TaxTMI 
TaxTMI 
1981 (6) TMI 113
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....rlier sewing thread was contended to be cotton yarn so much so that according to the assessee he is not liable to tax on the sales of sewing thread as the sale was at the second point in the State and not the first and the sale at the first point had been taxed. If the item which was sold is not shown to be cotton yarn naturally it will be liable to tax at every point of sale and, therefore, the sales tax authorities would be right in assessing tax on the turnover of sewing thread. Item 4(ii) in the Second Schedule of the General Sales Tax Act is "cotton yarn, other than handspun yarn, but not including cotton yarn waste". The rate of tax at the point of first sale in the year 1972-73 was 1 per cent and the general rate of tax during that year was 3 1/2 per cent. Cotton yarn, according to the revision petitioner, includes not only spun yarn as such but also yarn converted into thread or into other forms, for, according to the petitioner, the goods even then essentially retain their character as cotton yarn and therefore would fall within item 4(ii) of the Second Schedule. 3.. Cotton yarn is no doubt used for the purpose of manufacturing sewing thread. Sewing thread is sold for p....
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....i Sons[1976] 37 S.T.C. 227., the question this Court was called upon to consider was whether "twisted cotton fishing twine" was the same as cotton yarn within the meaning of item 4(ii) of the Second Schedule of the Act. This Court noticed the decisions laying down the guidelines and in that background observed thus: "When cotton yarn is understood as the thin thread spun out of cotton which is utilised for the purpose of making twine, cord, rope, etc., would it be possible to call the particular article-the article is not before us now-cotton yarn. If the common man would not understand the substance sold by the dealer in these cases as 'cotton yarn' and if in the commercial world it is not known or could not be known as 'cotton yarn' the article would not fall under item No. 4(ii) of the Second Schedule to the Kerala General Sales Tax Act, 1963." This view is consistent with the view expressed by the High Court of Allahabad in Mohta Trading Co. v. Commissioner of Sales Tax[1976] 38 S.T.C. 11., though earlier in Commissioner, Sales Tax v. Ballabh Das[1970] 25 S.T.C. 372. that court had indicated a contrary view. The principle of interpreting entries in the schedule bein....
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....vernment later sewing thread was not being taxed as cotton yarn. It is said that the plea of estoppel succeeded under such circumstances and therefore it is not open, in the case before us, to the department to turn round and say that sewing thread also can be taxed otherwise than as cotton yarn. The plea is essentially that the State Government having conceded the stand earlier that sewing thread will fall within the scope of the term "cotton yarn" in item 4(ii) of the Second Schedule they will be estopped from taking a different stand now and such estoppel based upon holding out a promise is a principle recognised by the Supreme Court as indicated in the decision in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.[1979] 44 S.T.C. 42 (S.C.). We need not go into the question in this case whether such a rule of estoppel will operate against the provisions of a statute and whether holding out by any officer or even the Government in regard to the scope of operation of a taxing statute would estop the assessing authority from taxing in accordance with law. In this case we need go into that question only if we find that there is any scope for applying the rule of promissory estop....
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....icular representation of the Government or promise of the Government the assessee altered his position by acting on the faith of it. So long as there is no such plea the question of promissory estoppel does not arise for consideration. 10.. We therefore hold against the assessee on the question of the claim to non-liability to tax in regard to sales of sewing thread. 11.. There are three more items of goods the turnovers in regard to which are said to be taxable. One of them is silk yarn. Silk yarn is not cotton yarn, though according to the counsel for the petitioner even silk yarn must be taken to be cotton yarn. This contention has only to be stated to be rejected. 12.. The other two items are lace cloth and woven lace. Though in the revision petition a contention is taken up by the revision petitioner that these must be taken as cotton yarn the learned counsel for the revision petitioner does not pursue that contention. According to him, lace cloth and woven lace must be understood as cotton fabrics which is an item falling within item 7 in the Third Schedule, "cotton fabrics". The Third Schedule exempts certain goods from tax under section 9 and one of them is cotton fab....