Commissioner of Sales Tax, U.P. Vs.
M/S. Sarin Textiles Mills  INSC 99 (21 April 1975)
SARKARIA, RANJIT SINGH SARKARIA, RANJIT SINGH
CITATION: 1975 AIR 1262 1975 SCR 743 1975 SCC
CITATOR INFO :
RF 1988 SC2237 (8) RF 1989 SC 317 (21)
U.P. Sales Tax Act, 1948, ss. 3 and
3A-'Woollen Carpet Yarn' if unspun fibre used in weaving.
The respondent is a manufacturer of and
dealer in 'Woollen Carpet Yarn', popularly known as kati. For the assessment
years 1959-60 and 1961-62 he was taxed by the Sales Tax officer at 6 pies per
rupee and 3 pies per rupee, respectively, under two notifications applicable to
the two assessment years respectively, issued under the U.P. Sales Tax Act,
1948. On appeal, the Assistant Commissioner held, that kati was an unclassified
item taxable at 2 pies per rupee tinder s. 3 of the Act, and the order was
confirmed on revision and by the High Court on reference.
The two Notifications provided (1) that
turnover of 'Yarn of all kinds including unspun fibre used in weaving' is
liable to tax at 6 pies per rupee, and (2) turnover of yarn of all kinds
including unspun fibre used in weaving, is liable to tax at 3 pies per rupee.
There was another notification which provided that turnover of "Woollen
goods excluding carpet but including knitting wool" is liable to tax at
one anna per rupee.
The authorities under the Act found that kati
are short cut pieces of unspun fibre about 2 inches in length ; that the pieces
have very little tensile strength and are not used, and are not capable of
being used, for weaving, knitting or rope-making ; that the only use to which
kati is put is by attaching each piece by hand around two warp threads ; that
it is not a component of the basic fabric of the carpet ;
that it is not an integral constituent of the
warp and weft of the carpet which consists of a different spun fibre of great
tensile strength ; and that the process of looping or knotting kati is
different and distinct from the process of lengthwise and cross-wise combining
of warp and weft components which makes the woven basic structure of the
Dismissing the appeal to this Court.
HELD : (1) Kati is not 'yam' because one of
the characteristics of yam is that it should be spun thread, whereas kati is
unspun fibre. [231-H] (2) It is not unspun fibre Used in weaving within the
meaning of the first two notifications because, on the facts found, it is not
used in weaving.
[233-C-D] (3) it is not ;woollen goods'
within the meaning of the 3rd notification, because. (233-C-D] (a) Katri is
only raw material from which 'woollen goods' are prepared and [233-E] (b) Yarn
used in weaving the warp and weft of carpets, or woollen fibre used in weaving
is, tinder the notifications, taxable at a par lower rate than woollen goods'.
and it could never have been intended that a mere component or raw material,
used by a manual process, not being a process of weaving in the manufacture of
'woollen goods' should be taxed at a higher rate treating kati as finished
'woollen goods'. [233-E.F.] 229 (4) Therefore, it is an unclassified item and
the turn-over is liable to tax only at 2 pies per rupee.
CIVIL APPELLATE JURISDICTION : Civil Appeal
Nos. 1934-35 of 1970 and 1172-73 of 1974.
Appeal by Special Leave from the Judgment and
Order dated the 30-4-1970 for the Allahabad High Court in S. T. R. No.
191 of 1969.
O. P. Rana for the appellant.
S. C. Manchanda and P. C. Kapoor for the
The Judgment of the Court was delivered by
SARKARIA, J.-These. appeals by special leave are directed against the judgment
of the High Court of Allahabad answering in favour of the assessee the
following question referred to it under s. 11 of the U.P. Sales Tax Act, 1948
(for short called the Act):
"Whether the articles "carpet.
woollen Yarn" is covered by the term 'yarn' mentioned in item No. 4 of
notification No. ST-907/X, dated 31-3-1956 and item No. 33 of notification No.
S.T. 1365/X dated 1-4-1960 taxable at 6 pies
and 3 pies per cent respectively or a kind of woollen goods as mentioned at
item No. 46 taxable at one anna per rupee according to notification No.
ST-905/X dated 31-3-56 or whether it is an unclassified item taxable at
M/s. Sarin Textile Mitts, Agra is a
manufacturer of and dealer in "woollen carpet yam", popularly known
The relevant assessment years are 1959-1960
The only dispute is whether such kati should
be taxed as "yarn" at 3% or as "woollen goods" at one anna
per rupee, under-the relevant notification issued under s. 3-A or as an
unclassified item at 2% under s. 3 of the Act.
The Sales-tax Officer by his order dated
6-10-1965 regarded it as a 'kind of yarn' covered by Entry No. 4, Notification
no. ST-907/ X dated 31-3-1956, and so taxed it at six pies per rupee for
1959-60 and at 3 per cent for the year 1961 62 in view of subsequent
notification ST-] 365/X dated 1-4-1960.
On appeal by the assessee the Assistant
Commissioner (Judi- cial) reversed that interpretation and held that woollen
carpet kati was an 'unclassified item' taxable at the rate of 2 per cent.
230 The Commissioner of Sales-Tax moved the
Revisional Authority under s. 10 of the Act against the order of the Assistant
Commissioner (Judicial). The' Judge (Revisions) agreed with the interpretation
adopted by the Assistant Commissioner (Judicial) and dismissed the revision
On application filed by Commissioner under s.
11(3) of the Act, the Judge (Revisions), referred the aforesaid question to the
THe High Court also held that the woollen
carpet kati is not ,yarn' since it is unspun fibre not used in weaving, and, as
such, it is not taxable as a 'kind of yarn' under the aforesaid notification.
It further rejected the alternative contention of the Revenue that woollen
carpet kati' is taxable under the notification No. ST-905/ X as "woollen
goods". In the result, the High Court answered the questions against the
Revenue. Hence these appeals.
Mr. Rana learned Counsel for the appellant
contends that the term "yam" used in the aforesaid notification
should be interpreted in the sense in which it is understood by persons engaged
in the trade. Stress has been placed on the fact that in English, even the
assessee has been describing the article in question as "woollen carper
"yran". Such kati, it is pointed out is used in the manufacturer of
carpets by a process of 'knotting', which in ordinary parlance is described as
'weaving'. According to Mr. Rana, the distinction drawn by the High Court,
between 'weaving' and 'knotting' being too fine and artificial, is not justified.
It is maintained that the Sales-tax Officer had rightly held that all twisted
wool fibres are yarn'. Since this woollen kati is such a fibre, it is yarn and
taxable as such under the aforesaid notifications. In the alternative, Counsel
submits that this article falls within the purview of "woollen goods"
and in taxable as such under notification No. ST-905/X of 1956.
As against this, Mr. Manchanda, learned
Counsel for the assessee contends that in the past for about 8 years, the
Revenue had been understanding and treating for the purpose of taxation,
"woollen carpet kati" as an article different front "yarn"
and "woollen goods" within the contemplation of the aforesaid
notifications. It is stressed that for the first 'time it was on 23-9-1963 that
the Sales-tax Officer departed from this time honoured interpretation and held
"woollen carpet kati" to be "yarn" within the said
notifications. It is submitted that the High Court's opinion, that woollen
carpet kati is neither "yarn" nor "woollen goods", proceeds
on facts found by the Assessing Authority on the basis of evidence adduced
regarding the nature and use of this article. On those facts, it is maintained,
no other reasonable interpretation than the one accepted by the High Court is
The notifications concerned issued under s.
3-A of the Act, are, these:
" (i) Notification No. ST 907/X dated
31st March, 1956. It declares that the turnover of certain commodities men- 231
tioned therein should be taxed at a single point, at the point of sale by the
manufacturer or the importer, at the rate of six pies per rupee. The relevant
entry of this notification is no. 4, which reads:
"Yarn of all kinds, including unspun
fibre used in weaving, other than handspun yarn but excluding cotton yarn in
cops and cones".
(emphasis added) (ii) Notification No. ST.
1365/X-990 1956 dated April 1, 1960.
It is also a notification under section 3-A
of the Act and the relevant entry is at item No.
33 which reads :
"Yam of all kinds including unspun fibre
used in weavingother than handspun yarn but excluding cotton yarn.(emphasis
added) (iii)Notification No. No. ST-905/X dated 31st March, 1956.
The relevant entry is at item No. 46 which
"Woollen goods excluding carpet but
including knitting wool." The rate of tax prescribed is one anna per
The first point to be considered is, whether
"woollen carpet kati" is "yarn" within the meaning of
Notification (i) and (ii) catalogued above.
"Yarn" has not been defined either
in the Act and the Rules, or in the Notifications. We have therefore to
construe this term in its ordinary grammatical sense. According to "Oxford
Dictionary" "yarn" means:
"Any spun thread specially of kinds
prepared for weaving, knitting or rope-making".
Webster's New World Dictionary also, gives
its meaning thus:
"Any fibre, as wool, silk, flax, cotton,
nylon etc. spun into strands for weaving, knitting or making thread".
Thus, a fibre in order to answer the
description of "yarn" in the ordinary commercial sense, must have two
characteristics. Firstly, it should be a spun strand.
Secondly, such strand should be primarily
meant for use in weaving, knitting or rope-making.
Now, it is an undisputed fact, in the instant
case, that "woollen carpet kati" is unspun fibre. It lacks the first
characteristic of "Yarn". It is therefore possible to say that, by
itself, the expression "yam of all kinds" in the notifications,
quoted above, would not cover unspun fibres.
But the succeeding phrase "including
unspun fibre 10 SC/75-16 232 used in weaving" qualifies the preceding
expression "yarn" of all kinds". This phrase, which, in one
sense, extends the connotation of "yarn" by including in it unspun
fibre, pinpoints and highlights, on the other hand, the usability of such
unspun fibre in weaving as a determinative circumstance.
The question thus narrows down into the issue
: Is woollen carpet kati--which is admittedly unspun fibre-"used in
weaving" within the contemplation of these notifications ? Again,
"weaving" has not been defined in these notifications or the other
statutory provisions. We have therefore to fall back upon its ordinary
dictionary meaning. In that sense, 'weaving' implies the process of forming
thread into fabric by interlacing. "The most important method by which
wool products are produced is weaving, the interlacing at right angles of two
or more systems of threads. Variations are almost limitless but all are derived
from three basic weaves, plain, satin and twill. Hundreds of yarns, wound on
large spool or beam form the warp. Each yarn is drawn through the eye of a
heddle or wire mounted on a harness frame. The alternate raising and lowering
of the frames, each with its hundreds of heddles controlling the warp yarns,
forms the shed, the space through whichthe weft or filling yarn is carried by
the shuttle, a long streamlinedbox holding a bobbin of yarn in its hollowed
centre. Each trip of the shuttle is called a pick. After each pick the
harnessframes shift position in accordance with the predetermined
pattern,producing a new shed or different combination of raised and lowered warp
The filling yarn are beaten down with a
weaver's read to make a tighter weave". (Encyclopaedia Brittanica Vol. 23,
342,1971 Edn.) Thus "weaving" is
the process of combining warp and weft components (respectively lengthwise and
cross-wise) to make a woven structure. The threads that lie lengthwise are
called the warp. The other threads which are combined with the warp and lie
width wise, are called the "weft", also known as "woof". An
individual thread from the warp of indefinite length, is called an end; each
individual length of weft from one edge to the other is called a pick.
Consecutive picks are usually consecutive
lengths of one piece of weft yarn that is repeatedly folded back on itself.
In all methods of weaving before a length of
weft is inserted in the warp, the warp is separated, over a short length
extending from the cloth already formed, into two sheds. The process is called
shedding. The sequence of primary operations in one weaving cycle is thus
shedding, picking and beating in. (Encyclopaedia Brittanica Vol. 23, p. 342).
Weaving is differentiated from both warp and
weft, knitting from braiding, and from net making, in that these processes all
make use of only one set of elements. In addition there are geometrical
differences". (Encyclopaedia ibid).
The ground having been cleared, it is to be
seen whether the process by which woollen carpet Kati is used in preparation of
carpets, can properly be called "weaving".
233 Now, the facts found on the basis of
evidence adduced by the Additional Appellate Commissioner and the Judge
(Revisions) Sales Tax are that such woollen kati are short cut pieces of unspun
fibre (each of which according to the aforesaid Encyclopaedia is about 2 inches
in length). It has very little tensile strength and is not used-as it is not
capable of being used-for weaving, knitting or rope-making. The only use to
which the kati or pile is put is by attaching each piece by hand around two
warp threads. The kati is not a component of the basic fabric of the carpet. It
is not an integral constituent of the warp and weft of the carpet which
consists of a different spun fibre of great tensile strength i.e. of yarn. The
process of looping or knotting these pile tufts is different and distinct from
the process of lengthwise and crosswise combining of warp and weft components,
which makes the woven basic structure of the carpet.
In view of these primary facts found by the
taxing authorities, the conclusion is inescapable, that woollen carpet kati is
neither yarn", nor "unspun fibre used in weaving" within the
contemplation of the aforesaid notifications issued under s. 3-A.
This takes us to the second question as to
whether such kati would fall within the ambit of "woollen goods"
under entry 46 of Notification (iii) set out above.
Here also, we find ourselves in agreement
with the Division Bench of the High Court that woollen carpet kati is only raw
material from which "woollen goods" are prepared. In this connection
it is to be noted that yarn used in weaving the warp and weft of carpets, or
woollen fibre used in weaving has been made taxable at a far lower rate than
"woollen goods" under the Notifications. It could never be the
intention that a mere component or raw material used in the manufacture of
woollen goods by a manual, process, not being a process of weaving, should be
taxed at a far higher rate, by treating the same as a finished "woollen
For the foregoing reasons, we are of the
opinion that "woollen carpet kati" is neither "yarn" nor
"woollen goods" falling under the aforesaid notifications issued
under S. 3- A. It is an unclassified item and its turnover is liable to tax at
the rate of 2% under S. 3 of the Act. Accordingly we affirm the answer given by
the High Court to the question referred and dismiss these appeals with one set
V.P.S. Appeals dismissed.