Strict construction of sales tax exemption leaves wool waste outside the raw wool entry and taxable under the Act

On a strict construction of the Madhya Pradesh General Sales Tax Act, wool waste is not treated as "raw wool" within entry 39 of Schedule I because it is not wool in its natural state and has already undergone processing. The Schedule was read as taxing woollen goods generally while exempting only raw wool, with knitting wool expressly excepted. The document therefore states that wool waste falls outside the exemption and is taxable under the Act.

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Issues: Whether wool waste falls within entry 39 of Schedule I to the Madhya Pradesh General Sales Tax Act, 1958 as "raw wool except knitting wool".

Analysis: The entry granting exemption for raw wool was read with the charging entry covering all kinds of woollen goods except those expressly covered by entry 39. On a strict construction of the taxing statute, wool waste could not be treated as raw wool because it was not wool in the natural state and had already undergone processing. The broader scheme of the Schedule also showed that the legislature intended to tax woollen goods generally and exempt only raw wool, with knitting wool as the stated exception.

Conclusion: Wool waste is not covered by entry 39 of Schedule I and is taxable under the Act; the reference is answered against the assessee and in favour of the Revenue.

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