Cotton sewing thread treated as cotton yarn for sales tax, attracting the lower special rate rather than the general rate.

Cotton sewing thread was treated as cotton yarn for sales tax classification under the Orissa Sales Tax Act, 1947, because the Court followed its earlier Division Bench view and the clarification referred to in the judgment. On that construction, turnover from sewing thread attracted the special rate applicable to cotton yarn rather than the general rate for goods without a prescribed special rate, so the Revenue's contention for higher taxation failed.

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Issues: Whether cotton sewing thread is to be treated as cotton yarn for the purpose of sales tax, and consequently taxed at the rate applicable to cotton yarn under section 5 of the Orissa Sales Tax Act, 1947, or as a separate taxable commodity at the higher general rate.

Analysis: The Court adopted its earlier Division Bench view and the clarification referred to in the judgment, holding that sewing thread falls within the description of cotton yarn. On that classification, the turnover of sewing thread attracts the rate prescribed for cotton yarn and not the general rate applicable to goods for which no special rate is prescribed.

Conclusion: Sewing thread is cotton yarn and is liable to tax at 2 per cent, not 5 per cent; the reference was answered against the Revenue.

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