DELHI CLOTH AND GENERAL MILLS CO. LTD. versus STATE OF RAJASTHAN AND ORS.

Citation: [1980] 3 S.C.R. 1109 · Decided: 08-05-1980 · Supreme Court of India · Bench: N.L. UNTWALIA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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• 
DELHI CLOTH AND GENERAL MILLS CO. LTD. 
v. 
STATE OF RAJASTHAN AND ORS. 
May 8, 1980 
[N: L. UNTWALIA AND R. S. PATHAK, JJ.] 
Exemption from Sales Tax under the Central Sales Tax Act,-"Rayou Tyre 
Cord Fabric'', whether covered by ite1n 18 of the Schedule to the Rajasthan 
Sales Tax Act, 1954, so as to qualify for exemption under the Central Sales 
1·ax Act,-ltem 18 of the Schedule to the Rajasthan Sales Tax Act, 1954,-
Whether assessment and payment of_ excise duties under the Additional Duties 
of .Excise (GOods of Special Importance) Act, 1957, a preconditl'on for claim-
ing exe1nption under the Rajasthan Sales Tax Act and 
therefore 
under 
the 
Central Sales Tax Act. 
Interference by Supreme Court under Art. 136 of the Constitution, whether 
hatred by Section 15 of the Rajasthan Sales Tax Act. 
Section 4(2) of the Rajasthan General Sales Tax Act, 1954 empowern the 
State' Government, by notification in the Official Gazette, to ·exempt from tax 
the sale of any goods or class of goods on such conditions as may be1 specified 
in the notification. 
By a notification dated 1st July, 
1958, 
the 
RajasthaTI'. 
Government unconditionally exeir.pted all varieties of, textiles made wholly or 
partly of rayon from !st July, 1958. 
S. 4(1) of the Rajasthan Sales Tax Act, 
1954 provides for exemption from Sales Tax of the goods 
specified 
in 
thci 
Schedule to that Act provided the conditions mentioned in the Schedule are· 
satisfied. Item 18, inserted in the Schedule by ther Rajasthan Taxation Laws. 
(Amendment) Act, 1964, included "rayon fabrics" as defined in the Additional 
Duties of Excise (Goods of Special Importance) Act, 1957. On this, the noti-
fication dated 1st July 1958 was. withdrawn as redundant. When Item 18 was 
inserted in the Schedule, no conditions were specified therein as a qualification 
for the exemption. The unconditional exemption from sales tax granted on the 
sale of rayon fabrics, that is to say, without the condition that additional eXcise 
duty was paid by the manufacturer, woo withdrawn by a notification dated 5th 
March, 1973 made by the Rajasthan State Government und<>r s. 4(2) of the 
Rajasthan Sales Tax Act. The notification provided that in the case of 
un· 
processed rayon and a·rtificial silk fabrics the exemption; from sales1 tax would 
apply only if the additional duty is leviable on them under the Additional 
Duties of Excise (Goods of Special Importance) Act, !957 and such goods had 
not specifically been exempted from the said duty and the dealers. thereof fur-
nished proof to the satisfaction of the assessing authority that such duty had 
been paid, 
Item 18 of the Schedule to the Rajasthan Sales Tax exempts from Sales Tax 
and purchase tax "all. cotton fabrics rayon or artiJicial silk fabrics, 
woollen 
fabrics as defined in the Additional Duties of Excise (Goods of Special Impor-
tance) Act, 1957 (Central Act 58 of 1957)". 
Section 2(c) of the Additional Duties 
of Excise 
(GOOds 
of Special 
Importance) Act, !956 declares that the e.xpression "rayon or artificial •ilk 
(1109) 
A 
c 
D 
F 
G 
ff 
111 0 
SUPREME COURT REPORTS 
(1980] 3 S.C.R. 
A 
fabrics" shall have the meaning assigned to it in Item 22 of the First Schedule 
to the c·entral Excise and Salt, .'-\ct, 1944, which reads : 
B 
c 
D 
E 
F 
G 
H 
"Rayon or artificial silk fabrics" means a1l varieties of fabrics 
manufactured either wholly or partly' from rayon or artificial silk and 
includes e111broidery in the piece, in strips or in metifs and Fabrics 
impregnated or co:ited with preparations of cellulose derivatives or of 
other artificial plastic materials .... " 
The appellant owns an industrial unit, Shriram Rayons, situ..'1'ted at Kota in 
the Sto'.lte of Rajasthan. It maiWf.actures a product· described as "Rayon Tyre 
(~ord Fabric''. Rayon fibre is spun into rayon and twist~d into cord. The cords 
are arranged lengthwise, and are commonly described as the "warp". They are 
packed 25 to the inch. By a process of weaving, cotton thread are wefted 
through a loom across the cords. The wefts are thinner and fewer than the 
cords, being not more than two to five per inch. The cord component com-
prises the major content of the product. The unprocessed 
rayon 
tyre 
cord 
fabric so produced is sold in the form of rolls in the market. 
After 
initial 
chemical treatment it is put through a process of rubberizing in the tyr~ manu-
facturing plant. The· rayon tyre cord fabric is used as a re-inforcing ba

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