As we  have already pointed  out, the  item refers  to "all varieties of fabrics" and  it will  be noticed  that Item 22(3) speaks of fabrics impregnated or coated with preparations of cellulose derivatives or  of other artificial plastic materials which, we are  told,  would  include  rubberized  cloth,  tarpaulin cloth, P.V.C.  cloth, water  proof cloth  and tent  cloth. A whole range of fabric is included.      It is then urged by Shri Sinha that when the Additional Duties of Excise (Goods of Special Importance) Act, 1957 was enacted Parliament  could not  have intended  the expression "rayon fabric"  to include  rayon tyre  cord fabric.  It  is pointed out  that  the  Statement  of  Objects  and  Reasons pertinent to  the Act  refers to mill-made textiles, and the submission is  that the  item in  the First Schedule to that Act refers  to fabric  which affects  the common  man, which finds place  in a popular market and is intended for popular use, and  does not  refer to a commodity which caters to the needs of a special category of consumers and is devoted to a particular use only. Now, the tyre manufacturing industry is of growing importance and has an increasingly important role to  play   in  everyday  life.  That  is  evident  from  the overwhelming expansion of automobile traffic prompted by the complex needs  of a  constantly enlarging economy. The daily life of  the average  citizen is  profoundly effected by the automobile, be  it passenger  bus or  a goods  truck or  the ubiquitous scooter. Tyres are needed for all. In rural areas tyres are  now coming  into use  for bullock  carts.  It  is futile to  suggest that  the tyre  plays a  less substantial role than  other popular  commodities in  modern life.  And, therefore, it  is but a short step to recognising the status of what  goes into  the manufacture of a tyre-the rayon tyre cord fabric as "goods of special importance". It may be that unlike the  cotton, silk,  woollen and rayon fabrics used as wearing apparel  or furnishing  material the rayon tyre cord fabric is  not directly  employed for  the satisfaction of a domestic  need.   Nonetheless,  as  an  integral  and  vital constituent of  an automobile tyre it is intimately involved in the diurnal activity of human life.      We are  then told  that when  the Additional  Duties of Excise (Goods  of Special  Importance) Act, 1957 was enacted there was  in existence a Circular dated 11th February, 1957 issued by the Revenue Board 1119 laying down  that tyre cord fabric could not be described as a "fabric"  within the meaning of the Central Excise Tariff. It is said that when that was the popular conception of tyre cord fabrics  it could  not have  been envisaged as a fabric when the statute was enacted. To our mind, the view taken by the Revenue  Board  cannot  be  regarded  as  resolving  the question before  us. Whether  Parliament understood the word "fabric" to  include tyre  cord fabric must be gathered from all the  relevant material  and with  reference to tests and criteria accepted  in law  rather on  the basis  of a single notification.

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    We may  now turn  to the  contention of Shri Sinha that the benefit  of exemption from sales tax is available to the appellant only  if he has paid the additional duty of excise on the product. It is pointed out that the appellant has not been assessed to additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and is, therefore,  not entitled  to exemption  from  sales  tax under the Central Sales Tax Act.      The Additional  Duties  of  Excise  (Goods  of  Special Importance) Act,  1957 came  into force  on  24th  December, 1957. Sub-section  (1) read  with sub-section  (2) of s.3 of the Act provide for the levy and collection of an additional excise duty, over and above the excise duty chargeable under the Central  Excises and  Salt Act, 1944 on certain goods at the rate  specified in  the  Schedule  to  that  Act.  Rayon fabrics are  mentioned in  the Schedule  to  the  Additional Duties of  Excise (Goods of Special Importance) Act, and are classified by  reference to Item 22 in the First Schedule to the Central Excises and Salt Act.      In the  present appeals,  we are concerned with a claim to exemption  from sales  tax, and  in order to consider the contention  of  the  Revenue  that  no  such  exemption  was available to  the appellant  because he  had  not  paid  any additional excise  duty on  rayon tyre  cord  fabric  it  is necessary to  determine whether  indeed the  exemption  from sales tax  was  subject  to  the  condition  of  payment  of additional excise duty.      S.4(2) of  the Rajasthan  Sales Tax  Act, 1954 empowers the  State  Government,  by  notification  in  the  Official Gazette, to  exempt from  tax the sale of any goods or class of goods  on such  conditions as  may be  specified  in  the notification. By  a notification  dated 1st  July, 1958, the Rajasthan Government  unconditionally exempted all varieties of textiles  made wholly  or partly  of rayon from 1st July, 1958. S.4(1)  of the  Rajasthan Sales Tax Act, 1954 provides for exemption  from sales  tax of the goods specified in the Schedule to  that Act  provided the  conditions mentioned in the Schedule are satisfied. Item 18, in- 1120 serted in  the  Schedule  by  the  Rajasthan  Taxation  Laws (Amendment) Act,  1964, included  "rayon fabrics" as defined in  the  Additional  Duties  of  Excise  (Goods  of  Special Importance) Act,  1957. On  this, the notification dated 1st July, 1958  was withdrawn as redundant. Now when Item 18 was inserted in  the  Schedule,  no  conditions  were  specified therein as  a qualification for the exemption. Therefore, in respect of the assessment years with which these appeals are concerned, the  turnover  of  rayon  tyre  cord  fabric  was clearly exempt  from sales tax under the Rajasthan Sales Tax Act, and  there was  no  condition  in  that  Act  that  the exemption was  dependent on  payment  of  additional  excise duty. That  being so,  there was  an unconditional exemption from central sales tax also.      The unconditional  exemption from  sales tax granted on the sale  of rayon  fabrics, that  is to  say,  without  the condition that  additional  excise  duty  was  paid  by  the manufacturer, was  withdrawn by  a  notification  dated  5th March, 1973  made by  the Rajasthan  State Government  under S.4(2) of  the Rajasthan  Sales Tax  Act.  The  notification provided  that   in  the   case  of  unprocessed  rayon  and artificial silk  fabrics the  exemption from sales tax would apply only  if the additional duty is leviable on them under the  Additional   Duties  of   Excise  (Goods   of   Special Importance) Act,  1957 and  such goods  had not specifically been exempted  from the  said duty  and the  dealers thereof

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furnished  proof   to  the  satisfaction  of  the  assessing authority that  such duty  had been paid. Therefore, as from 5th March,  1973 the  exemption from tax under the Rajasthan Sales Tax  Act was  available only if additional excise duty was leviable and the dealer had established that he had paid such duty.  About the same time, the Rajasthan Taxation Laws (Amendment) Act, 1973 deleted Item 18 in the Schedule to the Rajasthan Sales Tax Act with effect from 5th March, 1973. It is  evident,  therefore,  that  a  dealer  was  entitled  to exemption from  sales tax  up to 4th March, 1973 without the requirement of  payment of  the additional  excise duty. The conclusion is inescapable that even if the appellant did not pay additional  excise duty, he was exempt from sales tax on the turnover  of rayon  tyre cord  fabric for the assessment years under consideration.      Finally, it  is urged  by Shri  Sinha that the question whether  the   rayon  tyre  cord  fabric  falls  within  the expression "rayon  fabrics" is  a question  of fact  and the assessing authority, the appellate authority and the revenue Board are all agreed that it cannot be classified as a rayon fabric and,  therefore, this  Court should  not interfere in these appeals.  It is  also pointed  out that under s. 15 of the Rajasthan Sales Tax Act a proceeding by way of reference is available to 1121 the appellant  and this  Court, even  if it were to consider these appeals  on  the  merits,  should  exercise  no  wider jurisdiction than that available to it if it had entertained a reference. We are unable to agree that the question is one of fact.  It is  a question which concerns the consideration of Item  22 of  the Schedule  to the  Additional  Duties  of Excise (Goods of Special Importance) Act, 1957. If the rayon tyre cord  fabric manufactured by the appellant is recovered by that  item it  is exempt  from sales  tax and there is no jurisdiction in  the sales  tax authorities  to  assess  the appellant  on   its  turnover.   The  question   is  one  of substantial   importance,   and   having   regard   to   the circumstances there  is good  reason  for  entertaining  the appeals and deciding them on the merits.      In the  result the appeals are allowed, the assessments in respect  of  the  turnover  of  rayon  tyre  cord  fabric manufactured by  the appellant  relating to  the  assessment years 1969-70,  1970-71, 1971-72 and the first six months of 1972-73 are  quashed. In the circumstances there is no order as to cost. S.R.                                         Appeal allowed. 1122