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TMI Blog1995 (1) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... CY/54/81 dated July 3, 1981 and sold as 'cotton sewing thread' under invoice No. 959 dated July 14, 1981, does not change its basic characteristic and still remains yarn and no different commercial commodity comes into existence? 2.. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the 'cotton sewing thread' sold by the respondent is nothing but cotton yarn, and would attract no tax being 'resale' as defined under section 2(26) of the Bombay Sales Tax Act, 1959? 3.. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the 'cotton sewing thread' sold by the respondent under invoice No. 959 dated July 14, 1981, is nothing but cotton yarn specified in entry B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n yarn" and "cotton thread" having been regarded as two different commercial commodities by the Legislature itself, sale of "cotton thread" by the assessee would not amount to resale of "cotton yarn" within the meaning of section 2(26) of the Act. He therefore held that the activity of converting "cotton yarn" into "sewing thread" amounted to manufacture within the meaning of section 2(17) of the Act and hence the sales thereof would be subject to levy of tax under the Act. Aggrieved by the above order of the Commissioner, the assessee appealed to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Tribunal accepted the contention of the assessee that "cotton sewing thread" sold by the assessee was nothing but "cotton yarn". The Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the expression "cotton yarn" includes yarn in all shapes and colours. According to him, "cotton sewing thread " is nothing but a variety of "cotton yarn". He, therefore, submits that the Tribunal was right in holding that despite the cotton yarn purchased by the assessee being processed and rewound on paper tubes and wrapped with plastic and labelled and sold as "cotton sewing thread", it remained "cotton yarn". In support of the above contention, counsel relies on the decision of the Madras High Court in State of Tamil Nadu v. R.V. Krishniah Chetty and Sons [1994] 92 STC 262 and of the Orissa High Court in Srinivasa Distributing Agencies v. State of Orissa [1981] 48 STC 453. 4.. It is obvious from the rival submissions of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em which takes them out of the description thereof in that entry........." "Manufacture" has been defined in clause (17) of section 2 to mean "producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods:............." It, however, does not include such manufactures or manufacturing processes as may be prescribed. Rule 3 of the Bombay Sales Tax Rules, 1959 ("the Rules") prescribes the manufactures and manufacturing processes which shall not be included in "manufacture" for the purpose of clause (17) of section 2 of the Act. The process specified therein which is relevant for the present purpose is the one specified in clause (xviii) of rule 3 which is in the following terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd specifying the same as a separate item in entry 23 of Schedule C. In view of the above, it is difficult to accept the contention of the assessee that "cotton sewing thread" is "cotton yarn", for the purpose of section 7 of the Act. 6.. Moreover, in common parlance and commercial or trade parlance also, "cotton yarn" and "cotton sewing thread" are regarded as two different and distinct commodities. In the instant case, the yarn purchased by the assessee was converted into "sewing thread" by applying certain processes and sold as "sewing thread" under the label "Mongoose brand mercerised sewing thread". In the sale invoice, the goods sold by the assessee were described as "cotton sewing thread No. 60/200 metres coloured mongoose" and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. We are supported in our above conclusion by the decision of the Allahabad High Court in Mohta Trading Co. v. Commissioner of Sales Tax [1976] 38 STC 11 where it was held that "cotton yarn and cotton sewing thread are two distinct and well-known commodities. They are separate things in ordinary parlance. It cannot be said that they are the same thing. Even their user is distinct and separate. Thus in the commercial world when one asks for cotton yarn one would not be given cotton sewing thread or vice versa. It is, therefore, evident that cotton yarn and cotton sewing thread are two distinct and separate items in ordinary parlance. On the question whether cotton sewing thread retained its characteristic of its being cotton yarn the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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