Cotton yarn character preserved in sewing thread, keeping it as declared goods and preventing general goods taxation.

Sewing thread retains the character of cotton yarn for sales tax purposes where the commodity is merely processed, coloured, spooled and sold as sewing thread. Earlier binding decisions held that these steps do not alter its essential character, so it continues to qualify as declared goods under the Tamil Nadu General Sales Tax Act, 1959. The Tribunal's contrary treatment of the goods as general goods was rejected because the addition of colour and processing did not change the nature of the product. The assessee succeeded, and sewing thread could not be taxed as non-declared general goods.

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Issues: Whether sewing thread retains the character of cotton yarn and is to be treated as declared goods for tax purposes under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The Court noted that the issue had already been decided in earlier binding decisions holding that sewing thread is cotton yarn and does not lose that character merely because it is processed, coloured, put on spools, or sold for use as sewing thread. The Tribunal had ignored those decisions and had treated the goods as general goods, even though the assessee's activity was only purchase of cotton yarn, dyeing it, spooling it, and selling it as sewing thread. The addition of colour did not alter the essential character of the commodity.

Conclusion: Sewing thread remains cotton yarn, continues to be declared goods, and cannot be taxed as non-declared general goods. The assessee succeeded.

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