Woollen carpets retained their exemption status despite coating and cutting, as their essential character as woollen fabrics remained unchanged.

Woollen carpets coated with prevulcanised latex and cut to size remained exempt as woollen fabrics under the Kerala General Sales Tax Act because the statutory entry adopted the Central Excises definition of woollen fabrics, and the goods admittedly contained more than 40 per cent wool by weight. The coating and cutting did not change their essential character, and in common parlance they continued to be understood and used as woollen carpets. The exemption entry also covered fabrics in pieces or strips, so the sale turnover was not liable to tax.

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Issues: Whether the turnover from sale of woollen carpets coated and cut to size was exempt as woollen fabrics under section 9 read with item 7 of the Third Schedule to the Kerala General Sales Tax Act, 1963.

Analysis: The entry exempted cotton fabrics, woollen fabrics and rayon or artificial silk fabrics as defined in the First Schedule to the Central Excises and Salt Act, 1944. The carpets admittedly contained more than 40 per cent wool by weight, satisfying the statutory definition. The coating of the base with prevulcanised latex mixed with hydraulic alumina and the cutting of the carpets into sizes did not alter their essential identity. In common parlance they continued to be understood and used as woollen carpets, and the entry itself contemplated fabrics in pieces or strips.

Conclusion: The carpets remained woollen fabrics within the meaning of the exemption entry, and the turnover from their sale was not liable to tax.

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