Handloom cloth exemption turns on statutory character, not mode of sale, under the Hyderabad sales tax schedule.

Handloom cloth falling within item 22 of Schedule I to the Hyderabad General Sales Tax Act retained its exemption from sales tax if it satisfied the statutory condition of costing less than Rs. 3 per yard. The expression "cloth" was interpreted in its ordinary and wide sense, and the exemption was held to attach to the quality and character of the cloth, not to the mode of sale. Accordingly, handloom cloth sold in units was not outside the exemption merely because it was not sold by the yard, provided the other statutory requirements were met.

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Issues: Whether handloom cloth sold in units, and costing less than Rs. 3 per yard, fell within item 22 of Schedule I of the Hyderabad General Sales Tax Act, 1950 so as to be exempt from sales tax.

Analysis: Item 22 exempted handloom cloth other than that specified in item 15, subject to the condition that it cost less than Rs. 3 per yard. The expression "cloth" was to be understood in its ordinary and wide sense, covering fabrics used for wearing apparel and other purposes, and there was nothing in the provision to confine the exemption to cloth sold by the yard. The exemption attached to the quality and character of the cloth, not to the mode in which it was sold. Accordingly, sale in units did not take the cloth outside the exemption if the statutory conditions were otherwise satisfied.

Conclusion: Handloom cloth sold in units was not excluded from item 22 merely because of the mode of sale, and the assessee was entitled to succeed on that legal issue.

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