Strict construction of tax exemptions keeps ready-made garments outside cloth exemption; Article 286 challenge also failed.

Fiscal exemptions are construed strictly and are confined to the precise goods described in the exemption notification. Ready-made garments made from exempted cloth were treated as distinct commercial commodities, involving added labour and profit, so they did not fall within the cloth exemption and remained liable to sales tax. The constitutional objection under Article 286(3) also failed because that provision operates only where Parliament has enacted a law declaring the relevant goods essential for the life of the community; a pending bill is insufficient. The assessment was therefore sustained and the exemption claim rejected.

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Issues: (i) whether ready-made garments manufactured out of exempted cloth were themselves exempt from sales tax under Item 17 of Schedule I to the Hyderabad General Sales Tax Act and the governing notification; (ii) whether the sales tax levy was invalid for want of reservation for the President's assent under Article 286 of the Constitution of India.

Issue (i): whether ready-made garments manufactured out of exempted cloth were themselves exempt from sales tax under Item 17 of Schedule I to the Hyderabad General Sales Tax Act and the governing notification.

Analysis: The exemption covered cloth of the specified description and cost, not articles manufactured from such cloth. Ready-made garments are distinct commercial commodities, sold as units and involving added labour and profit, and therefore do not answer the description of cloth costing less than the prescribed amount per yard. Fiscal exemptions are to be construed strictly and cannot be extended beyond the language of the exemption. The exemption was confined to the specific article mentioned in the schedule and did not extend to garments made from that article.

Conclusion: The ready-made garments were not exempt and were liable to sales tax.

Issue (ii): whether the sales tax levy was invalid for want of reservation for the President's assent under Article 286 of the Constitution of India.

Analysis: Article 286(3) operates only where Parliament has by law declared the relevant goods to be essential for the life of the community. No such operative law declaring ready-made garments or cloth to be essential goods was shown. A pending bill did not satisfy the constitutional requirement. In the absence of a law bringing the goods within Article 286(3), the constitutional objection failed.

Conclusion: The challenge under Article 286 failed and the levy was not invalid on that ground.

Final Conclusion: The assessment was upheld and the writ application could not succeed because neither the claimed exemption nor the constitutional objection was made out.

Ratio Decidendi: A tax exemption must be construed strictly and is confined to the precise goods described, while Article 286(3) is attracted only when Parliament has enacted a law declaring the goods to be essential for the life of the community.

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