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of <h1>Court rules saris with attached zalars are not tax-exempt or 'art silk fabrics' under tax law.</h1> <h3>Shree Ram Industries Versus The State of Gujarat</h3> The court held that saris with attached zalars are not exempt from tax under entry 41 of Schedule A and do not qualify as 'art silk fabrics' under section ... - Issues Involved:1. Tax exemption applicability under entry 41 of Schedule A for saris with attached zalars.2. Classification of saris with attached zalars under section 14(7) of the Central Sales Tax Act, 1956.3. Applicability of tax rate under entries 11A and 19 of Schedule E if the second issue is affirmed.Detailed Analysis:Issue 1: Tax Exemption Applicability under Entry 41 of Schedule AThe primary issue was whether saris to which zalars (borders) were attached after the manufacturing process are covered by entry 41 of Schedule A, making them exempt from tax under section 5(1) of the Bombay Sales Tax Act, 1959. Entry 41 refers to 'Rayon or artificial silk fabrics' as defined in item 22 of the First Schedule to the Central Excises and Salt Act, 1944. The court noted that the manufacturing process for these saris was complete before the zalars were attached, making the attachment an additional, independent process. This additional process converted the saris into a different commodity known as embroidered or decorated saris, which are covered by entries 11A or 19 of Schedule E, not entry 41 of Schedule A. Therefore, the court concluded that these saris are not exempt from tax under section 5(1).Issue 2: Classification under Section 14(7) of the Central Sales Tax Act, 1956The second issue questioned whether saris with attached zalars qualify as 'art silk fabrics' under section 14(7) of the Central Sales Tax Act, 1956. This section adopts the definition from item 22 of the First Schedule to the Central Excises and Salt Act, 1944. The court determined that since the saris underwent an additional process after their initial manufacture, resulting in a new product known as embroidered or decorated saris, they no longer fit the definition of 'art silk fabrics' under section 14(7). Thus, they are not classified as such for tax purposes.Issue 3: Applicability of Tax Rate under Entries 11A and 19 of Schedule EGiven the negative answer to the second issue, the third issue about the tax rate applicability under entries 11A and 19 of Schedule E did not arise for consideration. The court did not address this issue as it was contingent on an affirmative answer to the second issue.Conclusion:1. The sales of saris of art silk fabrics with attached zalars are not covered by entry 41 of Schedule A and are not exempt from tax under section 5(1) of the Bombay Sales Tax Act, 1959.2. Saris with attached zalars do not qualify as 'art silk fabrics' within the meaning of section 14(7) of the Central Sales Tax Act, 1956.3. The third question regarding the tax rate does not arise due to the negative answer to the second question.Reference answered accordingly.
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