Madras High Court
T.M.A. Yacub Hussain vs The State Of Tamil Nadu on 15 November, 1979
Equivalent citations: [1980]46STC470(MAD)
JUDGMENT Sethuraman, J.
2. Item 4 of the Third Schedule as it was then in the statute ran as follows:
All varieties of textiles (other than durries, carpets, druggets and pure silk cloth) made wholly or partly of cotton, staple fibre, rayon, artificial silk or wool including handkerchiefs, towels, napkins, dusters, cotton velvets and velveteen, tapes, niwars and laces and hosiery cloth in lengths.
3. The learned counsel for the assessee contended that the word "textile" did not require that there should be a warp and woof pattern, and that even where yarn was arranged in parallel lines and pasted together, it has been considered to be a textile. It would therefore, according to him, follow that yarn which was merely twisted in the shape of ropes under consideration here should also retain the character of textile. We are unable to agree with this submission. As rightly pointed out by the Tribunal, one does not go to the textile shop for the purpose of getting this kind of yarn, nor does one go to the assessee's shop for getting textile. The two varieties of goods are so wholly different that both cannot be grouped under "textiles" which would have to be understood in the ordinary and accepted commercial sense.
4. The Supreme Court in a recent decision, Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 S.T.C. 433 (S.C.), pointed out that the word "textile" must be interpreted according to its popular sense, meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. Their Lordships referred to the Customs Tariff Act where there was a reference to "textile fabrics" and in connection with "dryer felts", which was under consideration in that case, and pointed out that the inclusion of "dryer felts" in the Customs Tariff Act under the head "textile fabrics" would clearly show that "dryer felts" which were "woven textile felts...of a kind commonly used in paper-making machinery" were regarded in common parlance, according to the sense of ordinary traders and merchants, as textile fabrics. Therefore, the test to be applied is whether under common parlance or by the commercial community, the ropes in question are taken as "textiles". The result of the test would be clearly against the assessee as cotton ropes of the thickness with which we are now concerned would not constitute any kind of textile.
5. The learned counsel then advanced the alternative argument that the commodity dealt with was only yarn and its thickness was of no consequence. The Second Schedule describes the declared goods in respect of which a single point tax only is leviable under Section 4. Item 3 of the said schedule contains the following narration :
Cotton yarn, but excluding cotton yarn waste.
6. The cotton yarn considered by this entry was liable to sales tax at the point of first sale in the State. The learned counsel contended that the cotton yarn had been produced only locally and that, therefore, the ropes could not be subjected to taxation at the point of second sales. Unfortunately for him, it is not possible to classify the present ropes with which we are concerned as yarn. Though the ropes are made of yarn, still they have undergone a transmutation into a different commercial commodity. A common man or a merchant would not call the rope "yarn". The type of ropes used for tying cattle or for passing through their nose or for being used as whips cannot be classified as yarn, so as to fall within the above-mentioned item.
7. In Muthusavari Pillai & Sons v. State of Tamil Nadu [1977] 39 S.T.C. 359 at 365, this Court had to go into the question whether cotton yarn twisted into bandings and similar ropes could be classified as "textile" or "yarn". In the course of the judgment, it was pointed out at page 365 after referring to the relevant authorities :
It is true that yarn does not lose its character as yarn merely by reason of its consisting of a bunch of threads, as in the case of doubling, and twisting together of two or more threads to make a stronger or firmer thread in order to manufacture a specified kind of textile ; it still retains its character as yarn. Thus, merely on the ground that the yarn in question consists of a bunch of spun thread, it could not be held that it is not yarn.... If the bunch of spun thread forms the basic spun yarn for weaving, it will still retain the character of yarn. In other words, its capability of being used for making textiles within the meaning of item 4 of the Third Schedule would determine its character as yarn. Once the produce is not and could not be used for such manufacture of textiles, it ceases to be yarn within the meaning of item 3 of the Second Schedule.
8. These observations apply with full force here.
9. The Supreme Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 S.T.C. 433 (S.C.) pointed out that the use to which the goods may be put was immaterial and did not bear in its character as a textile. This was strongly relied upon by the learned counsel for the assessee. Observations in judgments cannot be put to the process of literal construction or understood divorced from their context. The real problem in that case was whether the word "textiles" was to be understood only in the sense of materials used for wearing apparel, drapery, etc. The dryer felts were meant for industrial use. Their Lordships negatived a restricted use of the expression. The observation was made in such a context. The Supreme Court has in more than one place in the said judgment pointed out that the expression should have to be understood in the popular or commercial sense. The purpose for which the commodity is used is often a guiding factor to determine its character. But, in some contexts, the purpose may not furnish a conclusive answer. Judged by these considerations, the ropes in question cannot by any stretch of imagination be classified as yarn. Under these circumstances, we do not find that there is any scope for accepting the assessee's contention. The revision petitions accordingly fail and they are dismissed with costs. Counsel's fee Rs. 250 ; one set.