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TMI Blog2018 (3) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... Directorate of the Government of U.P. in view of notification dated 14.11.1995 by which silk-yarn has been exempted from tax under Section 4 of the Trade-tax Act, 1948 and in view of paragraph 10 of the judgment of the Supreme Court in the case of M/s Jhunjhunwala and others vs. State of U.P. and others reported in 2006 NTN (31) 276 ?". Revision Nos. 86 of 1987 and 87 of 1987 arise out of proceedings in Appeal No. 306 of 2005 and 307 of 2005 pertaining to Assessment year 1998-99 and 1999-2000 which were decided by the Trade-tax Tribunal Lucknow by a common judgment dated 14.09.2005. In these relevant years the revisionist purchased ''cocoon' from the Resham Directorate of Government of U.P. for Rs. 1,92,876.25 and 17,38,588.80 respectively. It is said to have made ''silk-yarn' from the cocoon and sold it. The dispute herein does not relate to imposition of tax on sale but the liability to tax on purchase of ''cocoon' from an unregistered dealer i.e. the Resham Directorate, under Section 3-AAAA(b) of the Act, 1948. The revisionist dealer denied tax liability on the purchase. The Assessing Officer made the final assessment accordingly vide orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evisionist before the Tribunal the assertion therein was that the appellant was a reeler of silk-yarn from cocoon. Cocoon was raw silk. In its raw or natural state it was found only in the form of cocoon. Cocoon is a silk worm. It is a live stock, therefore, exempt from tax w.e.f. 01.02.1985 vide Notification dated 31.01.1985. The Appellate Authority had declared cocoon as non taxable for the year 2000-01 and 2001-02. Cocoon being silk yarn/raw silk/live stock as such was exempted good, not liable to tax under Section 3-AAAA of the Act, 1948. Thus, while replying to the notice of show cause issued by the Joint Commissioner it was stated that cocoon was silk yarn and as the latter was exempt from tax which was obviously a reference to the Notification dated 14.11.1995, though not in so many words, its raw-material could not be taxed. In the appeal before the Tribunal the stand was that it was a ''live stock', which was exempt, therefore, liability could not be fastened on him on its purchase. The Tribunal vide impugned judgment dated 14.09.2005 rejected the plea of the revisionist, and with reference to various decisions and the meaning of ''live stock', he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (iii) of the proviso to Section 3-AAAA(b) was not attracted. Cocoon was neither exempted under Section 4 nor under Section 4-A of the Act, 1948. The Notification dated 14.11.1995 reads as under:- "TT-2-2744/XI-9(232)/95-UP ACT-15/48-ORDER-95, dt. 14.11.1995 (Gazette dt. 14.11.1995) उत्तर प्रदेश कर एक्ट, १९४८ ( उत्तर प्रदेश एक्ट संख्या १५ सन १९४८) की धारा ४ के खंड (क) के अधीन अधिकार क! प्रयोग करके, राज्यपाल निर्देश देते हैं कि दिनांक १४ नवंबर ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the Act, 1948 from an unregistered dealer. The learned counsel for the petitioner was not able to demonstrate that the Resham Vibhag of the Government of U.P., from which he purchased the cocoon in question, was a registered dealer under the Act, 1948. He contended that Public Works Department of the State was a registered dealer and as the ''State' is a juristic person, therefore, the said registration would hold good for the Resham Vibhag also, which the Court finds to be rather fantastic. There is no relation ship between the Public Works Department and Resham Vibhag of the Government of U.P. with regard to the sale and purchase of cocoon. The contention is therefore, rejected. As regards the contention of Sri Mishra that the goods should first of all, be taxable, certainly this is a requirement as is evident from the very opening line of Section 3-AAAA wherein the words "who purchases any goods liable to tax under this Act" occur. Paragraph 10 of the judgment of the Supreme Court in the case of M/s Jhunjhunwala and others vs. State of U.P. and others 2006 NTN (31) 276 is also to the same effect, therefore, the moot point for consideration before this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at they are not similar The former Notification is not applicable to the Assessment Year 1998-99 and 1999-00 for obvious reasons. The fact that cocoon contains silk is not sufficient. It is not silk yarn. The contention of the counsel for the revisionist that cocoon is nothing but a silk yarn and after binding 3-4 threads the silk yarn is ready for sale, therefore, cocoon is not taxable under the Act, 1948, is not acceptable; firstly, for the reason it was his own case before the Appellate Authority in his show cause notice as also before the Tribunal that cocoon is a raw material from which silk yarn is manufactured, secondly silk yarn is the result of a process of reeling after purchase of cocoon and as already stated it is different from the latter for the purposes of sale and purchase in ordinary commercial parlance and is not the same in form and condition, Cocoon without being reeled and processed, which includes spinning or binding 3 or 4 fibers to form one thread cannot be sold or purchased as silk yarn. Cocoon is exempt from tax on sale only in the hands of the agriculturist or horticulturists producing it in view of the proviso to section 2(c) [erstwhile Section 2(i)] of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Motors Bareilly vs. Commissioner of Sales Tax U.P. reported in (2007) 4 SCC 140 the contention before the Supreme Court was that no purchase tax was payable in view of clause (iii) of the proviso to Section 3-AAAA of the Act, 1948 and an alternative argument was raised that even otherwise, assembling of the chassis and body of three wheelers resulting into autorickshaw did not amount to ''manufacture' within the meaning of Section 2(e-1). The Supreme Court held that a literal meaning is required to to be given to the expression used by the legislature. The requirement of law, in view of clause (iii) of the proviso, is that goods once sold to a registered dealer must be sold in the same form and condition in which he had purchased. The Court opined in the facts of the said case that it had no doubt in its mind that the sale made by the assessee of chassis with mounted body would be selling a product which is in a different condition from the chassis or body, and, thus, the same would be liable to purchase tax under sub section (a) of Section 3-AAAA. In paragraph 15 of its judgment it held that "a commodity is identified by ordinary commercial parlance. Autorickshaw is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;'manufacture' does not occur in Section 3-AAAA. The words in clause (iii) of the proviso are also different as discussed earlier. The judgment of Mysore High Court in the case of Deputy Commissioner of Sales-tax vs. Dharma Prakash S.V. Sreenivasa Setty (1954) 5 STC 180 (Mysore) relied upon by the petitioner also does not apply in this case as the issue in the said case was whether ''artificial silk' was a ''filature silk', foreign silk and Charkha silk, which were exempted from tax, which is not the case here. The Full Bench decision of Kerala High Court also does not help the Revisionist as the issue involved in the said case was the meaning of ''Silk' and whether ''Rayon' was silk ? and not whether ''cocoon' was silk yarn. Thus, none of the judgment cited by Sri Misra persuade the Court to take any other view of the matter. For the reasons aforesaid the Tribunal cannot be said to have committed any error in passing the impugned judgment. The question formulated is answered accordingly. Revisions No.86 of 2005 and 87 of 2005 are accordingly dismissed. Interim orders are discharged. Revisions No. 75 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after reeling had sold the silk yarn as such cocoon and silk yarn made from it were two different goods. Cocoon could also not be said to be a raw silk. The Appellate Authority had erred in relying upon the decision referred. The Tribunal accepted the contention of the Department that merely because the cocoon was an agricultural produce it could not be treated as exempt from tax, as, such a produce was exempt only in the hands of the agriculturist or horticulturist in terms of proviso to Section 2(c) i.e. they were not to be treated as a dealers when they sold it. It was not exempt otherwise. Section 2(c) did not apply in this case. In the judgment relied upon by the Appellate Authority and referred hereinabove the transaction was not liable to tax under Section 3-AAAA, therefore, it was not applicable to the facts of the case. It accordingly allowed the appeal and set aside the impugned order. While the Tribunal cannot be faulted for arriving at its conclusion as to the non applicability of the decision of the High Court in Revision Nos. 195/79 and 196/79, the Court finds that there was no consideration by it or by the Appellate Authority as to whether cocoon was "pure silk" w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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