DESAI, J. -
(1.)THE facts leading to this reference are that Shree Ram Industries, the applicant herein, is a partnership-firm doing the business of manufacturing for sale art silk saris and also reselling saris. THE firm sells saris either in the same condition in which they are manufactured or, in some cases, after embroidering butta or attaching zalar to such saris. THE total turnover of the sales of the firm for the period between 29th October, 1962, to 17th October, 1963, was Rs. 35,41,358. Sales to the extent of Rs. 3,24,262 were held by the Sales Tax Officer as sales of tax-free goods covered by entry 41 of Schedule A to the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act ). Sales of Rs. 85,641 were held to be covered by entry 11a or entry 19 of Schedule E to the Act. Out of these sales for Rs. 85,641, sales for Rs. 45,216 were sales of saris either embroidered or decorated with butta, while sales for Rs. 40,425 were in respect of saris to which zalars were attached. THE dispute before the Tribunal was confined only to sales of saris with zalars amounting to Rs. 40,425, and the question that arose before the Tribunal was whether the said turnover could not be considered for the purpose of taxation, in view of the contention that the saris to which zalars were attached were covered by entry 41 of Schedule A with the consequence that their sale was free from any taxation. THE Tribunal following the decision of this court in the case of Pravin Bros. v. THE State of Gujarat ( 15 S. T. C. 478.), came to the conclusion that the saris to which zalars were attached was a different commodity and was covered by entry 11a or 19 to Schedule E to the Act, and hence the turnover in that respect was liable for taxation under the Act. At the instance of the partnership-firm, the Tribunal has referred 3 questions to us for our answers and they are : " (1) Whether, on the facts and in the circumstances of the case, the sales of saris of art silk fabrics to which zalars, that is, borders are attached by stiching them to saris after the process of manufacture are covered by entry 41 of Schedule A and, therefore, exempt from tax under sub-section (1) of section 5 of the Bombay Sales Tax Act, 1959 ? (2) If the answer to the first question is in the negative, whether, on the facts and in the circumstances of the case, saris of art silk fabrics to which zalars, that is, borders are attached by stitching them to saris after the process of manufacture are art silk fabrics within the meaning of sub-section (7) of section 14 of the Central Sales Tax Act, 1956 ? (3) If the answer to the second question is in the affirmative, whether, on the facts and in the circumstances of the case and having regard to the provisions of sub-section (7) of section 14 and section 15 of the Central Sales Tax Act, 1956, the rate shown against entry 11a and entry 19 of Schedule E to the Bombay Sales Tax Act, 1959, should be not more than 2 per cent of the sale price instead of the rate shown against that entry ?"
(2.)THE short question which arises for our determination is whether the saris to which zalars have been attached are covered by entry 41 of Schedule A or by entry 11a or 19 to Schedule E to the Act. Entry 41 in Schedule A is in the following terms : " 41. Rayon or artificial silk fabrics as defined in item No. 22 of the First Schedule to the Central Excises and Salt Act, 1944. "
Item 22 of the First Schedule to the Central Excises and Salt Act, 1944, is as follows : " 22. Rayon or artificial silk fabrics : 'rayon or artificial silk fabrics' include all varieties of fabrics manufactured either wholly or partly from rayon or artificial silk, but do not include any such fabrics - (i) if it contains 40 per cent or more by weight of wool; (ii) if it contains 40 per cent or more by weight of silk; (iii) if it contains cotton and less than 60 per cent by weight of rayon or artificial silk; (iv) if it contains no cotton and less than 40 per cent by weight of wool and less than 40 per cent by weight of rayon or artificial silk; or (v) if manufactured on a handloom. "
Entry 11a of Schedule E of the Act is as follows : " Saris embroidered or otherwise decorated, sold at a price not less than Rs. 18 but less than Rs. 30 per piece. "
(3.)THERE is an explanation to this entry which states that a sari decorated in the process of its weaving shall not be deemed to be a decorated sari, for the purpose of this entry. Entry 19 to Schedule E is to the following effect : " 19. Saris embroidered or otherwise decorated, sold at a price not less than Rs. 30 per piece. Explanation.- A sari decorated in the process of its weaving shall not be deemed to be a decorated sari for the purpose of this entry. "
Section 5 of the Act provides, so far as relevant, that notwithstanding anything in the Act, but subject to the conditions or exceptions, if any, set out against each of the goods specified in column 3 of Schedule A, no tax shall be payable on the sales or purchases of any goods specified in that schedule. It was contended by Mr. Kaji that under the provisions of section 5, a dealer would not be liable to pay any tax on the sales or purchases of any goods set out in Schedule A to the Act. He further contended that in order to find out whether the article is taxable or not it was necessary first to look at the entries in Schedule A, which refer to goods which are exempted from the payment of tax. If the article under consideration falls in any of the entries in Schedule A, the question of considering whether the article falls in any other entry of other schedules does not arise. This is so, he contended, because of the overriding provisions of section 5. The said section proceeds on the footing that the goods mentioned therein are not chargeable to tax even though the goods may fall in any other entry in any other schedule. The non obstante clause used in section 5 gives to the said section an overriding effect. In view of the provisions of section 5, the first question the authority has to address itself, when a question arises as to whether the goods are taxable or not, is whether the goods fall within the exempted categories of the goods mentioned in Schedule A or not. It is not open to the court in such cases to invoke the rule of construction that a special provision excludes a general provision or that the entry in Schedule A should be read harmoniously with the relevant entry in other schedules which makes the goods taxable. In short, the argument is that the court should examine the question as to whether the article is exempted under Schedule A in isolation and if the court comes to the conclusion that the article falls within that entry in that schedule it is not open to the court to consider other relevant entries. In support of this argument, Mr. Kaji relied upon the decision of the Division Bench consisting of J. M. Shelat, C. J. (as he then was) and P. N. Bhagwati, J. (as he then was), in the case of State of Gujarat v. Umedram Lallubhai ( 16 S. T. C. 1059. ). The question which arose before the court was whether indori borders containing more than 60 per cent of pure silk and woven handloom out of silk, art silk and jari threads are handloom cloth within the meaning of entry 29 in Schedule A to the Act. The court when considering the said question observed as follows : " But we may point out straightaway for reasons which will become apparent from what follows that if the borders can be said to be handloom cloth within the meaning of entry 29 of Schedule A, the sale of the borders would be exempt from tax and there would be no question of the State being entitled to tax the sale of the borders under entry 9 of Schedule E. . . . . . . . . . . If, therefore, handloom borders fall within the expression 'handloom cloth' as used in entry 29 of Schedule A, their sale or purchase would be exempt from tax notwithstanding that they fall within any entry in any of the other schedules of the Act. . . . . . . . But despite that, the sale or purchase of handloom borders would be exempt from tax if they can be said to be handloom cloth within the meaning of entry 29 of Schedule A, for the exemption granted under section 5 is an overriding exemption which prevails notwithstanding anything contained in any other provision of the Act. "