1991 (10) TMI 288 - HC - VAT and Sales Tax

Issues Involved:
1. Classification of nylon twine under the Tamil Nadu General Sales Tax Act, 1959.
2. Applicability of entry 18 of the First Schedule to the Act.
3. Determination of whether nylon twine should be taxed as a multi-point item under section 3(1) of the Act.
4. Revisions and writ petitions challenging the assessment orders.

Detailed Analysis:

1. Classification of Nylon Twine:
The primary issue is whether nylon twine, referred to as nylon fishnet twines or knitting yarn, falls under entry 18 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, or should be taxed as a multi-point item under section 3(1) of the Act. The Revenue contended that nylon twine is a multi-point item, while the assessees argued it falls under entry 18.

2. Applicability of Entry 18:
Entry 18 of the First Schedule reads: "Artificial silk yarn and staple fibre yarn. At the point of first sale in the State." The court examined whether nylon twine could be classified under this entry. It was established that the entries in the First Schedule should be interpreted according to their popular meaning or the meaning attached to them by those dealing in them, not their scientific or technical definitions. The court referenced several cases to support this principle, including Chennakesavalu v. Commissioner, Board of Revenue (C.T.) and State of Tamil Nadu v. Gopal Nair and Sons.

3. Yarn vs. Twine:
A crucial question was whether yarn is the same as twine. The court reviewed the nature and use of the goods dealt with by the assessees, noting that nylon twine is used to make nylon fishnet fabrics or webbings. The court referred to various dictionary definitions and concluded that yarn and twine are distinct. Yarn is a continuous strand used in weaving and knitting, while twine is a strong thread composed of smaller threads twisted together, used for binding or making nets.

4. Judicial Precedents:
The court analyzed several judicial precedents:
- Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Khader Kunhi Sons: The Kerala High Court held that twisted cotton fishing twine was not cotton yarn.
- Mohta Trading Co. v. Commissioner of Sales Tax: The Allahabad High Court held that cotton yarn on cops and cones is different from cotton sewing thread.
- Garware Nylons Ltd. v. Union of India: The Bombay High Court held that nylon twine is a specific type of nylon yarn. However, the court here disagreed with this conclusion, emphasizing that nylon twine and nylon yarn are commercially distinct.

5. Distinct Commercial Commodities:
The court found that nylon twine and nylon yarn are separate and distinct commercial commodities, each understood differently in the market. Nylon twine is manufactured specifically for making fishnets and cannot be reverted to yarn, making it distinct from nylon yarn.

6. Revisions and Writ Petitions:
The court addressed various revisions and writ petitions:
- T.C. Nos. 80 of 1989, 87 of 1989, 446 of 1989, and 391 of 1991: These appeals against the Joint Commissioner's orders were dismissed, upholding the classification of nylon twine as a multi-point item.
- Tax Case Nos. 2104 of 1984 and 1140 of 1987: These revision petitions in favor of the Revenue were dismissed.
- Tax Revision Cases Nos. 718 to 720 of 1986, 20 to 24 of 1991, 26 to 29 and 31 of 1991: These were allowed, setting aside the Tribunal's orders in favor of the assessees.
- Writ Petition Nos. 5146 to 5148 and 5176 of 1983: These petitions against notices for assessment years 1977-78 to 1980-81 were dismissed.
- Writ Petition No. 2497 of 1985 and Writ Petition No. 7625 of 1986: These petitions were dismissed, allowing the petitioners to seek remedies under the law.
- Writ Petition Nos. 2251, 2252, and 10258 of 1987: These petitions seeking to classify nylon twine under item 18 were dismissed.

Conclusion:
The court concluded that nylon twine does not fall under entry 18 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, and should be taxed as a multi-point item under section 3(1) of the Act. The assessees' appeals and petitions were dismissed, and the State's petitions were allowed.

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