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of <h1>Appeal allowed: 'Caristrap rayon cord' exempt from tax under Kerala Sales Tax Act. Parties to bear own costs.</h1> The court allowed the appeal, holding that 'caristrap rayon cord strapping' is exempt from tax under item 7 of the Third Schedule to the Kerala General ... - Issues Involved:1. Tax exemption status of 'caristrap rayon cord strapping' under the Kerala General Sales Tax Act, 1963.2. Definition and scope of 'rayon or artificial silk fabrics' as per the Central Excises and Salt Act, 1944.3. Applicability of the identity theory and common parlance theory in determining tax exemption.4. Jurisdiction of the High Court under Article 226 of the Constitution in tax matters.Issue-wise Detailed Analysis:1. Tax Exemption Status of 'Caristrap Rayon Cord Strapping':The appellants contended that 'caristrap rayon cord strapping' should be exempt from sales tax under item 7 of the Third Schedule to the Kerala General Sales Tax Act, 1963, which exempts 'rayon or artificial silk fabrics' from tax. The court examined whether the strapping, made almost exclusively from rayon cord, qualifies as 'rayon fabric.'2. Definition and Scope of 'Rayon or Artificial Silk Fabrics':The court referred to item 22 of the First Schedule to the Central Excises and Salt Act, 1944, which defines 'rayon or artificial silk fabrics' as including all varieties of fabrics manufactured either wholly or partly from rayon or artificial silk, excluding certain compositions. The court noted that the definition does not require exclusive use of rayon, allowing for substantial parts of other materials like wool, cotton, or silk.3. Applicability of the Identity Theory and Common Parlance Theory:The court discussed the identity theory, which suggests that the final product must remain essentially the same commercial article to be considered manufactured. However, the court found this inapplicable since 'rayon fabrics' encompass a variety of articles made from rayon, not a single specific item. The common parlance theory was also rejected, as 'rayon fabrics' do not denote any specified article or class of articles in common usage. The court concluded that 'caristrap rayon cord strapping,' being made substantially from rayon, qualifies as 'rayon fabric.'4. Jurisdiction of the High Court under Article 226:The revenue's counsel argued that the High Court should not exercise jurisdiction under Article 226, as the appellants had adequate remedies under the statute. The court acknowledged this but decided to proceed given the time elapsed and the merits of the case already being heard. The court referred to precedents where the Supreme Court allowed High Courts to entertain petitions even when alternative remedies were available.Conclusion:The court set aside the judgment under appeal and allowed the original petition, holding that 'caristrap rayon cord strapping' is exempt from tax under item 7 of the Third Schedule to the Kerala General Sales Tax Act, 1963. The court directed the parties to bear their respective costs throughout.Appeal allowed.
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