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1987 (8) TMI 425 - HC - VAT and Sales Tax
Issues: Interpretation of tax notification regarding classification of coir yarn.
In this case, the main issue revolved around determining whether coir yarn falls under the classification specified in a tax notification. The assessee, dealing in coir yarn, was initially taxed at 7%, considered an unclassified item by the assessing officer. The Assistant Commissioner upheld this decision. However, the Tribunal ruled in favor of the assessee, citing the Coir Industry Act of 1953, which defines coir yarn as yarn obtained by spinning of coir. The Revenue challenged this decision, arguing that coir yarn does not meet the characteristics of yarn as defined by the Supreme Court. The Supreme Court had previously stated that yarn must be a spun strand primarily meant for use in weaving, knitting, or rope-making. The Revenue contended that coir yarn, being thin and used mainly for rope-making, does not qualify as yarn under the notification. Upon analysis, the judge disagreed with the Revenue's argument. The judge referenced the Supreme Court's definition of yarn, emphasizing that yarn must be a spun strand primarily meant for weaving, knitting, or rope-making. The judge noted that coir yarn meets this definition as it is a thin string used for rope-making and potentially weaving. The judge clarified that weaving, in the context of coir industry products like coir matting, encompasses the use of coir yarn for creating such products, not limited to traditional fabric weaving. The judge highlighted that coir yarn's use in making coir matting, a form of weaving, supports its classification as yarn under the notification. Ultimately, the judge concurred with the Tribunal's decision, affirming that coir yarn should be taxed as a classified item at the rate of 2% under the specified entry in the notification. The judge dismissed the Revenue's revision, upholding the classification of coir yarn as per the notification. The judge concluded the judgment by dismissing the petition and making no order as to costs.
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