Predominance test keeps blended cotton yarn within tax exemption entry despite limited non-cotton content

Cotton yarn containing 10 per cent man-made staple fibre remained "cotton yarn" under entry 10 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957 for periods before 1 July 1985. Applying the predominance test, the Court treated the limited non-cotton content as insufficient to change the essential character of the commodity, particularly because the blend was introduced to meet requirements under the Cotton Textiles (Control) Order, 1948. The interpretation also aligned with the statutory treatment of cotton yarn as declared goods. The blended yarn therefore continued to fall within the cotton yarn entry, and the revision cases failed.

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Issues: Whether cotton yarn containing 10 per cent non-cotton content is "cotton yarn" within entry 10 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957 for the period prior to 1 July 1985.

Analysis: The relevant assessment years preceded the insertion of entry 165 in the First Schedule by the amending Act of 1985. Before that amendment, the question had to be answered on the wording of entry 10, which covered "cotton yarn" but excluded only cotton yarn waste. The yarn in question was cotton yarn with 10 per cent man-made staple fibre, introduced because of the statutory requirements under the Cotton Textiles (Control) Order, 1948. Applying the predominance test, the Court held that the presence of a limited non-cotton content did not alter the essential commodity character of the product. The construction also accorded with the object of treating cotton yarn as declared goods in the Third Schedule.

Conclusion: The blended yarn remained cotton yarn within entry 10 of the Third Schedule, and the revision cases failed.

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