Cotton yarn classification: blended yarn with limited staple fibre remains declared goods, and State entries cannot override Parliament.

Cotton yarn blended with staple fibre up to 16 2/3 per cent by weight retained its commercial identity as cotton yarn because a small admixture did not change the essential character of the product. On that basis, it continued to fall within section 14(ii-b) of the Central Sales Tax Act, 1956 and entry 3 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. A State entry could not treat such goods as non-declared goods or displace the restrictions in section 15 of the Central Sales Tax Act, 1956, since declared-goods status under Parliament's scheme remained controlling.

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Issues: (i) Whether cotton yarn blended with staple fibre up to 16 2/3 per cent by weight remains cotton yarn within section 14(ii-b) of the Central Sales Tax Act, 1956 and entry 3 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. (ii) Whether entry 18A of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 could treat such blended yarn as non-declared goods and thereby displace the restrictions under section 15 of the Central Sales Tax Act, 1956.

Issue (i): Whether cotton yarn blended with staple fibre up to 16 2/3 per cent by weight remains cotton yarn within section 14(ii-b) of the Central Sales Tax Act, 1956 and entry 3 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Cotton yarn was not defined in either Act, and the Court read the expression in its commercial setting, supported by the Control Orders governing cotton textiles. Those orders recognised cotton yarn manufactured wholly from cotton or partly from cotton with other material where cotton remained predominant, and the statutory control regime itself compelled a minimum blend of staple fibre in manufacture. Relying on earlier binding authority and allied decisions on commodity description, the Court held that small admixture of staple fibre did not alter the essential identity of the product. The blended yarn in question retained its character as cotton yarn.

Conclusion: The answer is in the affirmative. Cotton yarn blended with staple fibre up to 16 2/3 per cent by weight is cotton yarn within section 14(ii-b) of the Central Sales Tax Act, 1956.

Issue (ii): Whether entry 18A of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 could treat such blended yarn as non-declared goods and thereby displace the restrictions under section 15 of the Central Sales Tax Act, 1956.

Analysis: Once the goods continued to fall within section 14(ii-b), they remained declared goods for the purposes of article 286(3) of the Constitution of India. The Court held that a State entry could not unilaterally override the parliamentary declaration or the statutory restrictions governing declared goods. Any change in the status of the commodity would require appropriate amendment by Parliament to the Central Sales Tax Act, 1956. Accordingly, entry 18A could not take away the declared-goods character or the statutory safeguards attached to it.

Conclusion: The State entry could not alter the declared-goods status, and section 15 of the Central Sales Tax Act, 1956 continued to govern the levy.

Final Conclusion: The assessments and reopening proceedings were to be dealt with on the footing that blended cotton yarn of the stated percentage remained declared goods, and the petitions and tax revision were allowed accordingly.

Ratio Decidendi: Where a commodity retains its essential commercial identity despite a small compulsory admixture, a State taxing entry cannot convert declared goods into non-declared goods so as to avoid the restrictions imposed by Parliament.

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