Specific silk goods entry overrides khadi exemption, while tassar cloth remains outside the silk category.

A specific taxable entry for silk goods prevailed over the general khadi exemption, so khadi silk was treated as taxable at seven per cent to the extent it answered the description of handloom silk goods. For the first three years, the taxable turnover component above the stated price limit required limited factual determination, so that question was remanded; no further inquiry was needed for the last year. Tassar cloth was treated as a commercially distinct commodity from silk and therefore did not fall within the silk goods entry, so it remained outside that taxable category.

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Issues: (i) Whether khadi silk was taxable at seven per cent under the taxable goods entry or exempt under the khadi entry; (ii) whether tassar cloth was taxable under the silk goods entry.

Issue (i): Whether khadi silk was taxable at seven per cent under the taxable goods entry or exempt under the khadi entry.

Analysis: The relevant notifications under section 5(1) and section 6 of the Orissa Sales Tax Act created a higher rate for specified silk goods and an exemption for khadi and allied goods. The Court treated silk goods as falling within the specific taxable entry, and held that khadi silk, to the extent it answered the description of handloom silk goods covered by that entry, could not claim exemption merely because it was described as khadi silk. For the first three years, the turnover relating to handloom silk goods selling above the stated price limit required further factual inquiry, so the matter was remanded for that limited determination. For the last year, no such further inquiry was needed.

Conclusion: Khadi silk was held taxable at seven per cent under the specific entry, with remand confined to determining the taxable turnover component for the first three years.

Issue (ii): Whether tassar cloth was taxable under the silk goods entry.

Analysis: Tassar and silk were treated as different commercial commodities. On that basis, tassar goods were held not to fall within the specific entry for silk goods, and the exemption position was accepted.

Conclusion: Tassar cloth was held not taxable under the silk goods entry.

Final Conclusion: The reference was answered by upholding taxation of khadi silk under the specified entry while excluding tassar cloth from that taxable category, resulting in mixed success.

Ratio Decidendi: Where the statute contains a specific taxable entry for silk goods, that entry prevails over a general or exemption entry for khadi goods, but goods that are commercially distinct from silk cannot be brought within the silk entry merely by similarity in manufacture or appearance.

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