vil Appeal No 1134 NT of 1987
From the Judgment and Order dated 23
1984 of the Allahabad High Court in Sales Tax Revision No 146 of 1983
Prithvi Raj Ashok K Srivastava for the Appellant
ST Desai KB Rohtagi SK Dhingra Baldev Atreya and Shashank Shekhar for the Respondent
The following Judgments of the Court were delivered RANGANATH MISRA J Special leave granted
Delay of six days is condoned
The short question for consideration in this appeal at the instance of the Revenue is whether the High Court was justified in holding that in the absence of a notification withdrawing the earlier notification dated 2511
1958 made in exercise of power vested under section 4 of the UP Sales Tax Act 1948 Sales Tax would not be exigible in terms of the notification dated 112
1973 issued under section 3A of that Act
The notification of 1958 exempted cotton fabrics of all varieties  from sales tax
It is not disputed that under it sale of patta the goods in question on being treated as cotton fabric was exempted from sales tax
The notification of 1973 made under section 3A of the Act prescribed sales tax of seven per cent on the sale of beltings of all kinds
There is no dispute now that patta is a kind of belting material
Section 3 of the Act contains the charging provision and prescribes a uniform rate of tax on sales
Section 3A empow ers the State Government to modify the rate of tax by noti fication
The notification of 1973 in fact prescribes a rate of tax higher than provided by section 3
In 1958 under the notification referred to above patta as an item of cotton fabric stood exempted from tax liability
The High Court has 96 referred to some of its earlier decisions and has concluded thus Thus the consistent view of this court throughout has been that by issuing a separate notification under section 3A the earlier exemption granted under section 4 of the Act cannot be negatived
If the State wanted to tax beltings of all kinds  it has to amend the general notification issued under section 4 by deleting cotton fabric belts from the notification issued under section 4 of the Act   As has been pointed out above section 3 is the charging provision section 3A authorises variation of the rate of tax and section 4 provides for exemption from tax
All the three sections are parts of the taxing scheme incorporated in the Act and the power both under sections 3A as also under section 4 is exercisable by the State Government only
When after a notification under section 4 granting exemption from liability a subsequent notification under section 3A prescribes the rate of tax it is beyond doubt that the intention is to withdraw the exemption and make the sale liable to tax at the rate prescribed in the notification
As the power both for the grant of exemption and the variation of the rate of tax vests in the State Government and it is not the requirement of the statute that a notification of recall of exemption is a condition precedent to imposing tax at any prescribed rate by a valid notification under section 3A we see no force in the contention of the assessee which has been upheld by the High Court
In fact the second notification can easily be treated as a combined notifica tion both for withdrawal of exemption and also for provid ing higher tax
When power for both the operations vests in the State and the intention to levy the tax is clear we see no justification for not giving effect to the 2nd notifica tion
We would like to point out that the exemption was in regard to a class of goods and while the exemption continues a specific item has now been notified under section 3A of the Act
The appeal is allowed
The order of the Tribunal which has been affirmed by the High Court is set aside and the assessment is restored
Parties are directed to bear their respective costs throughout
BC Ray J I have had the privilege of going through the judgment rendered by my learned brother but I am unable to concur with the reasonings recorded by my learned brother in his judgment so far as it relates to the scope and effect of the notification dated 1121973 made under Section 3A of the UP Sales Tax Act 1948 by providing for imposition of sales tax on beltings of all kinds for the reasons given hereunder 97 Under Section 4 of the 1JP Sales Tax Act 1948 the Government issued two notifications No ST 4486x dated 14121957 and No 4064x 960458 dated 2511
1958 where by cotton fabrics of all kinds were exempted from the imposition of sales tax under the Act
Thereafter on 1st of December 1973 a notification was issued by the Government under Section 3 A of the said Act which introduces in the Schedule in Item No 8 beltings of all kinds for imposi tion of sales tax
The sole question arising in this appeal is whether beltings of all kinds are excisable to sales tax by virtue of the notification dated 112
1973 even though they fall within cotton fabrics of all kinds which are exempted from tax by virtue of the notifications dated 1412
1957 and 2511
Similar question arose in the case of Porritts  Spencer Asia Ltd vs State of Haryana 1978 42 STC 433 SC before this Court for considera tion
It was held by this Court that the words all varie ties of cotton woollen or silken textiles
In item 30 of Schedule B to the Punjab General Sales Tax Act must be interpreted according to its popular sense meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it
 This Court further observed whatever be the mode of weaving employed woven fabric would be textiles
What is neces sary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric
Moreover a textile need not be of any particular size or strength or weight
It may be in small pieces or in big rolls It may be weak or strong light or heavy bleached or dyed according to the requirement of the pur chaser
The use to which it may be put is also immaterial and does not bear in its character as a textile
It may be used for making wearing apparel or it may be used as a covering or bed sheet or it may be used as tapestry or upholstery or as duster for clearing or as towel for drying the body
A textile may have diverse uses and it is not the use which determines its character as textile
 It was also held that the textile has only one meaning namely a woven fabric and that is the meaning which it bears in ordinary parlance
The Court therefore held that dryer felts are textiles as these were made of yarn and the proc ess employed was that of weaving according to warp and woof pattern
It therefore falls within the meaning of textiles and so exempted from tax
Similar question arose in the case of State of Tamil Nadu vs Navinchandra  Company 1981 48 STC 118 Madras where exemption was claimed on the basis of a notification under Section 4 of the Tamil Nadu General Sales Tax Act 1959 in respect of hair belting 98 and cotton belting as falling within item No 4 of the Third Schedule of the said Act
This item No 4 reads as follows All varieties of textiles other than durries carpets druggets and pure silk cloth made wholly or partly of cotton staple fibre rayon artificial silk or wool includ ing handkerchiefs towels napkins dusters cotton velvets and velvetten tapes niwars and laces and hosiery cloth in lengths
 It was held that textiles haying a wider meaning than fab rics cottonbelting and hair belting were included in the expression cotton fabrics and as such they are exempted from taxation falling within Item No 4 of the Third Schedule as it stood prior to its amendment
It is pertinent to mention in this connection that in the case of Delhi cloth and General Mills Co Ltd vs State of Rajasthan and Others  the question arose whether rayon tyre cord fabric manufactured by the appellate company included within item No 18 inserted in the Schedule by the Rajasthan Taxation Laws Amendment Act 1964 and rayon or artificial silk fabrics extended to exemp tion under Section 41 of the Rajasthan Sales Tax Act which provides for exemption of sales tax of goods specified in the Schedule
It has been held that the product falls within the exempted item rayon or artificial silk fabrics in item No 18 of the Schedule inserted by Section 4 of the said Act
This judgment was rendered by this Court to which one of us was a party
In the instant case the question arising for considera tion is whether patta covered by cotton fabrics of all varieties is excisable to sales tax under the notification dated 112
1973 namely beltings of all kinds
In view of the decisions referred to hereinbefore cotton beltings fall within the textiles of all varieties as notified under Section 4 of the said Act being exempt from the imposition of sales tax
The question that falls for consideration is what is the effect of the notification issued under Section 3 A of the said Act on 112
1973 mentioned in the Schedule beltings of all kinds
There is no dispute nor any chal lenge that these beltingsare cotton beltings falling within cotton fabrics of all kinds and as there is a general exemp tion granted by the notification issued in 1957 and 1958 exempting cotton fabrics of all kinds  it is not possible to hold in any view of the matter that it will be excisable to sales tax on the basis of the notification dated 1121973 under Section 3 A of the said Act by the Govern ment
The next question for consideration is what is the effect of a 99 notification under Section 3 A including an item in the Schedule for imposition of sales tax though there is a general exemption from sales tax under Section 4 of the Sales Tax Act
It has been held in the case of Commissioner of Sales Tax vs Ms Dayal Singh Kulfi Wala Lucknow 1980 UPTC 360 as follows A fiscal statute like the one before me has to be interpreted strictly
If there is any ambiguity or doubt it should be resolved in favour of the subject
There is no equity about tax
The taxing liability must be express and absolute
In the present case the specification of the goods for purpose of section 3 A is one thing but whether or not such goods would be exempted from tax is the power conferred upon the State Government under section 4 of the Act
So long the exemption continues the dealer can cer tainly urge and with jurtisification that the mere specifi cation of goods under section 3 A or declaring the point of sales at such turnover liable to tax would not take away the exemption from payment of tax which the goods enjoyed by virtue of the exercise of power by the State Government under Section 4 of the Act
The operating fields of the two sections namely sections 3 A by itself cannot override the power under section 4
On the other hand if certain goods have been classified for purposes of by the State Govern ment if such goods had been exempted from sales the De partment cannot contend that the exemption should not be construed in favour of the assessee
 In this case the question arose whether the general exemption granted under Section 4 of the Act in respect of milk and milk products is sufficient to exempt kulfi and lassi in respect of which a separate notification was issued under Section 3 A for imposition of tax
A similar question also arose in the case of Commission er of Sales Tax vs Rita Ice Cream Co Gorakhpur 1981 UPTC 1239 and it was held that so long as the general exemption under Section 4 continues a particular item noti fied under Section 3 A of the Sales Tax Act cannot be taxed
On a conspectus of all these decisions aforesaid the only irresistible inference follows that so long as the general exemption granted under Section 4 with regard to cotton fabrics of all kinds continues no sales tax can be imposed on beltings of all kinds which fall within the cotton fabrics of all kinds and the general exemption under section 4 will prevail over the notification made under section 3 A of the Sales Tax Act
I am unable to subscribe to the view that since the notification under section 3 A of the UP Sales Tax Act has been made subse 100 quent to the notification issued under Section 4 of the said Act the subsequent notification under Section 3 A will prevail over the general exemption granted under Section 4 of the said Act
In my considered opinion the reasonings and conclusions arrived at by the High Court are unexception able
The appeal is accordingly dismissed and the judgment and order of the High Court of Allahabad is hereby affirmed
NPV Appeal allowed


Summary:
The State Government issued a Notification on November 25 1958 In exercise of power vested under Section 4 of the UP Sales Tax Act 1948
This Notification exempted cotton fabrics of all varieties  from sales tax
Under it patta as an item of cotton fabric stood exempted from tax liability
Subsequently another Notification was issued on December 1 1973 under Section 3 A of the Act
This Notification pre scribed a rate of tax higher than that provided by Section 3 of the Act which contains the charging provision and pre scribes a uniform rate of tax on sales
Section 3 A empowers the State Government to modify the rate of tax by Notifica tion
This Notification of 1973 was issued without withdraw ing the earlier Notification of 1958
The High Court affirming the order of the Tribunal held that in the absence of a Notification withdrawing the earlier Notification of 1958 sales tax would not be exigi ble in terms of the Notification of 1973
Allowing the Appeal HELD Per majority Pathak CJI and Ranganath Misra J Ray J dissenting 1
The High Court was not justified in holding that in the absence of a notification withdrawing the earlier Noti fication of 1958 sales tax would not be exigible in terms of the Notification of 1973
The order of the Tribunal which has been affirmed by the High Court is set aside and the assessment restored
96G 2
The Notification of 1958 issued under Section 4 of the Act exempted cotton fabrics of all varieties  from sales tax
The Notification of 1973 under Section 3 A of the Act prescribed sales tax of 7 on the sale of beltings of all kinds
There is no dispute that patta is a kind of 94 belting material and on being treated as cotton fabric was exempted from sales tax
95FG 3
Section 3 is the charging provision Section 3 A authorises variation of the rate of tax and Section 4 pro vides for exemption from the tax
When after a Notification under Section 4 granting exemption from liability a subse quent Notification under Section 3 A prescribes the rate of tax the intention is to withdraw the exemption and make the sale liable to tax at the rate prescribed in the Notifica tion
96B D 4
As the power both for the grant of exemption and the variation of the rate of tax vests in the State Government and it is not the requirement of the Statute that a Notifi cation of recall of exemption is a condition precedent to imposing tax at any prescribed rate by a valid Notification under Section 3 A the second Notification can easily be treated as a combined Notification both for withdrawal of exemption and also for providing higher tax
96D E 5
The exemption was in regard to a class of goods and while the exemption continues a specific item has now been notified under Section 3 A of the Act
96F Per Ray J dissenting 1
Cotton beltings fail within beltings of all kinds  as notified under Section 4 of the Act being exempt from the imposition of sales tax
As there is a general exemption granted by the Notifications issued in 1957 and 1958 exempt ing cotton fabrics of all kinds  it is not possible to hold in any view of the matter that it will be excisable to sales tax on the basis of the Notification dated December 1 1973 under Section 3 A of the said Act by the Govern ment
i98F G H 2
So long as the general exemption granted under Sec tion 4 with regard to cotton fabrics of all kinds  contin ues no sales tax can be imposed on beltings of all kinds which fail within the cotton fabrics of all kinds  and the general exemption under Section 4 will prevail over the Notification made under Section 3 A of the Sales Tax Act
99GH 3
It is not possible to subscribe to the view that since the Notification under Section 3 A has been made subsequent to the Notification issued under Section 4 of the Act the subsequent Notification under Section 3 A will prevail over the general exemption granted under Section 4 of the Act
99H 100A 95 Porritts  Spencer Asia Ltd vs State of Haryana 1978 42 STC 433 SC State of Tamil Nadu vs Navinchandra  Company 1981 48 STC 118 Madras Delhi Cloth and General Mills Co Ltd vs State of Rajasthan and Others   Commissioner of Sales Tax vs Ms Dayal Singh Kulfi Wala Lucknow 1980 UPTC 360 and Commis sioner of Sales Tax vs Rita Ice Cream Co Gorakhpur 1981 UPTC 1239 referred to