Manufacture of surgical cotton and revisional power distinct from reassessment limitation under sales tax law

Processing raw cotton through cleaning, boiling, bleaching, drying, opening, carding, compressing, cutting and packing produces surgical cotton, a commercially distinct commodity with a different name, character and use. It is therefore manufacture, and the product does not remain cotton in its unmanufactured state or continue to fall within the declared goods entry for cotton under the sales tax laws. The commentary also distinguishes reassessment under section 11-A from revision under section 21(1) of the Punjab Act: the former is subject to limitation for fresh factual information, while the latter is a broader revisional power concerning legality or propriety. A later Tribunal decision does not constitute fresh information for section 11-A and does not bar revision under section 21(1).

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Issues: (i) Whether surgical cotton, after manufacture, remains cotton in its unmanufactured state and is covered by the declared goods entry for cotton under the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. (ii) Whether a Tribunal decision constituted fresh information so as to attract reassessment under section 11-A of the Punjab General Sales Tax Act, 1948 and restrict the revisional power under section 21(1) of that Act.

Issue (i): Whether surgical cotton, after manufacture, remains cotton in its unmanufactured state and is covered by the declared goods entry for cotton under the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956.

Analysis: Cotton is declared goods only in its unmanufactured state under section 14 of the Central Sales Tax Act, 1956, and tax on declared goods is controlled by section 15. The material showed that raw cotton undergoes a series of processes such as cleaning, boiling, bleaching, drying, opening, carding, compressing, cutting and packing, resulting in an article used for medical purposes and known in commerce as surgical cotton. The process brings into existence a commercially distinct commodity having a different name, character and use from raw cotton. Accordingly, the product is not merely cleaned cotton but a manufactured article.

Conclusion: The issue is answered against the assessee and in favour of the Revenue. Surgical cotton is not cotton in its unmanufactured state and is not covered by the declared goods entry for cotton.

Issue (ii): Whether a Tribunal decision constituted fresh information so as to attract reassessment under section 11-A of the Punjab General Sales Tax Act, 1948 and restrict the revisional power under section 21(1) of that Act.

Analysis: The revisional power under section 21(1) is distinct from reassessment under section 11-A. Section 11-A prescribes a limitation for reassessment by the Assessing Authority, whereas section 21(1) confers plenary revisional power on the Commissioner to examine legality or propriety at any time. A later judicial pronouncement does not supply fresh factual information for section 11-A; it only clarifies the correct legal position. The limitation under section 11-A therefore does not control revision under section 21(1).

Conclusion: The issue is answered against the assessee and in favour of the Revenue. The Tribunal decision did not bar exercise of revisional power under section 21(1), and section 11-A limitation was inapplicable.

Final Conclusion: The references were answered in favour of the Revenue, holding that surgical cotton is a manufactured commodity distinct from unmanufactured cotton and that the revisional assessment under the Punjab Act was not barred by the limitation applicable to reassessment.

Ratio Decidendi: Where processing produces a commercially distinct article with a different name, character and use, the result is manufacture and the original declared goods description does not continue to apply; separate revisional power is not curtailed by the reassessment limitation unless the statute expressly so provides.

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