TaxTMI 
TaxTMI 
1981 (5) TMI 114
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....ent made in the U.P. Sales Tax Act, this reference was converted into a revision under sub-section (6-A) of section 11. It came up for hearing before a learned Judge of this Court who, being of the opinion that there is conflict in two decisions of this Court, viz., Commissioner of Sales Tax v. Mulri Dhar Shiv Kumar (page 44 infra) 1979 UPTC 1234 and British India Corporation Ltd. v. Commissioner of Sales Tax (page 47 infra) 1980 UPTC 1078, referred the case to a larger Bench. That is how the revision has come up before us. In order to appreciate the controversy involved in the case and the respective submissions made before us, it would be necessary to refer to the facts giving rise to this revision in some detail. M/s. Prem Hosiery Stores, Kanpur, the assessee was a wholesale dealer in cotton hosiery, umbrella cloth, woollen and nylon hosiery. For the assessment year 1971-72 it disclosed its gross turnover at Rs. 7,63,859 and net at Rs. 7,27,462.35. For various reasons the accounts and the disclosed turnover were rejected by the assessing authority. Apart from that on scrutiny of the details of purchases the assessing authority found that the assessee had purchased handloom go....
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....t tax. It was hence contended by the learned standing counsel, Sri A.P. Misra, that the conflict in the two decisions of this Court, viz., Murli Dhar Shiv Kumar (page 44 infra) 1979 UPTC 1234 and British India Corporation (page 47 infra) 1980 UPTC 1078 need not be gone into. After hearing the counsel for the parties we find merit in this contention. In brief, we may refer to these decisions with a view to show that it is not necessary in the present case to resolve the conflict between them. In Verma Hosiery Stores [1972] 30 STC 606; 1972 UPTC 258, the assessee carried on business in hosiery goods of all kinds and the dispute in the reference before this Court related to the rate of tax applicable to the turnover of mufflers and topas. The assessee was manufacturing those articles and the process involved was that of knitting of cotton yam and not of weaving. After referring to the meaning given to the word "garments" in Webster's Dictionary it was observed that topas and mufflers are knitted garments and as such would fall in the category of hosiery goods. Following the decision given by this Court in Ram Lal & Brothers v. Commissioner of Sales Tax (S.T.R. No. 284 of 1964 decided ....
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....On this view, sweaters, cardigans and pullovers, which are machine knittted, were treated as hosiery goods liable to be taxed as such. In the instant case we are concerned with the question of taxability of mufflers made out of woven cloth and not mufflers which ate machine knitted and the controversy after the decision of the appellate authority, as confirmed by the revising authority, is as to whether such mufflers are liable to be treated as woollen goods or as handloom cloth. The controversy is not as to whether they can be treated as hosiery goods and, therefore, we agree that the latter part of question No. (2) need not be gone into if it is found that these mufflers are woollen goods and not handloom cloth and if we find that it is so, it would not be necessary to resolve the conflict between the aforesaid two decisions. It admits of no doubt that hosiery products generally are knitted articles and they are different from woven articles, vide Jaipur Hosiery Mills (P.) Ltd. v. State of Rajasthan [1970] 26 STC 341 (SC). The mufflers involved in the instant case being woven articles, therefore, are not hosiery products. Section 4 of the Act provides that no tax shall be paya....
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....d be seen that the controversy is confined to this aspect only. In other words, what is required to be seen is as to whether mufflers made out of woollen cloth are to be treated as cloth itself or are liable to be treated as clothes. In Lakshmiratan Cotton Mills Company Limited v. Sales Tax Officer [1962] 13 STC 1031, a question arose before this Court as to whether there is any difference between "cloth" and "clothes". The view taken was that there is essential difference between "cloth" and "clothes" and it is that whereas "cloth" is what comes straight from the weaving of textile factory, "clothes" are articles after cloth has been converted by cutting and stitching and something having been done to "cloth" either by human or machine agency to make that "cloth" into a garment or wearing apparel. Neither the size in which a particular cloth is manufactured nor its adaptability for a particular use, nor the fact that it can straightaway be used as a garment can make cloth manufactured by a mill cease to be "cloth". Where after cloth has been manufactured, something more is done to it by some other agency which makes it into a different kind of product or makes its adaptable for a ....
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....esented the cloth manufactured by the assessee as such and the view taken was that the size of a particular cloth or its adaptability for a particular use or the fact that it can straightaway be used as a garment would not mean that the cloth so manufactured by a mill ceases to be cloth. In the present case, in the absence of any material on the record to show that the woven handloom scarfs purchased by the assessee had been subjected to any process either by human or machine agency it is not possible to treat them as clothes. There is also nothing on the record to show that these scarfs were not. manufactured by the mills as such and simply because the cloth was of a particular size or could be adapted for a particular use would not mean that the cloth so manufactured ceased to be a cloth. In Porritts & Spencer (Asia) Ltd. [1978] 42 STC 433 (SC) the word "textiles" occurring in item No. 30 of Schedule B to the Punjab General Sales Tax Act, 1948, had come up for consideration. In that case the assessee made dryer felts out of cotton or woollen yarn by the process of weaving according to the warp and woof pattern and it was held that the word "textiles" may be interpreted accordi....
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....year, the assessee purchased mufflers from Dhariwal Mills on which additional excise duty had been paid. Apart from these mufflers, it also purchased mufflers made on handloom. The assessee claimed exemption on this turnover on the basis of Notification No. ST-4485/X dated 14th December, 1957, in respect of mufflers purchased from Dhariwal Mills and under Notification No. ST-4064/X dated 25th November, 1958, in respect of mufflers made on handloom. The appellate authority upheld the claim and also the turnover. In this reference, at the instance of the Commissioner of Sales Tax, the question involved is as regards the taxability of mill-made mufflers. The relevant part of Notification No. ST-4485/X dated 14th December, 1957, issued under section 4(1) of the Act is to the following effect: "In partial modification of Notification No. ST-905/X dated 31st March, 1956 (S. No. 73), and Notification No. ST-418/X-902(9)-52 dated 31st January, 1957 (S. No. 105), and in exercise of the powers conferred by clause (b) of subsection (1) of section 4 of the U.P. Sales Tax Act, 1948 (U.P. Act No. 15 of 1948), as amended up-to-date, the Governor of Uttar Pradesh is pleased to order that, no ta....
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....960, it was excluded by the notification dated 1st October, 1962, except pure woollen hosiery, i.e., woollen hosiery made out of wool in which no other material was used. In the case of Commissioner of Sales Tax, Lucknow v. Verma Hosiery, Rakabganj, Lucknow [1972] 30 STC 606, it has been held that cotton mufflers are hosiery. On the same line of reasoning woollen mufflers would also be hosiery; as they are articles which are used next to the skin and thus satisfy one of the tests for determining whether the commodity is a hosiery. The revising authority does not doubt that mufflers sold by the assessee are hosiery, but he excluded them by reference to the notification issued under section 4, which has been extracted earlier. Now both the notifications, i.e., the one under section 4 and the other under section 3-A had been issued by the State Government. The notification under section 4 was issued on 14th December, 1957, while these notifications are subsequent. As the authority issuing the notifications is the same, one has to proceed on the footing that it will not issue notifications, which collide or conflict with each other. The safe rule to adopt in interpreting these notifica....
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....ng to Rs. 26,647.52 and as such these are taxable in its hands? (b) Whether, in the facts and circumstances of the case, the sale of cardigans and pullovers by the assessee during the period 1973-74 amounting to Rs. 20,14,654.48 is taxable in the hands of the assessee as sale at 3 per cent or as sale of woollen goods at 6 per cent?" 2.. The assessee, Cawnpore Woollen Mills Branch, Kanpur, one of the branches of British India Corporation, manufactures woollen goods and yarn, etc., woollen cardigans and pullovers. It also maintains a canteen as a measure of labour welfare activity under section 46 of the Factories Act, 1948, read with rule 68 of the U.P. Factories Rules. It has been held by the Additional judge (Revisions) that canteen sales are sales within the meaning of the Sales Tax Act and the assessee was a dealer liable to pay tax. Reliance for this proposition was placed on Swadeshi Cotton Mills Co. Ltd. v. Sales Tax Officer [1964] 15 STC 505. In respect of cardigans and sweaters it was held that they were taxable at 6 per cent as held in Ram Lal and Bros. v. Commissioner of Sales Tax 1969 Law Diary 41. 3.. Both these findings have been challenged. So far as canteen ....
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....ports-wear combinations, pants, vests, gloves, waistcoats, sports-wear as well as socks and stockings. The term 'knitted texture' is more descriptive." In Encyclopaedia Britannica the history of hosiery has been traced and it is pointed out that: "Hosiery is covering for the feet and legs designed to be worn inside the shoes and other outer foot coverings." Then it is pointed out' "that the term is so understood in most countries particularly United States of America, but in Great Britain it is taken to include machine-knitted garments of all types (vide page 740, Vol. II)." The New Universal Encyclopaedia, Vol. 5, defines "hosiery" as under: "Knitted goods of all kinds......In addition to hose, knitted coats, sweaters, jerseys, gloves, necktie, caps, shawls and waist coats........" 7.. According to the dictionary the meaning of the word "hosiery", therefore, is quite extensive. It applies as much to upperclothing as to underclothing. The basic characteristic however is that it should be knitted. 8.. In Ram Lal's case 1969 Law Diary 41 this Court accepted the test of "worn next to skin" mainly because of the Hindi version of Notification No. ST-905 dated 31st M....
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.... it should be confined to underclothing, socks and stocking only as held by this Court in Ram Lal's case 1969 Law Diary 41. This necessitates an examination of notifications issued from time to time as in such circumstances the legislature's intent discerned from these notifications can be the best guide. 12.. The first Notification No. 117 was issued on 8th June, 1948, under section 3-A and entries 3 and 4 read as under: "3. Woollen goods and knitting wool. 4.. Hosiery of all kinds." In Hindi the entry read as under: "3. Uooni mal aur hath se bunney ka uoon. 4.. Sab prakar ke hosiery." 13.. In 1956 the Hindi notification of hosiery in ST-905 dated 1st April, 1956, read: "Sabhi prakar ke mose, baniyain, hosiery, aadi." The entry in respect of hosiery continued except for change of rate and point of tax till 1961 when by Notification No. 1281 dated 1st October, 1961, the entry was substituted and it read in English and Hindi as under: "Hosiery of all kinds other than woollen hosiery." "Upyukt vigyapat mey shabd 'yeoparyon' tatha 'shabd sabhi prakar' ke beech mey shabd 'uooni chizon se baney' rakh diya jay." By Notification No. 1281-A issued....
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.... goods. The question then is what meaning should be ascribed to the word "hosiery", the narrow or limited sense in which it was understood in Ram Lal's case 1969 Law Diary 41 or the broader and wider meaning extending to all knitted apparels as was given to it by the Rajasthan High Court. For this also it may be useful to look to the notifications quoted earlier. It shall be seen that in the notification issued in 1948 the word "hosiery" was used both in Hindi and English notifications. This indicates that the intention was to cover in the word "hosiery" all that which was included in it. In 1956 no doubt the words "socks and banian" had been used yet the word "hosiery" had also been mentioned. From 1961 onwards even the notification issued in Hindi used the word "hosiery". In Ram Lal's case 1969 Law Diary 41, the Bench while quoting the Hindi notification omitted to consider that along with the words "baniyain, mose" the word "hosiery" was also mentioned. In any case in subsequent notification the words "baniyain" and "mose" having been dropped and the word "hosiery" having been used as was done in 1948, it was clear indication of extending the entry and granting benefit of lower ....