Referential tax definition of cotton fabric kept bookbinding cloth within the entry despite dyeing, starching and calendering.

Where a sales tax entry adopts a statutory definition by reference, the incorporated definition must be read with its amendments, and cotton fabric does not lose that character merely because it has been dyed, starched and calendered. The processing did not alter the fabric's essential nature, and a different commercial or user description was not decisive. On that basis, bookbinding cloth continued to fall within the cotton fabric entry and was not taxable as a separate residuary commodity. The related notification issue was also answered in favour of the assessee, as the processed fabric qualified for the claimed exemption or concessional treatment.

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Issues: (i) Whether bookbinding cloth, produced by dyeing, starching and calendering cotton fabric, remained cotton fabric within the meaning of entry 37 of Schedule I to the Gujarat Sales Tax Act, 1969 read with item 19 of the First Schedule to the Central Excises and Salt Act, 1944. (ii) Whether the sale or purchase of bookbinding cloth fell within item 67 of the Government Notification issued under section 49 of the Gujarat Sales Tax Act, 1969.

Issue (i): Whether bookbinding cloth, produced by dyeing, starching and calendering cotton fabric, remained cotton fabric within the meaning of entry 37 of Schedule I to the Gujarat Sales Tax Act, 1969 read with item 19 of the First Schedule to the Central Excises and Salt Act, 1944.

Analysis: Entry 37 adopted the definition of cotton fabrics from the Central Excise law by reference, and therefore had to be read as a piece of referential legislation. Under item 19, cotton fabrics meant all varieties of fabrics manufactured wholly or partly from cotton, and the amended definition, read with section 2(f), continued to treat cotton fabrics subjected to processes such as dyeing and other similar processes as cotton fabrics. The processes of dyeing, starching and calendering did not alter the basic character of the fabric. The fact that the product had a special use or was known in commerce by a different name was not decisive where the statutory definition was wide enough to cover it.

Conclusion: Yes. Bookbinding cloth remained cotton fabric and was not taxable as a distinct residuary commodity on that basis.

Issue (ii): Whether the sale or purchase of bookbinding cloth fell within item 67 of the Government Notification issued under section 49 of the Gujarat Sales Tax Act, 1969.

Analysis: Item 67 covered cotton, rayon, artificial silk or woollen fabrics dyed, bleached or printed. The Tribunal had excluded bookbinding cloth on the footing that starching and calendering were not mentioned. In view of the conclusion that the product was cotton fabric under entry 37, the broader question of the notification was not necessary for the decision, though the issue was answered against the department.

Conclusion: Yes. The applicant was entitled to the benefit claimed under the notification item.

Final Conclusion: The reference was answered against the department and the assessee succeeded on the core classification question, with the processed fabric continuing to retain its character as cotton fabric under the referential sales tax entry.

Ratio Decidendi: Where a State taxing entry adopts a statutory definition by reference, the incorporated definition carries its later amendments, and a fabric expressly defined by statute does not cease to fall within that definition merely because it has undergone processes that leave its essential character intact or give it a different commercial or user description.

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