V.K. Mehrotra, J.
1. The three submissions made on behalf of the Commissioner of Sales Tax, U. P., applicant in this revision under Section 11(1) of the U.P. Sales Tax Act, are, firstly, that the turnover of the dealer, opposite party in the revision, of sale of ice-cream was wrongly held exempt from levy of sales tax as a milk product, secondly, that part of taxable turnover of self manufactured soda lemon was erroneously held not liable to tax, and thirdly, that the turnover of sale of acrylic yarn was erroneously held liable to tax at a lower rate of 2 per cent instead of 7 per cent.
2. So far as the first contention is concerned, it is obvious that the view taken by the Sales Tax Tribunal, Saharanpur, was plainly correct. It has been ruled by a Division Bench of this Court in Commissioner of Sales Tax, U.P. v. Rita Ice Cream 1981 ATJ 476 that ice-cream was exempt from levy of sales tax as a milk product.
3. The second submission also does not deserve acceptance for a perusal of the order of the Tribunal shows that as against the estimated taxable turnover of Rs. 29,000 the Tribunal thought it proper to estimate it at a lesser figure of Rs. 23,000. It was open to the Tribunal, as the last authority for determining questions of fact, to do so.
4. The third contention relates to. rate of tax on the turnover of acrylic yarn. The Tribunal has mentioned in its order that in the schedule of rates in the U. P. Sales Tax Act acrylic yarn had been shown to be taxable at 2 per cent at item No. 617. Further, that in Notification No. 213 of 1976 of 31st August, 1976, too synthetic fibres of all kinds had been treated taxable at 2 per cent. The submission of the learned standing counsel is that acrylic yarn was sold as knitting yarn by the dealer as was found by the assessing authority. As such, it was liable to be taxed as an unclassified item for it became taxable in the hands of a manufacturer or importer, at the rate of 6 per cent only with effect from 1st March, 1979, under Notification No. ST/II-2177/X-6-(19)-78 at item No. 205(a) of that schedule. It appears that the Tribunal was in error in referring to item No. 617 of the schedule of rates for that item does not relate to acrylic yarn marketed for use as knitting yarn. There is substance in the submission made on behalf of the Commissioner that prior to the notification dated 1st March, 1979, when knitting yarn, whether woollen, acrylic or of any other kind, was made taxable in the hands of a manufacturer or importer, the turnover of sale of acrylic yarn marketed as knitting yarn was liable to be taxed as an unclassified item, of which the rate at the relevant time, according to the learned standing counsel, was 7 per cent. To that extent, the view taken by the Tribunal is not correct.
5. The revision succeeds in part. While the order of the Tribunal is substantially upheld, it is set aside in so far as it relates to the rate of tax on the turnover of acrylic yarn of Rs. 40,000 for the year in question. Instead of being taxed at the rate of 2 per cent the turnover was liable to be subjected to tax at 7 per cent as an unclassified item as urged by the learned standing counsel.
6. A copy of this decision shall be forwarded to the Tribunal as required by Section 11(8) of the Act.
Costs on parties.
Dt. April 13, 1982.
7. Before this judgment, which was dictated in open court on 13th April, 1982} was transcribed and put up for signature, Sri Rajesh Kumar, appearing for the dealer-opposite party, prayed that he may be heard further in support of this plea that the order of the Tribunal did not require any interference even in regard to the rate of tax on the turnover of acrylic yarn. Consequently, he was heard and so was the learned standing counsel further.
8. The submission of Sri Rajesh Kumar is that the notification which would govern the turnover in question was the one dated 3rd April, 1975, by which an earlier notification dated 15th November, 1971, had been substituted. At the relevant time, the entry was in the following term :-
108. Yarn of all kinds including unspun fibre used in weaving, other than handspun yarn, but excluding cotton yarn, woollen carpet yarn, filature silk yarn, staple fibre yarn and nylon yarn.
9. The rate of tax was 2 per cent and the turnover remained taxable as before in the hands of manufacturer or importer. It is urged that having regard to the amplitude of the entry, even acrylic yarn was taxable at 2 per cent being included in the category 'yarn of all kinds'.
10. The learned standing counsel, on the contrary, contended that there is no scope for this submission for the matter stood settled by a Division Bench decision of this Court in Commissioner of Sales Tax, U.P. v. Sarin Textile Mills 1970 UPTC 625, wherein the Bench ruled that a similar entry evinced the intention of the State Government to the effect that the word 'weaving' should qualify not only the unspun fibre but also the term 'all kinds of yarn'. This decision, according to the learned standing counsel, was affirmed by the Supreme Court though this matter was not specifically dealt with.
11. Sri Rajesh Kumar has brought to my notice the Hindi version of the notification which runs thus :
Haath ke kathe sooth se bhinna sabhi prakaar ka sooth jiske anthargarth buniyi mein prayuktha hone vaala bina katha dhaagaa bhi hai, kinthu jiske anthargath rooyi ka sooth, unhi kaalinon ke umra ka sooth, reyan sooth, fayilechar resham ka sooth, staipil fayibar ka sooth thatha nayilon sooth nahin hain.
12. It is also urged that the Division Bench did not deal with this notification at all nor did it express a concluded opinion on the question.
13. The entry with which the Division Bench dealt in the case of Sarin Textile Mills 1970 UPTC 625 after its modification by notification dated 1st April, 1960, was in these terms :
Yarn of all kinds including unspun fibre used in weaving other than handspun yarn but excluding cotton yarn.
14. The Division Bench expressed itself at page 627 of the report thus:
It has been contended on behalf of the assessee and this contention has found favour with the appellate and the revisional authority that the yarn contemplated by the notifications Nos. 1 and 2 is that kind of yarn which is used in weaving. If one looks at the notification No. 1, one finds that having regard to the three commas, used in entry No. 4, the word 'weaving' qualifies only the phrase 'unspun fibre' and does not qualify the phrase 'yarn of all kinds'. According to the text of this entry the contention that weaving qualifies all kinds of yarn does not appear to be correct. But when one looks at the subsequent notification No. 2 of 1st April, 1960, the commas have been omitted so that, according to the text of that entry the word 'weaving' would qualify all kinds of yarn as well. Indeed there are subsequent entries also relating to yarn where commas have been omitted. It is possible, therefore, to say that the intention of the State Government was that the word 'weaving' should qualify not only the unspun fibre but also the term 'all kinds of yarn'.
15. If one compares the text of the entry as it was worded, in the notification dated 1st April, 1960, and the one relatable to the dispute involved in the present case, it would be clear that the language, in the material part, is the same. The observations of the Division Bench cannot be ignored by taking the view that they did not incorporate a concluded opinion about it.
16. The counsel for the dealer also urged that it was not open to the Commissioner to plead for imposition of tax at the higher rate on the footing that what was being sold by the dealer was acrylic yarn as knitting yarn, when, in fact, no such ground had been raised in the memo of revision in this Court nor was any such finding invited on his behalf before the Tribunal. This submission cannot be countenanced in the facts of the instant case. A perusal of the order of assessment reveals that a categorical conclusion was recorded by the assessing authority that the dealer had admitted at the time of survey that he had purchased/imported the commodity as knitting wool from Delhi and had, after making bundles, and labelling it, sold it as such. The assessing authority based its conclusion, in favour of the taxability at the higher rate, on a categorical finding that the dealer had also sold acrylic yarn as knitting wool, When the Assistant Commissioner (Judicial) took the view that what was sold by the dealer was only acrylic yarn and that the State representative had also admitted its taxability at the rate of 2 per cent, a specific ground was taken on behalf of the Commissioner in the memo of revision filed on his behalf before the revising authority that the Assistant Commissioner (Judicial) was in error in holding the turnover of acrylic yarn, which had been sold as wool by the dealer taxable at 2 per cent. This was stated in ground No. 5 of the memo which was expanded in the same ground by saying that the acrylic yarn, which was sold as wool by the dealer, was an unclassified item during the year in question and could not be treated to be included in the category of 'yarn of all kinds' as was done by the Assistant Commissioner. The Tribunal did not disturb the conclusion of the assessing authority, nor did it deal with ground No. 5 specifically, but observed in its order, impugned in this Court, that the commodity was shown to be taxable at 2 per cent in the schedule of rates in U. P. Sales Tax Act at item No. 617 along with nylon yarn.
17. Another facet of the submission made by Sri Rajesh Kumar is that in the memo of revision of this Court, the only controversy raised was that the commodity sold was 'wool' and that it was not pleaded that it had to be treated as 'knitting wool'.
18. The submission is hypertechnical in nature as, having regard to the finding of the assessing authority and the ground which was raised on behalf of the Commissioner before the tribunal as well as the second ground mentioned in the memo of revision in this Court, it is clear that what was treated to be in issue between the parties was that the commodity sold by the dealer during the year 1976-77 was liable to be taxed as an unclassified item for he has sold the acrylic yarn as knitting wool.
19. Lastly it was urged by Sri Rajesh Kumar that the mere fact that the dealer had described the commodity as knitting wool was not determinative of the fact that it was knitting yarn and further that there was nothing on the record to show that the yarn sold by him could not be used for the purpose of weaving. In this view of the matter, it was urged the Tribunal's conclusion deserved to be upheld. In the circumstances of the instant case, it is too late to contend that the taxability of acrylic yarn as an unclassified item was being based by the department on the mere fact that it had been described as 'wool' by the dealer. It has been found that at the relevant time the entry relating to yarn, as interpreted by the Bench of this Court, was confined to yarn used for weaving. There was no entry which would have brought the commodity sold by the dealer within the ambit of taxability at a lower rate at a particular point. It was for the first time that in the year 1979, as noticed earlier in this judgment, that a separate entry relating to knitting wool whether woollen, acrylic or of any other kind, as a taxable entry at the rate of 6 per cent in the hands of the manufacturer or importer, came into existence. It is obvious that till the time that a separate entry about it came into existence, acrylic yarn sold by the dealer was taxable as an unclassified item.
20. It has been nobody's case, prior to the submission made today, that acrylic yarn sold by the dealer, could also be used for weaving purposes. It is not possible, therefore, to entertain this submission and seek further investigation of facts in this regard now.
21. The conclusion is inevitable that the Tribunal was in error in upholding the view that the turnover of acrylic yarn sold by the dealer-opposite party during the year 1976-77 was liable to tax at the rate of 2 per cent. The order dictated on 13th April, 1982, shall stand.