2008 (9) TMI 905 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether cotton yarn and sewing thread are one and the same commodity for taxation purposes.

Detailed Analysis:
The High Court of Madras heard a revision filed by the Revenue against an order of the Sales Tax Appellate Tribunal. The main issue was whether cotton yarn and sewing thread should be considered the same commodity for taxation. The Tribunal had ruled in favor of treating them as the same based on a previous court decision. However, the Revenue argued that sewing thread is not declared goods and falls outside the relevant tax entry. The Division Bench of the High Court had previously considered a similar case and held that sewing thread retains its identity as cotton yarn even when used for sewing purposes.

In the previous judgments, the High Court had emphasized that sewing thread does not lose its character as cotton yarn, even when sold for sewing purposes. The court stated that adding color to the yarn does not change its fundamental nature as cotton yarn. The Tribunal's decision to tax sewing thread separately was deemed erroneous by the High Court, as it contradicted established legal principles. Therefore, the High Court set aside the Tribunal's order and allowed the writ petition filed by the assessee.

The High Court concluded that the issue at hand had already been settled in previous judgments, affirming that cotton thread manufactured by the assessee remains a declared good and is essentially the same as cotton yarn. As a result, the tax case was dismissed based on the established legal principles and precedents.