KWALITY TEXTILES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE above tax case revision is filed at the instance of the assessee as against the order of the Sales Tax Appellate Tribunal for the assessment year 1996 -97. The above tax case revision was admitted on the following substantial questions of law:

(2.) AGGRIEVED by this, the assessee went on appeal before the Appellate Assistant Commissioner (Commercial Taxes). The first appellate authority referred to various decisions and arrived at the conclusion that tarpaulin is cotton fabric, exempted from sales tax levy. The first appellate authority pointed out that cutting the knitted fabric into different sizes and then stitching the four sides, thus, making into stitched knitted towels could not make it different from knitted fabric and the same would not amount to manufacture for a new commodity to emerge. The first appellate authority also held that knitted cotton fabric and knitted towels were the one and the same commodity and the same were exempted from sales tax. Thus, the first appellate authority accepted the case of the assessee. Consequently, he allowed the appeal and also deleted the penalty.

(3.) THE learned counsel appearing for the assessee pointed out that similar question whether the commodity dealt with by the dealer, i.e., terry towel would qualify for exemption or not, came up for consideration for the assessment years 1992 -93 and 1995 -96 and accepted the case of the assessee that terry towel was an exempted item. On remand by the Tribunal, the assessing officer passed the revised assessment order on July 16, 2007, wherein, the assessing officer accepted the case of the assessee that terry towel was not liable to tax and accordingly held that turnover of terry towel for the year 1995 -96 was liable for exemption. Apart from that, the Department had also accepted the case of the assessee for the earlier years as referred to above.