1985 (11) TMI 216 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of pachrangi dori under the Central Sales Tax Act.
2. Taxability of pachrangi dori at 2% as declared goods or at 7% as unclassified goods.

Detailed Analysis:

Issue 1: Classification of Pachrangi Dori
The primary question was whether pachrangi dori falls within the purview of section 14 of the Central Sales Tax Act, 1956, as a declared good. The court examined the nature of pachrangi dori, which is a bunch of cotton threads intertwined and braided, resembling a cord thinner than a string. The court considered various judicial precedents and concluded that pachrangi dori retains its identity as cotton yarn despite the processes of twisting, braiding, and intertwining. The court stated, "The mere act of twisting, braiding, colouring, dyeing, or bunching of cotton yarn into a single cord does not bring into existence a new commercial product." Therefore, pachrangi dori is classified as cotton yarn under section 14 of the Central Sales Tax Act.

Issue 2: Taxability of Pachrangi Dori
The second issue was whether pachrangi dori should be taxed at 2% as declared goods under section 14 of the Central Sales Tax Act read with section 15, or at the general rate of 7% for unclassified goods. The court examined the relevant tax provisions and previous judicial decisions. It was determined that since pachrangi dori is classified as cotton yarn, it falls under the declared goods category. The court noted, "The tax would be, therefore, 2 per cent during the relevant assessment periods." Thus, pachrangi dori should be taxed at the rate of 2% and not at the general rate of 7%.

Conclusion:
1. Pachrangi dori is not a cotton fabric and is therefore not exempted from tax under the Act.
2. Pachrangi dori is a cotton yarn covered by clause (iib) of section 14 of the Central Sales Tax Act, 1956, and is one of the goods declared to be of special importance. It would be, therefore, exigible to tax for the relevant period at 2 percent.
3. Pachrangi dori does not fall under the residuary item No. 19 of Table No. 17 of the rates structure issued by the State Government. As such it is not exigible to tax at the general rate of 7 percent meant for unclassified goods.

The court upheld the view taken by the Board of Revenue for Rajasthan and left the parties to bear their own costs.