Decided on January 17,1967



- (1.) THIS revision petition has been filed against the order of the Dy. Commissioner, Excise & Taxation, (Appeals), Ajmer and Kota Division, whereby he held that cloth had been exempted from sales tax and that a sari even though embroidered did not lose the characteristic of cloth, following the rule laid down in the case of Sri Kittappa Dress Manufacturing & Embroidery Works vs. The State of Madras (STC 1962 p. 35 ). The learned Dy. Commissioner thus came to the conclusion that the saris were exempted from sales tax.
(2.) ALTHOUGH other parts of the judgment were also attacked initially yet the only point urged before me relates to the sale of saris. The contention of the learned Govt. Advocate is that a sari ceases to be cloth when embroidered. In support of this contention, he relies on the rule laid down by the Supreme Court in M. Abdul Hameed Sahib vs. The State of Madras (1965 STC 822 Vol. XVI ). In this case, the assessee, a dealer in cloth and ready-made garments, sold to customers zari embroidered pieces of silk cloth and in the bills issued to them particular description of the embroidery was given and a price was fixed according to the weight of the zari. It was, noted that the customers did not supply the cloth for the embroidered pieces and that the value of cloth was very little when compared with the value of the zari work done on the pieces. It was held by the learned Judges that item 4 of the Third Schedule to the Madras General Sales Tax Act, 1959 which exempted all varieties of textiles was not applicable as the embroidery by zari design on the cloth had naturally altered the nature of the goods sold. In this case also, the case of Kittappa Dress M. & E. Works relied upon the Dy. Commissioner was referred to and it was contended that what was sold was cloth and not embroidered pieces and that the embroidery did not alter the nature of the substance as cloth. Another case cited was Kailash Nath vs. State of U. P. (1957-8 S. T. C. 358) The learned Judges distinguished the case of Kittappa Dress M. & E. Works on the ground that the substance in that case was sold only as cloth and embroidery did not make any appreciable difference in the value of the material sold. It was found in that case that the addition of the embroidery enhanced the price of the cloth by a small margin varying from four annas to 12 annas, while in the case of M. Abdul Hameed, it was found that the embroidery by zari design on the cloth had materially altered the nature of the goods sold and the value of the cloth was in fact the value of the weight of the zari that went into the embroidery. On this ground, the learned Judges also distinguished the case of Kailash Nath. In this case, the assessees sold cotton cloth manufactured by them to their constituents, who thereafter dyed and printed such cloth with hand-made apparatus and exported them as hand-printed cloth. The Supreme Court held that, though the colour of the cloth had changed by printing and processing, the cloth exported was the same as the cloth sold by the petitioner. The tenor of the above discussion obviously is that if the embroidery work is of a very minor nature and does not substantially alter the value or the character of the material it would continue to be treated as textile. On the other hand, if as a result of heavy embroidery design on the pieces of cloth, the value of the cloth portion becomes trivial when compared with the zari portion, it would be idle to contend that what is sold is only cloth and not some other article. The whole question therefore, becomes a question of fact to be determined by the Sales Tax Authorities in the light of these rulings. I find that the lower authorities have not examined the impugned sales in this manner. Under the circumstances, I find that this is a fit case for interference by this court in its revisional jurisdiction. In the result, this revision petition is accepted to this extent and the impugned order is set aside and the case is remanded to the assessing authority for reassessment of the sale of Saris in the light of the observations made above. .;

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