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of <h1>Court rules transmission beltings with cotton-rubber mix as cotton fabric for tax exemption</h1> <h3>The State of AP Versus Goodyear India Ltd.</h3> The State of AP Versus Goodyear India Ltd. - [1989] 74 STC 47 (AP) Issues:Identification of transmission beltings as cotton fabrics for tax exemption under the A.P. General Sales Tax Act.Analysis:The judgment delivered by JEEVAN REDDY, J. addressed the issue of whether transmission beltings can be classified as 'cotton fabrics' for tax exemption under the A.P. General Sales Tax Act. The contention raised by the Government Pleader for Commercial Taxes was that the transmission beltings, manufactured with cotton and rubber, do not qualify as cotton fabrics under entry 5 of the Fourth Schedule. The Court examined the manufacturing process of the beltings and referred to relevant legal provisions, including the Additional Duties of Excise Act. The explanation in the Fourth Schedule linked the definition of cotton fabrics to the Act of 1957, necessitating a closer look at item 19(1) of the First Schedule. The Court emphasized the definition of 'fabric' as per established textile references to determine whether the transmission beltings met the criteria of cotton fabric.The Court cited the Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan case to elaborate on the definition of fabric, emphasizing the broad classification of textile products. It was observed that the transmission beltings, containing 66.7% cotton and 33.3% rubber, qualified as cotton fabric subjected to a rubberising process. The Court applied the test of predominance and concluded that the beltings were indeed cotton fabric under entry 5, thereby exempt from tax. The judgment highlighted the test certificate from the National Test House supporting the composition of the beltings and affirmed their classification as cotton fabric.Furthermore, the Court distinguished the Gujarat High Court's decision in Hind Engineering Co. v. Commissioner of Sales Tax, where rubber beltings were not considered cotton fabrics due to the transformative effect of the rubber superimposition process. The Gujarat case relied on a different legal framework compared to the present scenario, emphasizing the specific wording of item 19 under the Central Excises and Salt Act. In contrast, the Court in the current judgment emphasized that the presence of the term 'cotton fabrics subjected to the process of rubberising' in the relevant provisions supported the classification of the beltings as cotton fabric despite the rubber component. The Court's analysis focused on the essential nature of the beltings as predominantly cotton fabric, leading to the dismissal of the T.R.C. with no costs awarded.In conclusion, the judgment provided a detailed analysis of the manufacturing process, legal provisions, and textile definitions to determine the classification of transmission beltings as cotton fabric for tax exemption under the A.P. General Sales Tax Act. The Court's interpretation of relevant statutes and precedents supported the decision to exempt the beltings from tax, emphasizing their composition and predominant cotton content despite the rubber component.
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