Exempt goods under the Fourth Schedule cannot be taxed under the general charging provision when specific entry coverage is established.

Steel shutter lathes were treated as falling within entry 2(a)(v) of the Fourth Schedule to the Karnataka Sales Tax Act because their physical characteristics and admitted use brought them within the exempt category. The Court held that, once covered by that specific entry, the goods were taxable only at the first sale point and could not be subjected to levy under section 5(1) merely on account of the assessee's trade activity. It further held that the general charging provision applied only where the transaction was outside the specific charging and exemption structure, so revisional interference under section 22-A was unwarranted. The levy was therefore unsustainable.

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Issues: Whether steel shutter lathes purchased by the assessee fell within entry 2(a)(v) of the Fourth Schedule to the Karnataka Sales Tax Act, 1957 so as to be taxable only at the first sale point and not liable to tax on the assessee's purchase or turnover under section 5(1) of the Act.

Analysis: The goods were examined on their physical characteristics and the admitted manner of use. The Court accepted that the articles fell within one of the categories covered by entry 2(a) of the Fourth Schedule and that, once the department did not dispute the purchase and use, the transaction was entitled to the exemption attached to that entry. The Court further held that section 5(1) operated only where the transaction was not covered by the specific charging provisions in section 5(2), section 5(3), or section 5(4), and that a transaction falling within the exempted category could not be brought to tax under the general charging provision merely because of the assessee's trade activity. The revisional interference under section 22-A was therefore unwarranted.

Conclusion: The steel shutter lathes were held to fall within the exempt category under entry 2(a)(v), and the levy under section 5(1) was unsustainable. The assessee succeeded and the revisional order was set aside.

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