1964 (8) TMI 61

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....the authorities of the Sales Tax Department assessed the assessee on the above said turnover. Rule 4-A(iv) states that in the case of cotton including kapas sold to a spinning mill in the State the tax shall be levied on the amount for which it is bought by it, and in the case of cotton which is exported outside the State the tax shall be levied from the dealer who buys it in the State and is the last dealer not exempt from taxation under section 3(3) on the amount for which the cotton is bought by him. After the Central Sales Tax Act came into force cotton was declared as declared goods liable only to a single point levy. In defining the declared goods the Central Legislature excluded cotton waste from the category of cotton. Corresponding....

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....ain. From the above decision the present revision is filed by the assessee. Learned counsel appearing for the assessee before us urged that "cotton waste" and "cotton" are terms very well-known in the cotton trade, and that one cannot be confused with the other for the purpose of levy of sales tax. Thus, in a standard work on "Cotton" by Brown published by the McGraw Hill Book Company, New York and London, at page 538, it is observed, "Cotton waste from spinning mills consists principally of short fibres that have been rejected by machines in the process of combing and carding; and also floor sweepings, odds and ends from weaving, and various scraps. According to the estimate by Lomax, 25 per cent. of the raw cotton that enters spinni....

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....handising of the product, storage, and the assumption of all the normal risks such as credits, claims, rejections and repudiations, and fluctuations of price and value. All these functions are assumed by the dealer when he takes the mill's waste contract." It will be clear, therefore, that in the trade, "cotton" and "cotton waste" have distinct meanings, and one commodity cannot be confused with the other. Cotton waste may be still cotton, in the sense that it is composed of cotton fibres, and that some part of it still possesses the capacity of being spun out, but the capacity for being used for spinning cannot alone form the sole test for cotton. Many materials which possess the quality of being staple fibre lend themselves to spinning....