Retrospective amendment to cotton fabrics definition can extend state sales tax exemption to tarpaulin and P.V.C. rexine cloth.

A State sales tax exemption tied the meaning of "cotton textiles" to the definition of "cotton fabrics" in the central excise tariff. The commentary explains that, where the referring and parent enactments operate as a supplemental and integrated scheme, a retrospective amendment to the parent definition can be read into the exemption provision. On that basis, tarpaulin cloth and P.V.C. rexine cloth, being within the expanded definition of "cotton fabrics," would not be excluded by applying the earlier unamended definition or a user test. The operative effect is that such goods may fall within the exempted category under the State schedule.

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Issues: Whether tarpaulin cloth and P.V.C. rexine cloth fall within the meaning of "cotton textiles" under entry 8A of the Fifth Schedule to the Karnataka Sales Tax Act by reason of the amended definition of "cotton fabrics" in tariff item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944.

Analysis: The exemption under entry 8A of the Fifth Schedule was linked to the meaning of "cotton fabrics" in section 14 of the Central Sales Tax Act, 1956, which in turn derived its content from tariff item No. 19 of the Central Excises and Salt Act, 1944. The Court held that the later retrospective amendment to tariff item No. 19 could not be ignored merely because the earlier unamended definition had been applied in some decisions. Relying on the principle governing referential and incorporated legislation, the Court held that where the legislative scheme makes the incorporated provision and the parent enactment supplemental to each other, subsequent amendments in the parent enactment may be read into the referring provision. On that basis, tarpaulin cloth and P.V.C. rexine cloth, both covered by the expanded definition of "cotton fabrics", could not be excluded from the exemption merely by applying the user test or the unamended definition.

Conclusion: The issue was answered in favour of the assessee. Tarpaulin cloth and P.V.C. rexine cloth were held to fall within the exempted category of cotton textiles under entry 8A of the Fifth Schedule to the Karnataka Sales Tax Act.

Final Conclusion: The impugned clarification and assessment orders were set aside, and the petitioners were held entitled to exemption on the disputed goods.

Ratio Decidendi: Where a State sales tax exemption provision adopts the meaning of a commodity from a parent fiscal enactment, a retrospective amendment to the parent definition will govern the referring provision if the legislative scheme shows a supplemental and integrated relationship between the enactments.

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