TaxTMI 
TaxTMI 
1996 (2) TMI 472
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.... have been referred to this Court for its opinion: "(i) Whether surgical cotton after manufacture loses its basic character of cotton and can be termed as such being not cotton and as to whether cotton includes raw cotton, i.e., cotton in its natural or nearly natural form in the ginned or unginned state? (ii) Whether the order of the Tribunal rendered in 1976 forms a fresh material which debars the revising authority to exercise power under section 21(1) of the Act after the period of limitation under section 11-A of the Act?" Counsel for the parties are agreed that all these references on question No. (i) be disposed of together as the only question to be decided is as to whether surgical cotton is a commercially different commodity than the unmanufactured cotton. Question No. (ii) in G.S.T.R. Nos. 16 and 17 of 1982 would be dealt with separately in this very judgment. We are referring to the facts from G.S.T.R. No. 1 of 1986 as the counsel for the parties have referred to the facts from this reference petition. M/s. National Scientific Industries, Hisar (hereinafter referred to as "the assessee") is engaged in the manufacture of surgical cotton. It is registered b....
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....ton is used; that surgical cotton is a variety of cotton and is not a manufactured product of cotton because it had not at all changed its basic character of cotton and can be put to use for all purposes for which cotton is used. Department, being aggrieved against the order of the Tribunal, filed an application under section 42(1) of the Haryana Act for referring the aforesaid question of law to this Court for its opinion. Tribunal accepted the application filed by the department and referred the aforesaid question of law for the opinion of this Court. Before adverting to the contentions raised by the respective counsel for the parties, it would be useful to refer to the provisions of the statute. "Declared goods" are defined in section 2(c) of the Central Act to mean "goods declared under section 14 to be of special importance in inter-State trade or commerce". Section 14 of the Central Act contains the list of "declared goods". This section finds its support from article 286(3) of the Constitution of India. The said article authorises the Parliament to declare certain goods to be of special importance in inter-State trade or commerce and further subject them to such ....
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....factured". Counsel appearing for the department referred to the project profiles prepared by the Development Commissioner, Small Scale Industries, Ministry of Industry, Government of India, of chemical, food, glass and ceramic industries to show what process of production undergoes for manufacturing the surgical cotton from the unmanufactured cotton. After opening the raw cotton in bale form, the same is loosened and dust and other particles are removed. The cotton is then sent to a kier where it is steam boiled for about 3-4 hours after adding chemicals such as caustic soda, soda ash, detergent, etc. This treatment removes much of the natural waxes and oils and softens and disintegrates any foreign matter that may remain after the cleaning operation. After the cotton is boiled, it is removed from the kier and taken to the tanks for washing. The washed cotton though absorbent is not of good colour. It is, therefore, bleached with chemicals such as hydrogen peroxide or sodium hypochlorite. The bleaching not only whitens the cotton but also improves its wetting properties and assists in disintegration of any remaining foreign materials. The bleached cotton is thoroughly washed again ....
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....e assessee that the surgical cotton is cotton which has undergone the process only of cleaning and packing and it can be called cotton after having been cleaned and packed and can be used as cotton for all purposes for which the cotton is used. In a number of decided cases, it has been held that "manufacturing" implies the making of a different article having a distinctive name, character or use, commercially different from the basic component, by physical labour or mechanical process. In State of Punjab v. Chandu Lal Kishori Lal and State of Punjab v. Krishna Cotton, Dal and Oil Factory [1970] 25 STC 52, the Supreme Court held that ginning process is a manufacturing process and ginned cotton is different from the unginned cotton. In this case, unmanufactured cotton, ginned or unginned, both are declared goods as per section 14 of the Central Act. In Babu Ram Jagdish Kumar and Co. v. State of Punjab (and other cases), [1979] 44 STC 159, it was held by their Lordships of the Supreme Court that rice and paddy are two different things and when paddy is dehusked and rice produced, there is a change in the identity of the goods. Although rice is produced out of paddy, it is not....
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....e residuary entry covered by item 80 of Schedule B. Item 1 of Schedule B would only include raw cotton, that is, cotton in its natural or nearly natural form in the ginned or unginned state, and not cotton which has been converted into specific different products after being subjected to various processes." Similar view has been taken by the Madras High Court in Sri Ram Products v. State of Tamil Nadu [1983] 52 STC 187. Now we deal with the various judgments cited before us by the counsel for the assessee, which in our view are not relevant or applicable to the facts and circumstances of the case. Reliance was placed by the counsel for the assessee on Tungabhadra Industries Limited v. Commercial Tax Officer, Kurnool [1960] 11 STC 827, where their Lordships of the Supreme Court had held that hydrogenated groundnut oil, after process of refinement, remains groundnut oil within the meaning of the Rule. The interpretation given by their Lordships was in the context of the Madras General Sales Tax Act, 1939, where the entry was "groundnut oil" and not "raw groundnut oil". It was held that hydrogenated oil was prepared by process of refinement of the groundnut oil and the sam....
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....ee, and therefore, the references are at the instance of the assessee. Question No. (i) in these two references is also answered against the assessee and in favour of the department. It is held that surgical cotton is not the same thing as raw cotton in its unmanufactured state because surgical cotton, after undergoing the manufacturing process, loses its basic character of cotton and cannot be termed as unmanufactured in the ginned or unginned state. Now, we take up question No. (ii) in G.S.T.R. Nos. 16 and 17 of 1982. Relevant facts pertaining to this question are that the Assessing Authority had treated the surgical cotton as unmanufactured cotton and levied the tax taking it to be a declared goods. Sales Tax Tribunal, Punjab, in another Appeal No. 91 of 1975-76 (State v. Kiran Surgical Sales Corporation, Ludhiana) (not pertaining to the assessee), decided on April 20, 1976, held that surgical cotton is produced by manufacturing process and as such cannot be termed as cotton in its unmanufactured state, which alone is covered by section 14(ii) of the Central Act. After the aforesaid judgment of the Tribunal, Commissioner of Sales Tax, exercising its suo motu powers under sect....
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....e assessee by a single Judge judgment of this Court in Asian Rubber and Plastic Industries v. State of Punjab [1982] 50 STC 383 and a Division Bench judgment of this Court in Luthra Rubber Industries v. State of Punjab [1985] 59 STC 198. In Luthra Rubber Industries case [1985] 59 STC 198 (P&H), after approving the reasoning of the learned single Judge in Asian Rubber and Plastic Industries case [1982] 50 STC 383 (P&H) and after noticing the Full Bench judgment of this Court in Hari Chand Rattan Chand's case [1969] 24 STC 258, their Lordships repelled a similar contention raised by the counsel for the assessee and held that the decision of the Tribunal or the High Court cannot be termed or treated as information as envisaged under section 11-A of the Punjab Act, which may have come to the notice of the reviewing authority. It was held that the judgment of the Tribunal or the High Court would not provide any factual material, which was not on the file of the Assessing Authority. No new facts are put up before the authorities. It only brings true legal position to the notice of the revisional authority. Suo motu powers exercised by the revisional authority under section 21(1) of th....