THE ASSISTANT COMMISSIONER OF SALES TAX, KERALAversusM/S P. KESAVAN AND CO .

A      THE ASSISTANT COMMISSIONER OF SALES TAX, ~RALA
                                           v.
                           MIS P. KESAVAN AND CO .

                              . NOVEMBER 14, 1995

B     [S.P. BHARUCHA, FAIZAN UDDIN AND S.B. MAJMUDAR, JJ.J

          Kerala General Sales Tax Act, 1963 :

           S.9, Schedule III, Entry 7-Caristrap Rayon Cord Strapping-Sales tax
C   payable on-Assessee claiming exemption-Assessing Authority refusing
    claim-Writ petition by assessee agitating issue of manufacturing
    process-Held, authorities under the Act are more competent to deal with the
    issue involving intricate technical processes of manufacture and Court should
    direct writ petitioners to agitate their wievances before statutory authorities.

D          The respondents, sellers of Caristrap Rayon Cord Strapping,
    claimed exemption from taxation under the Kerala General Sales Tax Act,
    1963, on the ground that Entry 7 of Schedule III to the Act applied to the
    article. The Assessing Authority refused the claim. The respondents filed
    writ petitions before the High Court contending that refusal by the assess-
E ing authority of exemption under Entry 7 of Schedule III to the Act was
    arbitrary inasmuch as the Caristrap Rayon Cord Strapping was a fabric
    made purely from rayon yarns and the percentage of the bonding agent
    used for fabricating the said strapping was negligible. The Revenue con-
    tended that the writ petitions were not maintainable as the petitioners had
    not chosen to agitate the issue before the appropriate sales tax authorities
F . in appeal and revision; and that the issue involved in the case was of a
    technical nature and appropriate authorities to go into and appreciate
    such technical matters were the authorities provided for in the Act. The
    writ petitions were dismissed. The respondents filed appeals before the
    Division Bench of the High Court, which allowed the claim of the .respon-
G dents. Aggrieved, the Revenue filed the appeals.

          Allowing the appeals, this Court

          HELD : 1. Where technical matters or intricate technical processes
    are involved, and particularly when processes of manufacture have become
H   increasi~gly complicated, it is appropriate that the writ court should direct

                                          234
              ASSTI.COMMNR.OFSALESTAXv. P.KESAVAN &CO.                         235

     writ petitioners to agitate their grievances before statutory authorities who    A
     are more competent to deal with such matters and to assess the merits
     thereof. [237-E; G]

           1.2. In the instant case, the decision of the Division Bench of the High
     Court was given upon inadequate material. The High Court should not
     have entertained the writ petitions and should have directed the respon-         B
     dents to agitate their grievances before the authorities under the Kerala
     General Sales Tax Act, 1963. These authorities would have been in a better
     position to seek and appreciate the necessary evidence and determine
     whether or not the strapping sold by the respondents fell within the scope
     of Entry-7 of Schedule-III to the Act. [237-C-D]                                 C
           2. The respondents shall be at liberty to adopt appropriate proceed-
     ings under the Kerala General Sales Tax Act, 1963, to claim exemption for
     the said strapping for the relevant years. [238-A-B]

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1899-1.900                   D
     (NT) of 1976.

          From the Judgment and Order dated 10.11.75 of the Kerala High
     Court in W.A. Nos. 84-85 of 1974.

           A.S. Nambiar and M.A. Firoz for the Appellant.                             E

           S. Muralidhar for the Respondent.

           The following Order of the Court was delivered :

           The appeals, by certificate, arise upon the common judgment of a           F
     Division Bench of the Kerala High Court whereby writ petitions filed by
     the respondents were allowed.

           The respondents were sellers of Caristrap Rayon Cord Strapping.
     According to them, the said strapping was exempted from taxation under           G
     the Kerala General Sales Tax Act, 1963. They relied in this behalf upon


..
     Entry-7 of Schedule-III to the said Act. Schedule-III sets out the goods
     which are exempted from sales tax under section 9 of the said Act. Entry-7
     thereof reads thus :

              "Cotton fabrics, woolen fabrics and rayon or artificial silk fabrics    H
    236                  SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R.

A           as defined in Items Nos. 19, 21 and 22 respectively of the First
            Scheduled to the Central Excise and Salt Act, 1944."

    Item No. 22 of the First Schedule to the Central Excise and Salt Act, 1944,
    so far as it is relevant, read as follows :

B           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."


c purelyThe said strapping, according to the writ petitions, is a fabric made
         from rayon yarns. The rayon yarns are used with bonding agents in
    fabricating the said strapping. The percentage of the bonding agent used
    for fabricating the said strapping is negligible. A sample of the said
    strapping with its literature was annexed to the writ petitions. Upon this
    basis it was contended that the refusal by the assessing authority of
D   exemption under Entry-7 of Scheduled III of the said Act was erroneous.
    The appellants filed an affidavit to counter the averments in the writ
    petitions. They submitted that the writ petitions were not maintainable in
    that the writ petitioners had not chosen to agitate the issue before the
    appropriate sales tax authorities in appeal and revision. The counter also
    submitted that the said strapping was a different and distinct commercial
E   commodity and it was so understood in the commercial world and by
    persons using the same. The writ petitions were rejected by the learned
    single judge, who found that the requirements of Entry-7 of Schedule-III
    to the Act were not satisfied. The Division Bench allowed the appeals filed
    against his decision, observing that all articles produced and manufactured
F   by the use of rayon would be rayon fabrics. Before the learned single judge
    and the Division Bench the appellants, that is to say, the sales tax
    authorities, strenuously contended that technical matters were involved and
    that the appropriate authorities to go into and appreciate such technical
    matters were the authorities provided for in the said Act. Both the learned
G   single judge and the Division Bench negatived this contention.

          These appeals had come up earlier for hearing and the Bench of two
    learned judges came to the conclusion that they should be heard by a
    Bench of three judges in view of the fact that new techniques had been
    evolved for making fabric out of yarn and it might be inadvisable to confine
H   the weaving process to the wrap and woof method.
            ASSTI.COMMNR.OFSALESTAXv. P.KESAVAN &CO.                        237

          What has to be seen, having regard to Entry-7 of Schedule-III of the A
    said Act read with Item No. 22 of the First Schedule of the Central Excise
    and Salt Act, 1944, is whether the said strapping is a fabric, manufactured,
    either wholly or partly, from rayon. As aforestated, the only material placed
    by the respondents before the Court was the bare statement that the said
    strapping was made purely from rayon yarns and the percentage of bonding
                                                                                  B
    agent used in fabricating the said strapping was negligible. The brochure
    which was annexed to the writ petition is before us. It describes the various
    uses to which the said strapping can be put; it does not describe the process
    of manufacture or fabrication of the said strapping, the inputs therein and
    the percentage of the bonding agent used. The principal question is
    whether the said strapping is a fabric made from rayon yarn and no             c
    material was placed before the Court in the writ petition to show that it
    was. In view thereof, we think that the writ petitions ought not to have been
    entertained and the respondents ought to have been directed to agitate
    their grievances before the authorities under the Act. These authorities
    would have been in a better position to seek and appreciate the necessary D
    evidence and determine whether or not the said strapping was something
    that fell within the scope of Entry-7 of Schedule-III to the Act.

           Where technical matters are involved, and particularly when proces-
    ses of manufacture have become increasingly complicated, it is appropriate
    that the authorities best competent to deal with such matters should be        E
    allowed to do so. The learned single Judge was swayed by the fact that
    some time had already elapsed since the writ petition was admitted. Far
    less time had elapsed then than has elapsed now. The Division Bench cited
    judgments in support of the view that it was not necessary to refer the
    respondents to the authorities under the Act. It does not appear to have       p
    appreciated that regard must be had to the facts of each case. Where
    sufficient evidence is placed before the writ court for an unambiguous
    conclusion upon technical matters to be reached, those authorities might
    be apposite, but we must stress that where intricate technical processes are
    involved, it is proper that the writ court should direct writ petitioners to
    agitate their grievances before statutory authorities who are more com-        G
    petent to assess the merits thereof.

-         We are satisfied that the decision of the Division Bench was given
    upon inadequate material. This decision must be set aside and the respon-
    dents relegated to such remedy as they may have under the provisions of H
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    238                   SUPREME COURT REPORTS [1995] SUPP. 5 S.C.R.

A   the said Act.

           The appeals are allowed. The judgment and order under appeal is
    set aside. The respondents shall be at liberty to adopt appropriate proceed-
    ings under the Kerala General Sales Tax Act, 1963, to claim exemption for
    the said strapping for the years 1970-71 and 1971-72. If the appropriate
B   proceedings are adopted by 1st January, 1996, the same shall be decided
    without taking the aspect of limitation into account. There shall be no order
    as to costs.

    R.P.                                                       Appeals allowed.