Exemption for cotton-coated fabrics upheld where only exempt cotton fabrics were sold and declaration-form import did not trigger tax.

Cotton-coated fabrics sold by the dealer were treated as exempt under the notification issued under section 4 of the U. P. Trade Tax Act, 1948, because the turnover related only to cotton fabrics covered by the entry for cotton fabrics of all varieties. The revenue failed to show that any goods other than cotton-coated fabrics were purchased or sold. Tax could not be levied merely because the goods had been imported against a declaration form, where the same exempt goods were later sold and no taxable item was established. The revisions challenging the Tribunal's finding accordingly failed.

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Issues: Whether cotton-coated fabrics sold by the dealer were taxable, and whether tax could be levied merely because the goods had been imported against declaration form under the U. P. Trade Tax Act, 1948.

Analysis: The turnover in question related only to cotton-coated fabrics. The revenue was unable to show that any item other than cotton-coated fabrics had been purchased or sold. The Court accepted the Tribunal's finding that the goods were cotton fabrics covered by the notification granting exemption under section 4 of the U. P. Trade Tax Act, 1948, under the entry relating to cotton fabrics of all varieties. The mere fact that the goods had been imported against declaration form did not justify levy of tax when the goods sold were the same exempt goods and no taxable item was shown.

Conclusion: Cotton-coated fabrics were held exempt from tax, and the revisions challenging that finding failed.

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