Cotton sewing thread is distinct from cotton yarn and cannot claim resale treatment as declared goods.

Cotton sewing thread made from cotton yarn by dyeing, rewinding, packing and labelling was held to be a distinct commercial commodity and not cotton yarn. Reading the Bombay Sales Tax Act, 1959 with the relevant definitions and rule, the Court applied common parlance and trade parlance to hold that yarn and sewing thread are separate goods with different uses. Because the processed product no longer answered the description of declared goods as cotton yarn, the transaction was not treated as a resale of declared goods and did not attract the exemption claimed. The questions were answered in favour of the Revenue and against the assessee.

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Issues: Whether cotton sewing thread produced from cotton yarn by dyeing, rewinding, packing and labelling remains cotton yarn so as to amount to resale of declared goods and escape tax under the Bombay Sales Tax Act, 1959.

Analysis: The statutory scheme treated cotton yarn as declared goods under Schedule B, while cotton thread was separately specified in Schedule C. On a conjoint reading of section 7, the definitions of "resale" and "manufacture" in section 2, and rule 3(xviii) of the Bombay Sales Tax Rules, 1959, sales tax was payable on resale only if the goods continued to answer the description of cotton yarn. The Court held that cotton sewing thread is not the same commodity as cotton yarn. In common parlance and trade parlance they are distinct goods with different uses, and thread is a product made from yarn, not yarn itself. The processes applied by the assessee brought the goods out of the description of cotton yarn.

Conclusion: Cotton sewing thread is a distinct commercial commodity and does not constitute cotton yarn for the purpose of section 7. The questions referred were answered in favour of the Revenue and against the assessee.

Ratio Decidendi: Where the statute and commercial understanding treat yarn and sewing thread as distinct commodities, processing cotton yarn into sewing thread results in a different which is outside the description of declared goods as cotton yarn and is not a resale of the original yarn.

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