Handloom cloth exemption under khadi notification upheld; entry tax could not be levied on the goods.

Handloom cloth was treated as falling within the exempted category of "khadi" under the relevant entry tax exemption notification because the notification expressly covered cotton and woollen khadi cloth and the record contained a certificate describing the goods as handloom cloth. On that footing, the exemption applied to the goods in question, and entry tax was not leviable. The Board of Revenue's view treating the goods as covered by the exempt class was upheld, and the reference was answered in favour of the assessee.

---

---

Issues: Whether handloom cloth falls within the expression "khadi" in Entry No. 51 of Schedule I and the exemption notification dated 8 March 1982 so as to be exempt from entry tax.

Analysis: The reference arose under Section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958 on the question whether the Board of Revenue was justified in treating handloom cloth as covered by the exempted class of goods. The notification issued under Section 10 of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 expressly exempted "cotton and woollen khadi cloth" from the whole of entry tax for the specified period. The record also showed that the assessee had produced a certificate describing the goods as handloom cloth. On that basis, the exemption was held to extend to the goods in question and the Board's view was found to be correct.

Conclusion: Handloom cloth was held to be covered by the relevant exemption and not liable to entry tax; the issue was answered in favour of the assessee and against the Revenue.

Final Conclusion: The reference was decided in favour of the assessee, with the exemption notification applied to the goods claimed to be handloom cloth.

Ratio Decidendi: Where the exemption notification expressly covers the relevant class of cloth and the goods are shown on the record to answer that description, the exemption must be applied and entry tax cannot be levied.

---