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TMI Blog2007 (8) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of the powers conferred by section 8(5) of the Central Sales Tax Act, 1956, the State Government [.2.] hereby directs that the rate of tax payable under clause (b) of sub-section (2) of the said section by a dealer having his place of business in the State in respect of the sale by him from any such place of business of gota, gota-kinari, salma, sitara and badla in the course of inter-State trade or commerce shall be calculated at the rate of three per cent. This shall have immediate effect." Later on, these items were exempted from sales tax vide notification dated March 6, 1991 (S. No. 836 of J.K. Jain's Book Vol. 2). The assessing authority while passing the original assessment order did not impose any additional tax over 1.5 per cent, which was charged by the assessee from his customers and paid to the State. However, by resort to section 12 of the Rajasthan Sales Tax Act, 1954 (for short, "the Act"), exercising its reassessment powers, the assessing authority imposed tax on sale of the aforesaid commodity, metallic yarn, at the rate of three per cent and the difference tax was imposed. The first appeal filed by the assessee was allowed by the learned Deputy Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill withstand repeated launderings without losing sparkle. Because metallic yarns are not affected by sea water or the chlorinated water of swimming pools, they are widely used in swimwear. The dyestuffs used in colouring metallic fibres are usually fast to light thus retaining bright colour. Because metallic MC yarns are used primarily for decorative purposes, they do not usually contribute significantly to the strength of fabrics or garments. They may, however, be used as weft or warp yarns, and are sufficiently strong to withstand weaving and knitting operations. When necessary, metallic yarns are combined with such supporting yarns as nylon. The plastic film of the metallic yarn is flexible, and the yarns are extensible to a degree depending upon the type." An extract from the commentary of "Essentials of Textiles" by Marjory L. Joseph, California State University, Northridge (Second Edition) is also of relevance here: "Metallic fibers or yarns Metallic yarns are truly the oldest form of man-made fibre, dating back to ancient Persia and Assyria. Actually, the first metallic fibres were not real fibres but were the result of slitting very thin sheets of metal into narrow, ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 505 explained the process of producing metallic yarn as under: (at page 506) ". . . The process of producing metallic yarn was witnessed by the Assistant Sales Tax Commissioner before deciding the appeal. He has noted that the metallic yarn is produced from a transparent glittering polyester film. Firstly, the film is put on rough slitting machine from which strips of a width of 64 mm. emerge. These strips are further placed on micro-slitting machine which cuts the strips into 214 pieces. These 214 pieces are known as metallic yarn. At that time both the sides of the strip are left out. These remaining strips are of uneven breadth and they are called side strips. The Tribunal has further noted on the information furnished that polyester yarn which is used for weaving clothes is produced by three methods of which the basic raw material is the same. The side raw material is in pulp form and is known as D.M.T. which is a petroleum product out of which all polyester is manufactured. From this, yarn is produced by using either of the three different processes, viz., (i) fibre process, (ii) continuous filament process and (iii) metallic filament process. In the present case, the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts found by the taxing authorities, the conclusion is inescapable, that woollen carpet kati is neither 'yarn' nor 'unspun fibre used in weaving' within the contemplation of the aforesaid notifications issued under section 3A." The aforesaid case, with great respect, is clearly distinguishable from the facts of the present case, where metallic yarn in full lengths is obtained by slitting of metal film prepared with coating of aluminum thin sheets with films which is purchased by the assessee and by slitting process, such yarn, cannot be equated with woollen kati, which is a short length cut pieces of unspunned fibre of about 2 inches in length. The honourable Supreme Court, therefore, held that it could not be either held as "yarn" or as "woollen goods". The reliance placed by the Revenue on the said case is, therefore, misconceived. The other contention raised by the learned counsel for the Revenue is that since in the registration application, the item stated to be manufactured by the petitioner-assessee was "badla", the assessee could not contend that commodity manufactured by him was not "badla", but was "man-made yarn" and he was estopped from raising such a co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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