Broad exemption from levy under sales tax law includes turnover tax where raw silk has already been taxed.

Explanation VIII to the Second Schedule to the Karnataka Sales Tax Act was construed as a broad exemption from levy, not limited to tax under section 5 or the Second Schedule alone. Because raw silk had already suffered tax and silk yarn was treated as a commercially distinct product, the provision was read in light of the legislative intent to avoid double taxation on the same raw material and finished product. The Court applied the language of the explanation and the scheme of the Act to hold that the exemption also covered turnover tax under section 6-B. The Commissioner's contrary clarification was held illegal, ultra vires and unenforceable, and the impugned notices and orders were quashed.

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Issues: Whether explanation VIII to the Second Schedule to the Karnataka Sales Tax Act, 1957 exempts silk yarn manufactured out of raw silk from turnover tax leviable under section 6-B of the Act, and whether the Commissioner's clarification taking such turnover into account was valid.

Analysis: The expression "no tax shall be levied" in explanation VIII was held to be comprehensive and not confined to tax under section 5 or the Second Schedule alone. The Court noted that the raw silk had already suffered tax under the Third Schedule, that silk yarn was a commercially distinct product falling under the Second Schedule, and that the legislative history showed an intention to avoid double taxation on the same raw material and finished product. The wording of explanation VIII was contrasted with other explanations in the Second Schedule that expressly restricted the exemption to particular levies. Applying the settled principle that an explanation must be construed according to its language and legislative intent, the Court concluded that the exemption extended to all tax leviable under the Act, including turnover tax under section 6-B.

Conclusion: Explanation VIII was held to exclude from levy, including turnover tax under section 6-B, silk yarn manufactured out of raw silk that had already suffered tax under the Act. The Commissioner's clarification to the contrary was declared illegal, ultra vires and unenforceable, and the impugned notices and orders were quashed.

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