COMMISSIONER OF SALES TAX MAHARASHTRA STATE BOMBAY Vs. RUBY SURGICAL AND ALLIED PRODUCTS PRIVATE LIMITED

JUDGEMENT

(1.) BY this reference under section 61 (1) of the Bombay Sales Tax Act, 1959, made at the instance of the Revenue, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion :

(2.) THE Commissioner did not agree with the contention of the assessee and held that absorbent cotton wool did not fall under the above entry and hence, sales thereof were exigible to tax at the rate of 10 per cent as a residuary item under entry 102 of Part II of Schedule "c" to the Act at the rate of 10 per cent. While arriving at the above conclusion, the Commissioner relied upon the decision of this Court in Commissioner of Sales Tax v. Fairdeal Corporation Ltd. [1962] 13 STC 750 and the decision of the Madras High Court in Sri Ram Products v. State of Tamil Nadu [1983] 52 STC 187. Aggrieved by the above decision of the Commissioner, the assessee appealed to the Maharashtra Sales Tax Tribunal ("tribunal" ). The Tribunal held that absorbent cotton wool was "cotton" within the meaning of entry 2 of Schedule B to the Act and hence it was taxable at the rate of 4 per cent. The Tribunal distinguished the decisions of this Court and the Madras High Court referred to above and allowed the appeal of the assessee. The Revenue sought for reference of the question as to whether "absorbent cotton wool" was "cotton" within the meaning of entry 2 of Schedule B to the Act to this Court. Hence this reference at the instance of Revenue.

(3.) WE have heard Mr. M. D. Siodia, learned counsel for the Revenue, who submits that absorbent cotton wool is not cotton in its unmanufactured state as the process undertaken by the assessee to convert cotton into absorbent cotton wool amounts to manufacture. In support of this contention, reliance is placed on the wide phraseology used in the definition of "manufacture" contained in section 2 (17) of the Act. The case of the Revenue, in other words, is that cotton ceases to be cotton and becomes a different marketable commodity once it is converted into absorbent cotton wool. According to the Revenue, the use to which the absorbent cotton wool is normally put is different from the use to which ordinary cotton is put.