Cotton fabric exemption prevails for woven patta; later beltings notification does not defeat an existing tax relief.

A woven article made from 100% cotton yarn remains cotton fabric in common parlance even when used in industrial mills, because its character depends on its composition and form, not its end use; the patta therefore fell within the cotton fabrics exemption. An existing exemption cannot be displaced by a later notification classifying beltings of all kinds unless the exemption is expressly withdrawn or amended; the later beltings entry did not override the earlier relief for cotton fabrics. The note states that tax liability must rest on express legislative or notification language, and the assessee continued to receive the exemption.

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Issues: (i) whether the product manufactured as patta was cotton fabrics within the meaning of the exemption notifications under the U.P. Sales Tax Act; (ii) whether the later notification covering beltings of all kinds displaced the earlier exemption available to cotton fabrics for U.P. sales and inter-State sales.

Issue (i): whether the product manufactured as patta was cotton fabrics within the meaning of the exemption notifications under the U.P. Sales Tax Act.

Analysis: The product was found to be a woven article manufactured from 100 per cent cotton yarn and used in oil mills, dal mills and rice mills without further processing after leaving the loom. Cotton fabric was not defined in the Act, so the expression had to be understood in common parlance. A woven fabric made from cotton yarn remains cotton textile irrespective of its industrial use, and the character of the product does not depend on the purpose for which it is put to use.

Conclusion: The patta manufactured by the assessee was cotton fabrics and fell within the exemption.

Issue (ii): whether the later notification covering beltings of all kinds displaced the earlier exemption available to cotton fabrics for U.P. sales and inter-State sales.

Analysis: The earlier exemption notifications remained in force and were not withdrawn. A later specific classification for beltings could not, by itself, take away an exemption already granted under the exemption power unless the general exemption was amended or withdrawn. Taxing liability must be express, and where the exemption continued, the department could not rely on the later notification to negate it.

Conclusion: The later beltings notification did not override the exemption, and the assessee remained entitled to the benefit.

Final Conclusion: The revision failed because the goods were cotton fabrics and the existing exemption was not displaced by the later entry for beltings of all kinds.

Ratio Decidendi: A product woven from cotton yarn is cotton fabric in common parlance, and an existing exemption cannot be defeated by a later classification notification unless the exemption itself is expressly withdrawn or amended.

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