Cotton fabrics classification: cut pieces sold as rags or chindhis remained cotton fabrics for sales tax purposes.

Cut pieces of cotton cloth sold as rags or chindhis remained within the expression "cotton fabrics" in entry 15 of Schedule A to the Bombay Sales Tax Act, 1959, because the statutory meaning of cotton fabrics covered fabrics manufactured wholly or partly from cotton. Their irregular shape, sub-standard condition, or the fact that buyers used them as raw material for paper did not change their commercial description. The surrounding excise treatment of damaged cotton fabrics as chindhis, rags and fents supported that reading. As a result, such goods were outside the residuary entry 22 of Schedule E and were treated as cotton fabrics for sales tax purposes.

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Issues: Whether rags and chindhis, being cut pieces of cotton cloth sold in irregular shapes and sizes and used as raw material for paper manufacture, fall within the expression "cotton fabrics" in entry 15 of Schedule A to the Bombay Sales Tax Act, 1959.

Analysis: The expression "cotton fabrics" in the relevant entry was to be understood by reference to its statutory definition in item No. 12, later item No. 19, of the First Schedule to the Central Excises and Salt Act, 1944. That definition covers all varieties of fabrics manufactured wholly or partly from cotton, and the inclusion of specific articles such as dhoties, sarees and similar goods showed that cut pieces of cloth could still remain within the description of cotton fabrics. The character of the goods did not change merely because they were sold in small or irregular pieces or because purchasers used them as raw material for paper. The surrounding excise notification treating damaged or sub-standard cotton fabrics as chindhis, rags and fents also supported the understanding that such goods remained cotton fabrics. The use to which a purchaser put the goods could not govern their description for sales tax purposes.

Conclusion: Rags and chindhis are covered by the expression "cotton fabrics" in entry 15 of Schedule A to the Bombay Sales Tax Act, 1959, and are not assessable under the residuary entry 22 of Schedule E. The reference was answered in the negative, in favour of the assessee.

Ratio Decidendi: Cut pieces of cotton cloth do not cease to be cotton fabrics merely because they are sold in irregular forms or are intended by the purchaser for a use other than clothing or covering.

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