Cotton based tarpaulin and sales tax exemption turn on continuing Third Schedule coverage despite later charging entry

Cotton based tarpaulin was treated as falling within "cotton fabrics" for the relevant excise tariff period, so additional excise duty under the special importance levy applied. The Kerala General Sales Tax exemption continued through the Third Schedule because the exempting entry remained unamended, and a later insertion of tarpaulin in the First Schedule did not, by itself, remove that exemption. The exclusion clause was relevant only where no duty was levied under the 1957 levy. On that reasoning, cotton based tarpaulin remained exempt from sales tax under the KGST Act.

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Issues: Whether cotton based tarpaulin was exempt from sales tax under the Kerala General Sales Tax Act, 1963 by reason of its coverage as cotton fabrics in the Third Schedule and its liability to additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

Analysis: Cotton based tarpaulin was held to fall within the expression "cotton fabrics" under the Central excise tariff entry applicable to the relevant period and was, therefore, goods on which additional duty under the 1957 Act was leviable. The exemption under the KGST Act operated through the Third Schedule and was not displaced merely because tarpaulin was separately introduced in the First Schedule. The decisive factor was that the corresponding exempting entry in the Third Schedule remained unamended. The inclusion of tarpaulin in the charging schedule did not, by itself, override the continuing exemption where the statute still treated the goods as covered by the exempting entry and where the exclusion clause only removed goods on which no duty was levied under the 1957 Act.

Conclusion: Cotton based tarpaulin was exempt from sales tax under the Kerala General Sales Tax Act, 1963 and was not exigible to tax under that Act.

Final Conclusion: The appeals succeeded on the principal exemption issue, and the orders holding cotton based tarpaulin taxable under the KGST Act were set aside.

Ratio Decidendi: Where goods continue to fall within an unamended exempting entry and are subjected to additional excise duty under the special importance levy, a later inclusion of the same goods in the charging schedule does not defeat the exemption from sales tax.

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