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TMI Blog1996 (2) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... oses its basic character of cotton and can be termed as such being not cotton and as to whether cotton includes raw cotton, i.e., cotton in its natural or nearly natural form in the ginned or unginned state? (ii) Whether the order of the Tribunal rendered in 1976 forms a fresh material which debars the revising authority to exercise power under section 21(1) of the Act after the period of limitation under section 11-A of the Act?" Counsel for the parties are agreed that all these references on question No. (i) be disposed of together as the only question to be decided is as to whether surgical cotton is a commercially different commodity than the unmanufactured cotton. Question No. (ii) in G.S.T.R. Nos. 16 and 17 of 1982 would be dealt with separately in this very judgment. We are referring to the facts from G.S.T.R. No. 1 of 1986 as the counsel for the parties have referred to the facts from this reference petition. M/s. National Scientific Industries, Hisar (hereinafter referred to as "the assessee") is engaged in the manufacture of surgical cotton. It is registered both under the Haryana Act as well as under the Central Sales Tax Act, 1956 (hereinafter referred to as "th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had not at all changed its basic character of cotton and can be put to use for all purposes for which cotton is used. Department, being aggrieved against the order of the Tribunal, filed an application under section 42(1) of the Haryana Act for referring the aforesaid question of law to this Court for its opinion. Tribunal accepted the application filed by the department and referred the aforesaid question of law for the opinion of this Court. Before adverting to the contentions raised by the respective counsel for the parties, it would be useful to refer to the provisions of the statute. "Declared goods" are defined in section 2(c) of the Central Act to mean "goods declared under section 14 to be of special importance in inter-State trade or commerce". Section 14 of the Central Act contains the list of "declared goods". This section finds its support from article 286(3) of the Constitution of India. The said article authorises the Parliament to declare certain goods to be of special importance in inter-State trade or commerce and further subject them to such restrictions and conditions in regard to the system of levy, rates and other incidents of tax as it deems proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Small Scale Industries, Ministry of Industry, Government of India, of chemical, food, glass and ceramic industries to show what process of production undergoes for manufacturing the surgical cotton from the unmanufactured cotton. After opening the raw cotton in bale form, the same is loosened and dust and other particles are removed. The cotton is then sent to a kier where it is steam boiled for about 3-4 hours after adding chemicals such as caustic soda, soda ash, detergent, etc. This treatment removes much of the natural waxes and oils and softens and disintegrates any foreign matter that may remain after the cleaning operation. After the cotton is boiled, it is removed from the kier and taken to the tanks for washing. The washed cotton though absorbent is not of good colour. It is, therefore, bleached with chemicals such as hydrogen peroxide or sodium hypochlorite. The bleaching not only whitens the cotton but also improves its wetting properties and assists in disintegration of any remaining foreign materials. The bleached cotton is thoroughly washed again to remove the chemicals. A small amount of diluted sulphuric acid is also added to neutralise alkali excess. The cotton is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cotton after having been cleaned and packed and can be used as cotton for all purposes for which the cotton is used. In a number of decided cases, it has been held that "manufacturing" implies the making of a different article having a distinctive name, character or use, commercially different from the basic component, by physical labour or mechanical process. In State of Punjab v. Chandu Lal Kishori Lal and State of Punjab v. Krishna Cotton, Dal and Oil Factory [1970] 25 STC 52, the Supreme Court held that ginning process is a manufacturing process and ginned cotton is different from the unginned cotton. In this case, unmanufactured cotton, ginned or unginned, both are declared goods as per section 14 of the Central Act. In Babu Ram Jagdish Kumar and Co. v. State of Punjab (and other cases), [1979] 44 STC 159, it was held by their Lordships of the Supreme Court that rice and paddy are two different things and when paddy is dehusked and rice produced, there is a change in the identity of the goods. Although rice is produced out of paddy, it is not true to say that the paddy continued to be paddy even after dehusking. The word "manufacture" has been interpreted by their Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or nearly natural form in the ginned or unginned state, and not cotton which has been converted into specific different products after being subjected to various processes." Similar view has been taken by the Madras High Court in Sri Ram Products v. State of Tamil Nadu [1983] 52 STC 187. Now we deal with the various judgments cited before us by the counsel for the assessee, which in our view are not relevant or applicable to the facts and circumstances of the case. Reliance was placed by the counsel for the assessee on Tungabhadra Industries Limited v. Commercial Tax Officer, Kurnool [1960] 11 STC 827, where their Lordships of the Supreme Court had held that hydrogenated groundnut oil, after process of refinement, remains groundnut oil within the meaning of the Rule. The interpretation given by their Lordships was in the context of the Madras General Sales Tax Act, 1939, where the entry was "groundnut oil" and not "raw groundnut oil". It was held that hydrogenated oil was prepared by process of refinement of the groundnut oil and the same remains to be the groundnut oil for the purposes of the relevant entry in the Madras General Sales Tax Act. Relying upon another judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and in favour of the department. It is held that surgical cotton is not the same thing as raw cotton in its unmanufactured state because surgical cotton, after undergoing the manufacturing process, loses its basic character of cotton and cannot be termed as unmanufactured in the ginned or unginned state. Now, we take up question No. (ii) in G.S.T.R. Nos. 16 and 17 of 1982. Relevant facts pertaining to this question are that the Assessing Authority had treated the surgical cotton as unmanufactured cotton and levied the tax taking it to be a declared goods. Sales Tax Tribunal, Punjab, in another Appeal No. 91 of 1975-76 (State v. Kiran Surgical Sales Corporation, Ludhiana) (not pertaining to the assessee), decided on April 20, 1976, held that surgical cotton is produced by manufacturing process and as such cannot be termed as cotton in its unmanufactured state, which alone is covered by section 14(ii) of the Central Act. After the aforesaid judgment of the Tribunal, Commissioner of Sales Tax, exercising its suo motu powers under section 21(1) of the Act, initiated proceedings for revising the assessment already framed in the case of the assessee. It was maintained by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch judgment of this Court in Luthra Rubber Industries v. State of Punjab [1985] 59 STC 198. In Luthra Rubber Industries case [1985] 59 STC 198 (P H), after approving the reasoning of the learned single Judge in Asian Rubber and Plastic Industries case [1982] 50 STC 383 (P H) and after noticing the Full Bench judgment of this Court in Hari Chand Rattan Chand's case [1969] 24 STC 258, their Lordships repelled a similar contention raised by the counsel for the assessee and held that the decision of the Tribunal or the High Court cannot be termed or treated as information as envisaged under section 11-A of the Punjab Act, which may have come to the notice of the reviewing authority. It was held that the judgment of the Tribunal or the High Court would not provide any factual material, which was not on the file of the Assessing Authority. No new facts are put up before the authorities. It only brings true legal position to the notice of the revisional authority. Suo motu powers exercised by the revisional authority under section 21(1) of the Act, under the circumstances, would be justified and it cannot be held that the power could only be exercised under section 11-A of the Punjab A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity, been fixed in section 11-A. The conclusion, in my opinion, must be that the Legislature did not intend to fetter the power of the Commissioner under section 21 by any rule of limitation and, therefore, left it to the Commissioner's discretion to exercise his power at any time. Mr. Bhagirath Dass says that it is improbable that such power unlimited in time could have been entrusted to the Commissioner, but, I can find nothing improbable about it, and the argument that the Commissioner may decide to reopen a matter settled twenty or thirty years previously, does not lead anywhere. The power of revision mentioned in section 21 is altogether separate from and unconnected with the power of reassessment by an Assessing Authority under section 11-A of the East Punjab General Sales Tax Act. In my opinion, therefore, the learned single Judge was right in holding that the Additional Assistant Excise and Taxation Commissioner had authority to revise the previous orders made by the Assessing Authority in the present cases." The reasoning adopted by the Division Benches in Narain Singh Mohinder Singh case [1963] 14 STC 610 (P H) and the National Rayon Corporation Limited's case [1964] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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