Tariff-based exemption for nylon fishing net fabric prevailed over the taxable entry, defeating sales tax assessments.

Nylon fishing net fabric was treated as man-made fabric falling within the relevant tariff-based exemption entry in the Third Schedule to the Kerala General Sales Tax Act, so the exemption prevailed despite the goods also appearing in the First Schedule. The Government clarification was not binding, but it was consistent with this reading, and the later specific exemption and the commercial character of the goods supported the view that the levy was not intended. The assessments treating the goods as taxable under the First Schedule therefore could not stand.

---

---

Issues: Whether nylon fishing net fabric is assessable under the First Schedule to the Kerala General Sales Tax Act, 1963, or is exempt under the Third Schedule; and whether the Government clarification and tariff description support exemption.

Analysis: The goods were held to answer the description of man-made fabric covered by the relevant tariff entries in the Central Excise Tariff Act, 1985, bringing them within the exemption entry in the Third Schedule as originally numbered and later renumbered. The Court noted that the Government clarification, though not treated as binding, reflected the same understanding and that the later specific exemption from 1 January 2000 and the commercial nature of the goods supported the view that tax was not intended to be levied. The fact that the item was also placed in the First Schedule did not displace the exemption once the goods satisfied the exemption entry.

Conclusion: Nylon fishing net or nylon net fabric sold by the assessees was entitled to exemption under the Third Schedule, and the assessments treating it as taxable under the First Schedule could not stand.

Ratio Decidendi: Where goods fall within a specific exemption entry describing the commodity by reference to tariff classification, the exemption prevails over a competing taxable entry in the First Schedule.

---