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TMI Blog1993 (3) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... und in the Second Schedule from the very beginning of the Act, though its words were slightly modified from time to time. Under the Act tax is levied on the sale of the goods mentioned in the Second Schedule, at the point of sale. Initially entry 24 read as "all kinds of mill yarn (other than cotton yarn and sewing thread and filature silk)". This was amended with effect from January 1, 1978 to read as follows: "All kinds of mill yarn excluding cotton yarn and filature silk." This was further amended with effect from April 1, 1984 to read as follows: "All kinds of mill yarn excluding cotton yarn, spun silk yarn and filature silk." With effect from April 1, 1988, the Second Schedule was restructured and the relevant entry was in entry 8 of Part M and it is as follows: "Mill yarn (all kinds) excluding cotton yarn, spun silk yarn, filature silk and those falling under any other entry." Entry 147 inserted with effect from April 1, 1982, was as follows "All kinds of man-made or synthetic staple fibres or fibres or filament yarn." Subsequently this became entry 2 of Part M to read as: "Man-made or synthetic staple fibres, fibre yarn or filament yarn (all kinds)." Of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding in which textile yarns are spun, woven or knit. (2) A business concern engaged in the manufacture of textiles." This meaning is relied on to contend that whatever is produced or spun in a building will be mill yarn or mill-made. At page 682, the expression "yarn" is explained thus: "Yarn: A continuous strand of textile fibers falling into two basic classes Spun yarn or continuous filament yarn. Spun yarn is an assemblage of relatively short fibers while continuous filament yarn is a grouping of virtually endless parallel continuous filaments. Yarn is the basic material which is made into fabric, thread, twine or cable. It can be woven, knitted, crocheted, tatted, netted, braided, etc., depending on the result desired and the character of the yarn. It can be a single or ply yarn. Spun yarns include cotton, woollen, worsted, the various man-made staples, silk, linen, jute, hemp, etc. Continuous filament yarns are forms of rayon, acetate, nylon and other synthetic textiles. With virtually all spun yarn, except those made on the woollen system, the objective is to have the fibers well distributed, even and parallel. In the woollen system the fibers are in a more or l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red of the shorter staple fibers, such as wool, cotton, man-made fiber staple. Yarns made of filaments are usually smoother than yarns made of staple. Filament yarn: A man-made fiber yarn made of continuous parallel filaments. Usually a fine, smooth yarn." The meaning of the word "man-made fibers" found at page 372 is as follows: "Man-made fibers: The overall generic term used in the U.S. and elsewhere to include those filaments (fibers) that are manufactured as opposed to those fibers that grow in nature (natural). Classifications: I. Cellulosic (derived from plant cellulose): rayon, acetate and triacetate. II. Non-cellulosic (chemical synthesis-synthetics): A. General purpose fibers: nylon, acrylic, modacrylic, polyester. B. Special purpose fibers: glass, aramid, novoloid, olefin, saran, rubber, anidex, metallic, vinyon, azlon, lastrile, nytril, vinal." The meaning of the term "spun yarn" is given at page 581, thus: "Spun yarn: A nautical term for two or three strand rope made of long tow hemp, loosely twisted, and tarred to prevent it from coming apart. The strands are twisted to the right, the rope itself to the left." The meaning of the term "fiber" is given at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow temperature. When the solution has ripened, it is pumped to spinning machines and forced through spinnerets to form filaments. The cuprammonium process is a method of dissolving cotton cellulose in a copper-ammonia solution. A special spinning process produces yarns of ultrafine denier, or weight. The acetate process changes the properties of cellulose by treating it in acetic anhydride and acetic acid, with sulfuric acid. The result is cellulose acetate, which is then dissolved in acetone to form a syrup-like solution. Spinning: All rayon-making centers about the spinneret, which contains a plate with tiny holes. Pumps force the cellulose through these holes. The thread like cellulose then flows into a chemical bath that hardens the liquid into threads. The threads are twisted together to form rayon yarn. The yarns are woven into fabrics that look like cotton, wool, or spun silk." The World Book Encyclopaedia, Volume 7, page 87 refers to "fiber". There are natural fibers and manufactured fibers. Natural fibers comprise of plant fibers and animal fibers. The relevant extract is given below: "Natural fibers: Natural fibers are obtained mainly from plants and animals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fibers, as well as the regenerated fiber acetate, are thermoplastic (softened by heat). Manufacturers are able to shape these fibers at high temperatures, adding such features as pleats and creases. These fibers also will melt if touched with too hot an iron. The most widely used kinds of synthetic fibers are (1) nylon, or polyamide fibers, (2) polyester fibers, (3) acrylic fibers, and (4) olefin fibers. Nylon fibers, or polyamide fibers, were the first synthetic fibers. They are light weight and strong and are widely used in carpets, hosiery, ropes, and tires. Polyester fibers.....omitted here. Acrylic fibers, including acrilan, creslan, and orlon, are soft and durable. A number of acrylic yarns resemble wool and are used in clothing, especially sweaters. Many artificial furs also are made from acrylic fibers." The process of manufacturing rayon yarn and/or nylon yarn involves the process of filamenting. It is the pumping of the relevant solution and forcing them through spinnerets to form filaments, that result in the formation of these yarns. Therefore they can be safely called filament yarns. In the case of acrylic yarn the position seems to be different though the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mill are to be considered only under entry 24 having regard to the clear language of the said entry. In fact, till entry 147 was inserted, all these goods were taxed under entry 24. During the period in question entry 24 did not contain the exclusionary words, "excluding those falling under any other entry". These exclusionary words are now found after April 1, 1988. The contention of Mr. Gandhi is quite attractive and one is tempted to apply the proposition stated by the learned counsel while construing this fiscal legislation. However, we are not inclined to accept the said proposition since it would result in rendering entry 147 otiose to some extent. In the year 1982, the Legislature introduced entry 147 and brought filament yarn under the said entry. In the absence of a clear ambiguity the court cannot ignore the effect of a provision introduced by legislation, even if it is a fiscal legislation. Due effect shall have to be given to the word "filament yarn" found in entry 147. Entries 24 and 147 shall have to be read together harmoniously so that both could operate, without doing any violence to the language employed in each of the entries. The purpose behind entry 147 seems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court observed thus: ".............If the language is plain, the fact that the consequence of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision. It is for the Legislature to step in and remove the absurdity. On the other hand, if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted." In the instant case before us we have construed the two competing entries and our view is that it is possible to read and give effect to both the entries, whereunder filament yarn could be taxed under entry 147. To the same effect is the decision of the Kerala High Court in Safari Industries (India) Private Ltd. v. State of Kerala [1989] 72 STC 264. Mr. Gandhi then relied on a Bench decision of this Court in Bharat Textile and Proofing Industries v. State of Karnataka [1988] 71 STC 10. Entry 75 of the Second Schedule refers to tarpaulin. Entry 8A of the Fifth Schedule to the Act refers to cotton textiles. The goods referred in the Fifth Schedule were excluded from taxation. The court held that tarpaulin also is a cotton textile and therefore Fifth Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conflict with one another, an attempt must be made to construe them harmoniously and not to treat them as repugnant to each other. " (Emphasis supplied). Kishinchand Chellaram v. Joint Commercial Tax Officer [1968] 21 STC 367 is a decision of the Madras High Court where there is a discussion about the nylon and similar other yarns. The State of Tamil Nadu v. Polyweb Private Ltd. [1982] 51 STC 364 is another decision of the Madras High Court wherein concept of "artificial silk fabrics" was considered. In Chiranjit Lal Anand v. State of Assam [1985] 60 STC 89 the Supreme Court pointed out that in the absence of any definition being given in the taxing enactment the meaning of the term in common parlance or commercial parlance has to be adopted. The decision of the Allahabad High Court in Commissioner, Sales Tax v. Bareilly Rope Stores [1988] 69 STC 241 pertains to coir yarn. Mr. Gandhi contended that, in these cases the assessing authorities erred in invoking section 12A of the Act. The said provision provides for assessing an escaped turnover. In these cases the entire turnovers were before the assessing authorities even at the first instance. The assessing authority levied tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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