TMI Blog1981 (6) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... to sales tax on the turnover of sewing thread, silk yarn, lace cloth and woven lace. It is the taxation of these items that is under dispute in this revision. The assessing authority, the Appellate Commissioner and the Tribunal have all held that the sales of these items are liable to tax. That is challenged in this revision. 2.. As indicated earlier sewing thread was contended to be cotton yarn so much so that according to the assessee he is not liable to tax on the sales of sewing thread as the sale was at the second point in the State and not the first and the sale at the first point had been taxed. If the item which was sold is not shown to be cotton yarn naturally it will be liable to tax at every point of sale and, therefore, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till they may retain their identity. Normally two tests are applied to ascertain whether goods known by two different names really belong to one and the same category. Two tests normally formulated are: (1) Do the goods retain their identity notwithstanding the change? (2) Are the goods accepted commercially as the same despite the change? 5.. For the manufacture of sewing thread no doubt cotton yarn is used. By a process of spinning a number of yarns together the sewing thread is manufactured. But in this process the cotton yarn loses its identity. It would no longer be cotton yarn. It is not possible, commercially, to reconstitute the sewing thread into cotton yarn. 6.. Sewing thread is commercially a product different from cotton yar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the common man would not understand the substance sold by the dealer in these cases as 'cotton yarn' and if in the commercial world it is not known or could not be known as 'cotton yarn' the article would not fall under item No. 4(ii) of the Second Schedule to the Kerala General Sales Tax Act, 1963." This view is consistent with the view expressed by the High Court of Allahabad in Mohta Trading Co. v. Commissioner of Sales Tax[1976] 38 S.T.C. 11., though earlier in Commissioner, Sales Tax v. Ballabh Das[1970] 25 S.T.C. 372. that court had indicated a contrary view. The principle of interpreting entries in the schedule being what we have indicated, we think that applying the above tests, we will be right in holding that sewing thread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of the Sales Tax Act. A theoretical approach to the possibility of reconverting the goods into yarn even after manufacture of the thread-assuming that that is possible-will not answer the question before us. Commercial considerations and considerations of what happen in practice should guide the court rather than such theoretical possibilities. 8.. A further contention has been raised by the learned counsel based on the plea of promissory estoppel and reliance is placed on the Orissa decision for that plea too. The decision of the Orissa High Court notices a letter from the Central Government construing the term "cotton yarn" and according to the counsel for the revision petitioner based on this view expressed by the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory estoppel is the averment as to a representation by way of holding out a promise and the other party acting upon that representation. If there is no case that a person has acted upon the representation of another the very basis or foundation of the plea of estoppel must be found to be absent. In the very decision to which the learned counsel for the revision petitioner adverted, the principle is explained thus: "The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. So long as there is no such plea the question of promissory estoppel does not arise for consideration. 10.. We therefore hold against the assessee on the question of the claim to non-liability to tax in regard to sales of sewing thread. 11.. There are three more items of goods the turnovers in regard to which are said to be taxable. One of them is silk yarn. Silk yarn is not cotton yarn, though according to the counsel for the petitioner even silk yarn must be taken to be cotton yarn. This contention has only to be stated to be rejected. 12.. The other two items are lace cloth and woven lace. Though in the revision petition a contention is taken up by the revision petitioner that these must be taken as cotton yarn the learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
