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1993 (12) TMI 233

, 5, 7, 8, 9 and 10 may be quashed and the respondents No. 2 and 3 may be directed to consider the rate of tax payable by the petitioner on absorbent cotton wool I.P. as 4% under item-No. 16 of the notification dated 27.6.1990. It is also prayed that the judgment given in the case of Vishwas Surgical Industries, Sri Ganganagar Asstt. Commercial Taxes Officer (1992) 10 STA 40 may be quashed. 2. The petitioner is a partnership firm registered under the provisions of the Indian Partnership Act. The petitioner is carrying on the business of purchase and sale of cotton at Nokha in District Bikaner. The petitioner is a registered dealer under the Rajasthan Sales Tax Act and the petitioner s sales tax number is 1812/29. One of the commodities which the petitioner sells is absorbent cotton wool I.P. Initially this item was governed by Item No. 11 of the notification dated 8.3.1988, which reads as under: 11. Cotton that is to say, all kinds of cotton (indigenous or Imported) in Its manufactured or un-manufactured state, whether ginned or unginned, baled, pressed or otherwise, but not including cotton waste. 3. The petitioner was collecting tax from the purchasers according to the rates fixe .....

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ed on the record as Annexs. 9 and 10. 5. It is alleged that a judgment was rendered by the Rajasthan Sales Tax Tribunal, Ajmer in the case of Vishwas Surgical Industries, Sri Ganganagar v. Assistant Commercial Taxes Officer was in relation to surgical cotton i.e. absorbent cotton or cotton wool. Copy of the judgment has been placed on the record as Annex. 11. All these notices have been issued on account of this judgment and a demand has been created for tax at the general rate of 10% on this item on account of the aforesaid judgment given by the Tribunal. Therefore, the petitioner has approached this Court by filling the present writ petition and submitted that no useful purpose would be served by submitting to the jurisdiction of the authorities in pursuance of the notice because the authorities are bound by the decision given by the Tribunal and they are not bound by the decision given by the Additional Collector, Commercial Taxes under Section 12A of the Act of 1954 and as such there is no option left with the petitioner but to approach this Court for determination of the question whether this item is covered by the general rate of tax i.e. 10% or at the rate of 6% or at the ra .....

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otherwise including cotton waste has been covered by this entry and tax payable is at the rate of 4%. Now, the question is whether the absorbent cotton wool. I.P. is covered by this entry or not. In this connection, the Additional Commissioner, Commercial Taxes has taken the view when the matter was referred to him under Section 12-A which empowers the Additional Commissioner for determination of the disputed questions if referred and in exercise of this power and after hearing the petitioner as well as the departmental representative determined this question and held that this item will be covered by entry No. 16 of the notification dated 27.6.1990 and shall be taxable at the rate of 4%. He has made a reference to the process and specification of this item as specified in Indian Pharma Copia and British Pharma Copia. Indian Pharma Copia prescribes the process as under: Standards: Absorbent cotton wool consists of the trichomes or good quality new Bombers of trained from the seedcoat of various species of the genus Gossypium, tinned, cleaned, purified and bleached. It does not contain any colouring matter. British pharma copia prescribes the standards under: Absorbent cotton wool i .....

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eparation and it will be taxed at the rate of 6% instead of 10%. 11. The question before the Tribunal was whether this cotton is to be taxed at the rate of 4% or at the rate of 6% treating it to be surgical cotton as a pharmaceutical preparation or at the genera rate of 10%. It was held that it will be taxed at the rate of 6% being a pharmaceutical preparation. 12. However, it may be stated here that the Government has resolved this controversy now by issuing a notification dated 12.4.1993 and they have added the word absorbent cotton wool I.P. in entry No. 16 after the existing word cotton waste. Therefore, the whole controversy is now academic but so far as the petitioner is concerned, it is relevant for the purpose of tax liability for previous years. 13. In fact, it was not brought to the notice of the Additional Commissioner that whether this commodity can be covered under entry 56 i.e. pharmaceuticals of the notification dated 27.6.1990 which reads as under: 56. Medicines, drugs and all kinds of pharmaceutical preparations excluding items mentioned at item No. 72. 14. Both the parties had concentrated on entry No. 16 only as the arguments were confined in that context. But th .....

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s as may be notified by the State Government 16. Therefore, the expression manufacture means and includes processing of the particular item according to the standards laid down. In the Standard Books on Pharmacology and the standards quoted above it shows that the cotton in order to acquire a shape of absorbent cotton wool I.P. i.e. commercially known as surgical cotton has to go a certain process and after cleaning and chemically processed it becomes surgical cotton i.e. a pharmaceutical product. These pharmacological books prescribe the manufacturing process of this surgical cotton and once it goes to a certain process it becomes a manufactured item and it acquires a particular new shape which is known in the commercial market as surgical cotton, Therefore, I think the view taken by the Tribunal appears to be correct as against the view taken by the Additional Commissioner, Commercial Taxes. In this connection, the Tribunal has made a reference to 1986 RTC 350; 1968 (21) STC 171; 1970 (25) STC 53; 1983 (53) STC 203. Against this reference has also been made to Sri Ram Products and Fairdeal Corporation Ltd. (supra). Both these cases were also considered by the Tribunal, which were .....

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