TaxTMI 
TaxTMI 
1982 (12) TMI 157
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.... to the sales of cotton pillow covers amounts to Rs. 47,147.79 during the said assessment year. It is common ground that the sales of cloth are exempt from tax under item 5 of the Fourth Schedule "cotton fabrics". It is the case of the petitioner that he is a second dealer of these cotton pillow covers, he having purchased the same from registered dealers in the State and that he did not collect any sales tax on the transactions relating to pillow covers. His contention is that inasmuch as the pillow covers sold by him were made exclusively of cotton, they are covered by item 5 of the Fourth Schedule and are exempt from tax. The facts in W.P. No. 6673 of 1982 are identical to those in W.P. No. 6666 of 1982 and relate to the assessment year 1979-80 except that for that year, the assessment was completed by an order dated 19th August, 1982, and the turnover relating to sales of pillow covers was brought to tax. Two other points arise in W.P. Nos. 5732 of 1979 and 5374 of 1979. The facts relevant thereto may now be noticed. W.P. No. 5732 of 1979 relates to the assessment year 1977-78. The petitioner returned a turnover of Rs. 10,35,314.13 claiming exemption on the entire turn....
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....ng the cotton fabrics and pillow cases would have been exigible to tax irrespective of whether the cotton cloth, from which the cotton pillow cases are prepared, had already suffered tax or not. Further, on every sale of goods, whether first, second or subsequent, sales tax would be payable. In other words, they would have been subjected to tax at multiple points even if the sales were within the State. However, sub-section (2)(a) of section 5 lays down that in the case of the goods mentioned in the First Schedule, tax shall be levied at the rates mentioned therein and only at the point of the sale specified therein where the sales are effected in the State irrespective of the quantum. In the case of goods mentioned in the Second Schedule, tax is leviable under sub-section (2)(b) of section 5 at the rates mentioned therein and only at the point of purchase. In respect of the goods mentioned in the Fifth Schedule, tax shall be levied at the rates and at the points specified in respect of every item mentioned therein under sub-section (2)(c) of section 5. We need take note of only section 8 which exempts from tax certain goods. The goods thus exempt from tax are specified in the Four....
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....any other process or any two or more of these processes. But this description of the cotton fabric contained in the said Act does not also solve the problem before us. The description of the expression "cotton fabrics" in the Additional Duties of Excise (Goods of Special Importance) Act, 1957, excludes certain cotton fabrics from its fold and does not define that expression. It has, therefore, to be understood in the ordinary commercial sense. In State of U.P. v. Indian Hume Pipe Co. Ltd. [1977] 39 STC 355 (SC) the Supreme Court referred, with approval, to its earlier decision in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286 (SC), in which while construing the import of the word "vegetables" observed thus: "But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning 'that sense which people conversant with the subjectmatter with which the statute is dealing would attribute to it'. It is to be construed as understood in common language." In King v. Plante....
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....ade cloth into different sizes and stitching and making them ready for use in a particular way and the operation was neither incidental nor ancillary to the process of manufacture and there was change of a substantial nature, pillow covers would not be covered by entry 33 of the Schedule of exempted goods (corresponding to item 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act) and sales of pillow covers, therefore, would be liable to sales tax." Of course, in that judgment a distinction was made between pillow covers and bed-sheets, towels and napkins prepared out of the same mill-made cloth and in relation to them, it was held that by cutting mill-made cloth into different sizes and stitching the border or hemming it, it does not cease to be mill-made cloth. We do not wish to express any opinion on that aspect. Mr. A.V.S. Ramakrishnaiah, the learned counsel for the assessee, however contended that in Government of Andhra Pradesh v. Venkateswarlu [1960] 11 STC 561 sarees and dhoties were recognised as cotton fabrics though they are identifiable and marketable commodities different from mere cotton cloth or cotton fabrics and were held exempt from ta....
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.... Bench, held that "the collar-lining could not be said to be an article, though prepared from cotton fabrics, which could be put to immediate use. The mere cutting of the cotton cloth to the required size and shape could not be said to be a process so as to make the end-product a different article than the cotton fabric". Their Lordships referred to the definition of the term "cotton fabrics" in item 19 of the First Schedule to the Central Excises and Salt Act, 1944, which specified referentially in entry 37 of Schedule I to the Act, an inclusive definition, and which had brought in also the fabrics impregnated or coated with other chemical compounds. It is in that view that inter-lining collar cuttings and inter-lining double collar cuttings were held to be cotton fabrics and exempted from tax. The inclusive definition of "cotton fabrics" occurring in the First Schedule to the Central Excises and Salt Act, in our view, does not take in its ambit, an article which is prepared by cutting of cotton fabric to a particular shape and stitching it and is intended to be used and in fact useful only for a particular purpose, that is, as a pillow case. The pillow case is used for covering t....
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.... STC 281 would not lend any assistance to his contention for that was a case where cotton fabric was stitched into the shape of a cap and as a cap is used to cover the head of a human being was rightly treated as a garment. A pillow case is not used for the purpose of covering any part of human body, it cannot be held to be a garment. The learned counsel for the assessee also contended that merely because things of a different shape are produced from out of cotton fabrics, though that particular article may be put to a definite use, they do not cease to be a cotton fabric. In this context, he placed reliance on the decision in Shamdas v. State of Andhra Pradesh [1967] 19 STC 412 where zarda manufactured out of tobacco, was still held to be tobacco and not taxable. In Surana and Company v. State of A.P. [1977] 40 STC 192 sugar-candy prepared out of sugar was still held to be sugar (sic). In Narain Venkat & Co. v. State of A.P. [1978] 41 STC 437, it was held that "what is necessary to make an article 'cotton fabric' is the manufacture of the same wholly or partly from cotton as stated in item 19 of the First Schedule to the Central Excises and Salt Act, 1944. The fact that subs....
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....78, and in respect of the assessment for 1977-78 the assessment order was made on 11th September, 1978. Thus both these orders were passed after the amendment came into force and when they were made they could not be treated as final, their finality was not only subject to an appeal or revision but also subject to the provisions of section 14(4)(cc). When these orders were made, if the conditions laid down in section 14(4)(cc) of the Act are satisfied, the competent authority was empowered to issue notices to the assessees calling upon them to show cause why the correct amount of tax payable should not be now assessed by him. In our view, the mere fact that the assessment orders related to an assessment year when section 14(4)(cc) of the Act was not in force, it does not preclude the Commercial Tax Officer from exercising his powers thereunder if in fact the assessment order was made on or after 17th January, 1978, when the amendment came into force. The exercise of the power is with reference to the order and not the year to which the turnover relates and the assessment not having become barred by limitation and the finality of the assessment order being subject not only to appeal....