Specific sales tax exemption prevails for laminated HDPE fabrics; writ jurisdiction remains open on a pure question of law

Laminated HDPE fabrics were treated as synthetic waterproof fabrics covered by the specific exempting clause in the annexure to the sales tax notification. The Court applied the rule that, in a fiscal exemption, a specific exemption prevails over a general exclusion where the goods squarely fit the exempted description, and held that lamination made the fabrics waterproof, so the tax demand was unsustainable. The Court also held that the existence of an appellate remedy did not bar writ jurisdiction because the challenge raised a pure question of law and the writ court could properly entertain it.

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Issues: (i) Whether laminated high density polyethylene fabrics were synthetic waterproof fabrics falling within clause (vi) of the annexure to the exemption notification and were therefore exempt from sales tax despite the exclusion of HDPE fabrics in entry 53. (ii) Whether the availability of an appellate remedy barred exercise of writ jurisdiction.

Issue (i): Whether laminated high density polyethylene fabrics were synthetic waterproof fabrics falling within clause (vi) of the annexure to the exemption notification and were therefore exempt from sales tax despite the exclusion of HDPE fabrics in entry 53.

Analysis: The notification excluded HDPE fabrics from exemption, but expressly preserved the benefit for items specified in the annexure, including rubberised or synthetic waterproof fabrics. The Court treated plain HDPE fabrics as synthetic fabric and accepted that lamination made the fabric waterproof. Applying the principle that where a fiscal provision is capable of two constructions the one favourable to the subject should be adopted, the Court held that the specific exemption in the annexure prevailed over the general exclusion in entry 53 for goods answering the description in clause (vi).

Conclusion: The issue was decided in favour of the assessee. Laminated HDPE fabrics were held to be synthetic waterproof fabrics entitled to exemption from sales tax.

Issue (ii): Whether the availability of an appellate remedy barred exercise of writ jurisdiction.

Analysis: The challenge raised only a question of law on the true scope of the exemption notification. The Court held that the existence of an alternative remedy does not create an absolute bar and that the writ court may entertain the petition where the question is legal and the discretion is properly exercised.

Conclusion: The issue was decided in favour of the assessee. The writ petition was maintainable notwithstanding the appellate remedy.

Final Conclusion: The tax demand on laminated HDPE fabrics was unsustainable and the assessee obtained complete relief against assessment and recovery under the impugned notification.

Ratio Decidendi: In a fiscal exemption notification, a specific exempting entry prevails over a general exclusion where the goods squarely answer the exempted description, and a writ petition may be entertained on a pure question of law despite the existence of an alternative remedy.

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