BEARDSELL LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE only question involved in this batch of cases is whether nylon twine variously called nylon fishnet twines, knitting yarn, etc., dealt with by the assessees come under entry 18 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act") or should properly be taxes as a multi-point item under section3(1) of the Act. According to the assessees the goods fall under entry 18 of the First Schedule of the Act, but according to the Revenue it is a multi-point item under section3(1) of the Act. In many cases the Revenue succeeded before the Tribunal while in some cases the assessees succeeded. In some of the cases the Joint Commissioner, exercising suo motu powers under section34 of the Act set aside the orders in favour of the assessees. THEre are also a few writ petitions challenging the action of the third respondent either in revising or proposing to revise the assessment orders, and holding that nylon twine is taxable as a multi-point item. Depending upon our ultimate decision, the fate of each case shall be determined at the end of our judgment.

(2.) HOWEVER, we will refer to the facts of T.C. No. 391 of 1991 for a proper understanding of the arguments and authorities cited before us in relation to the issues involved in the cases. For the assessment year 1983-84 the appellant in T.C. No. 391 of 1991 had returned a total and taxable turnover of Rs. 10, 49, 194 and Rs. 10, 598.60, respectively. On scrutiny of the accounts it was found that the assessees had claimed exemption on the sale of nylon fishnet twines, the turnover in respect of which was Rs. 8, 69, 704.03. For this and certain other defects the assessing authority determined the total and taxable turnover to his best of judgment. Nylon fishnet twines were assessed at five per cent. On appeal, the assessees contended that the turnover relating of nylon fishnet twine would fall under entry 18 of the First Schedule of the Act and inasmuch as the assessees had purchased the same from registered dealers the second sales at their hands were not taxable. This contention was accepted by the appellate authority. On suo motu revision, it was held, following Commissioner of Sales Tax v. Sarin Textile Mills 1975 AIR(SC) 1262, 1975 SCR 743, 1975 (4) SCC 308, 1975 (35) STC 634, 1975 (S) SCR 228, 1975 UJ 401, 1975 (4) CTR 132, 1975 TaxLR 1617, 1975 SCC(Tax) 300 (SC) 1975 AIR(SC) 1262, 1975 SCR 743, 1975 (4) SCC 308, 1975 (35) STC 634, 1975 (S) SCR 228, 1975 UJ 401, 1975 (4) CTR 132, 1975 TaxLR 1617, 1975 SCC(Tax) 300, that yarn is distinct from twine. Therefore the goods dealt with the assessees could not be equated to staple "artificial silk yarn or staple fibre yarn". The Joint Commissioner after following the procedure prescribed by law resorted the order of the assessing authority and set aside the order of the appellate authority.

(3.) ONE doubt which may arise on a first reading of the entry is whether nylon twine or nylon yarn will at all come within the words "artificial silk yarn". We find that this issue is no longer res integra because, as early as in Kishnichand Chellaram v. Joint Commercial Tax Officer 1968 (21) STC 367 (Mad.) the issue had been settled. In that case the stand of the Government of India that man-made fibres like nylon, terylene, terene, decron, etc., were artificial silk and ually and technically the above products are textiles coming under the category of "artificial silk", was accepted by the Division Bench of this Court, after referring to the literature on the subject. More recently in Sirsilk Ltd. v. Textiles Committee 1989 AIR(SC) 317, 1988 (4) JT 592, 1988 (2) Scale 975, 1989 (S1) SCC 168, 1988 (S2) SCR 880, 1989 SCC(Tax) 219 the following observations are apposite :