Classification under tax exemption notification: nylon yarn qualified as artificial silk yarn and received concessional sales tax treatment.

Nylon yarn was treated as falling within the expression "artificial silk yarn" for the purposes of the concessional notification under the Kerala General Sales Tax Act, 1963. On that classification, the notification's relief applied to the first sale point and the reduced tax rate of 2 per cent became available. The operative principle is that where the commodity sold answers the description used in a tax exemption or concession notification, the notified benefit must be applied according to that classification, and the turnover of nylon yarn qualified for concessional sales tax treatment.

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Issues: Whether nylon yarn is to be treated as artificial silk yarn so as to attract the benefit of the notification issued under section 10 of the Kerala General Sales Tax Act, 1963, granting tax relief at the first sale point and reducing the rate of tax to 2 per cent.

Analysis: The notification exempted staple fibre yarn and artificial silk yarn from tax at all points in the series of sales by successive dealers except at the first sale in the State by a dealer liable to tax under section 5 of the Act, and also reduced the rate from 3 per cent to 2 per cent. The only substantive question was whether nylon yarn fell within the expression artificial silk yarn. In view of the discussion in the referred decision on the nature of nylon, and since the revenue did not seriously contest the position, the Court accepted that nylon yarn answered that description and thus came within the scope of the notification.

Conclusion: Nylon yarn was held to be artificial silk yarn and the petitioner was entitled to assessment at the reduced rate of 2 per cent under the notification issued under section 10 of the Kerala General Sales Tax Act, 1963.

Final Conclusion: The turnover of nylon yarn qualified for the concessional sales tax treatment claimed by the assessee, and the revision was allowed to that extent.

Ratio Decidendi: Where the commodity sold falls within the expression used in a tax exemption or concessional notification, the notified relief must be applied according to that classification.

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