JUDGMENT R.R. Rastogi, J.
1. In compliance with the direction of this Court the Additional Judge (Revisions), Sales Tax, Kanpur Range I, Kanpur, had referred the following two questions of law for the opinion of this Court:
(1) Whether, under the facts and circumstances of the case, the learned Additional Judge (Revisions) was legally justified to hold that mufflers made out of woollen cloth, are woollen cloth and thus exempt from tax ?
(2) Whether the woollen mufflers made out of woollen cloth are taxable as woollen goods as per Notification No. ST-3613/X-900(21)-69 as modified by ST-II-332/X-1012-1971 dated 15th November, 1971, at 6 per cent or as hosiery of all kinds other than pure cotton hosiery taxable vide Notification No. ST-3612/X -900(21)-69 dated 1st July, 1969, at 3 per cent at all points of sale ?
2. In view of the amendment made in the U.P. Sales Tax Act, this reference was converted into a revision under Sub-section (6-A) of Section 11. It came up for hearing before a learned Judge of this Court who, being of the opinion that there is conflict in two decisions of this Court, viz., Commissioner of Sales Tax v. Mulri Dhar Shiv Kumar (page 44 infra) 1979 UPTC 1234 and British India Corporation Ltd. v. Commissioner of Sales Tax (page 47 infra) 1980 UPTC 1078, referred the case to a larger Bench. That is how the revision has come up before us.
3. In order to appreciate the controversy involved in the case and the respective submissions made before us, it would be necessary to refer to the facts giving rise to this revision in some detail. M/s. Prem Hosiery Stores, Kanpur, the assessee was a wholesale dealer in cotton hosiery, umbrella cloth, woollen and nylon hosiery. For the assessment year 1971-72 it disclosed its gross turnover at Rs. 7,63,859 and net at Rs. 7,27,462.35. For various reasons the accounts and the disclosed turnover were rejected by the assessing authority. Apart from that on scrutiny of the details of purchases the assessing authority found that the assessee had purchased handloom goods worth Rs. 7,825 but had not paid any tax on sales of the same. On examining the bijaks it found that the assessee had purchased handloom mufflers from outside the State and scarfs from Kanpur Woollen Mills, Kanpur. Excise duty had been charged in the bijaks relating to scarfs but had not been so charged on purchases of mufflers. The assessing authority hence treated scarfs as woollen goods for purposes of charging sales tax on sales of the same and not as mufflers. It was also of the opinion that otherwise also handloom mufflers had not been exempted from tax by any notification. However, following the decision of this Court in Commissioner of Sales Tax v. Verma Hosiery Stores [1972 UPTC 258 it took the view that sales of handloom mufflers were liable to be treated as woollen hosiery. The assessing authority, accordingly, estimated the sales at Rs. 9,00,000.
4. The assessee preferred an appeal. The Assistant Commissioner (Judicial) partly agreed with the reasons given by the assessing authority for rejecting the accounts and in his opinion only a nominal enhancement was called for. Accordingly, he modified the turnover to Rs. 7,75,000. Another submission made before him on behalf of the assessee was that woollen mufflers had been manufactured out of handloom cloth and hence the sales thereof were exempt from tax. The appellate authority partly accepted this contention. The view taken was that mufflers are of two types : one, those mufflers which are knitted by machines and in the other catagory are those mufflers which are made from woven cloth. Following the decision in Verma Hosiery Stores 1972 UPTC 258 mufflers manufactured by knitting were treated as hosiery liable to be taxed as such while mufflers made from handloom cloth were treated as cloth itself and the sales thereof were exempted from tax.
5. The department being aggrieved with the exemption so allowed, filed a revision which remained unsuccessful and now at its instance the questions noted above have been referred to this Court.
6. It would be seen that the controversy which is involved in the present case is as to whether mufflers made from woven cloth are to be treated as handloom cloth itself or woollen goods ? If they are treated as handloom cloth, their sales would not attract any tax, but if they are treated as woollen clothes their sales would attract tax. It was hence contended by the learned standing counsel, Sri A. P. Misra, that the conflict in the two decisions of this Court, viz., Murli Dhar Shiv Kumar (page 44 infra) 1979 UPTC 1234 and British India Corporation (page 47 infra) 1980 UPTC 1078 need not be gone into. After hearing the counsel for the parties we find merit in this contention. In brief, we may refer to these decisions with a view to show that it is not necessary in the present case to resolve the conflict between them. In Verma Hosiery Stores 1972 UPTC 258, the assessee carried on business in hosiery goods of all kinds and the dispute in the reference before this Court related to the rate of tax applicable to the turnover of mufflers and topas. The assessee was manufacturing those articles and the process involved was that of knitting of cotton yarn and not of weaving. After referring to the meaning given to the word "garments" in Webster's Dictionary it was observed that topas and mufflers are knitted garments and as such would fall in the category of hosiery goods. Following the decision given by this Court in Ram Lal & Brothers v. Commissioner of Sales Tax (S.T.R. No. 284 of 1964 decided on 6th February, 1969-Allahabad High Court) it was held that "hosiery" means an underwear or underclothing, i. e., articles which are used next to the skin. The Rajasthan High Court in Jaipur Hosiery Mills v. State of Rajasthan [1967] 19 STC 416 had held that "hosiery" means machine knitted garments. Since topas and mufflers are machine knitted garments and are worn next to the skin, the Bench in Verma Hosiery Stores 1972 UPTC 258 took the view that they satisfy both the tests and are articles of hosiery Covered by Notification No. 4562-2-II/X-902(7-M)-57 dated 1st October, 1962, and are taxable at the rate of one paisa per rupee. It was thus held that these articles cannot be taxed as readymade garments nor can they be taxed as unclassified goods.
7. It may be seen that according to this decision hosiery goods refer to that class of garments which are machine knitted and are worn next to the skin. In Murli Dhar Shiv Kumar (page 44 infra) 1979 UPTC 1234, the question involved was as regards the taxability of mill-made mufflers and following the decision in Verma Hosiery Stores 1972 UPTC 258, it was held that since woollen mufflers are articles which are used next to the skin, they satisfy one of the tests for determining whether the commodity is a hosiery, and they are liable to be treated as hosiery taxable under the aforesaid notification. However, the question as to whether woollen mufflers purchased by the assessee from Dhariwal Mills come into general category of woollen fabrics was not gone into. In British India Corporation Ltd. (page 47 infra) 1980 UPTC 1078, the assessee, who manufactured woollen goods, yarn, woollen cardigans and pullovers, claimed that the sales of cardigans and pullovers were liable to be taxed as hosiery goods and not as woollen goods. In Ram Lul's case (S.T.R. No. 284 of 1964 decided on 6th February, 1969-Allahabad High Court) pullovers and cardigans had been treated as woollen goods and not as woollen hosiery. That decision Was distinguished and on a consideration of the relevant notifications the view taken was that woollen hosiery has not been treated as part of woollen goods and that the word "hosiery" used in various notifications for purposes of taxability has to be understood in a wider sense inasmuch as it applies to all knitted articles and cannot be confined to undergarments only. On this view, sweaters, cardigans and pullovers, which are machine knittted, were treated as hosiery goods liable to be taxed as such. In the instant case we are concerned with the question of taxability of mufflers made out of woven cloth and not mufflers which are machine knitted and the controversy after the decision of the appellate authority, as confirmed by the revising authority, is as to whether such mufflers are liable to be treated as woollen goods or as handloom cloth. The controversy is not as to whether they can be treated as hosiery goods and, therefore, we agree that the latter part of question No. (2) need not be gone into if it is found that these mufflers are woollen goods and not handloom cloth and if we find that it is so, it would not be necessary to resolve the conflict between the aforesaid two decisions. It admits of no doubt that hosiery products generally are knitted articles and they are different from woven articles, vide Jaipur Hosiery Mills (P.) Ltd. v. State of Rajasthan [1970] 26 STC 341 (SC). The mufflers involved in the instant case being woven articles, therefore, are not hosiery products.
8. Section 4 of the Act provides that no tax shall be payable on the sale or purchase of the goods mentioned in Clauses (a) and (b) or any other goods which the State Government may, by notification, exempt. It appears that the assessee claimed exemption on the disputed turnover on the basis of Notification No. ST-4485/X dated 14th December, 1957, which was issued under Section 4(1) of the Act. By this notification woollen fabrics, inter alia, were exempted from tax. By subsequent notifications issued under Section 3-A of the Act woollen goods were made taxable. By Notification No. ST-1365/X-990-1956 dated 1st April, 1960, entry No. 25 made "woollen goods" excluding carpets but including knitting wool taxable at single point at 6 nP. per rupee. Notification No. ST-1281 dated 1st October, 1961, amended this entry with the result that it read as follows :
25. Woollen goods excluding carpets but including knitting wool, woollen hosiery and readymade garments made out of woollen cloth.
9. This entry was further amended by Notification No. ST-4562 dated 1st October, 1962, and it read as follows :
25. Woollen goods excluding carpets and hosiery other than pure woollen hosiery, but including knitting wool and readymade garments made out of 'woollen cloth'.
10. Notification No. ST-3613 dated 1st July, 1969, again substituted this entry and it read :
Woollen goods excluding carpets and hosiery, but including knitting wool and readymade garments made out of woollen cloth.
11. Notification No. ST-II-332 dated 15th November, 1971, has put this item under entry No. 106 and in the contents or at the point of levy and rate of tax there is no difference. For the assessment year under consideration, namely, 1971-72, therefore, the relevant entry was:
Woollen goods, excluding carpets and hosiery but including knitting wool and readymade garments made out of woollen cloth.
12. It would appear that in the notification issued under Section 4 and the subsequent notifications referred to above there is some conflict. The safe rule to adopt, however, when interpreting these notifications, is that if a commodity is clearly covered by a specific notification, then the notification which is general in terms should be interpreted in a manner so as to exclude that commodity. Since in the present case, both the appellate and the revising authorities treated mufflers made out of woollen cloth as handloom cloth itself, it would be seen that the controversy is confined to this aspect only. In other words, what is required to be seen is as to whether mufflers made out of woollen cloth are to be treated as cloth itself or are liable to be treated as clothes. In Lakshmiratan Cotton Mills Company Limited v. Sales Tax Officer [1962] 13 STC 1031, a question arose before this Court as to whether there is any difference between "cloth" and "clothes". The view taken was that there is essential difference between "cloth" and "clothes" and it is that whereas "cloth" is what comes straight from the weaving of textile factory, "clothes" are articles after cloth has been converted by cutting and stitching and something having been done to "cloth" either by human or machine agency to make that "cloth" into a garment or wearing apparel. Neither the size in which a particular cloth is manufactured nor its adaptability for a particular use, nor the fact that it can straightaway be used as a garment can make cloth manufactured by a mill cease to be "cloth". Where after cloth has been manufactured, something more is done to it by some other agency which makes it into a different kind of product or makes its adaptable for a particular kind of use it ceases to be "cloth" simpliciter and will have to be described by a different name. For this proposition reliance was placed on an earlier decision of this Court reported in Jaswant Rai Jai Narain v. Sales Tax Officer [1955] .6 STC 386 at 390.
13. It would be seen, therefore, that there is essential difference between "cloth" and "clothes" or garments. "Cloth" is the fabric or material from which "clothes" or garments are made as wearing apparel or other articles of personal use.
14. An attempt was made by the learned counsel for the assessee to canvass that the assessee manufactures mufflers as "cloth" and not out of "cloth" and hence in respect of the sales of the same it was not liable to any tax. Reliance was placed on Lakshmiratan Cotton Mills Company Limited [1962] 13 STC 1031 and Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433 (SC). We do not find any factual foundation for this submission on record. What was found by the assessing authority was that the assessee had purchased woollen handloom scarfs from the Kanpur Woollen Mills, Kanpur, and claimed exemption from tax in respect of the sales thereof on the ground that these were only handloom cloth. It was not the case of the assessee that it was itself manufacturing such cloth. At the same time, it may be noted that neither it comes out from the order of the assessing authority nor of the appellate authority that after purchasing woven handloom scarfs the assessee converted the same into mufflers or scarfs either by human or machine agency. Therefore, in the case of the assessee it is not possible to hold that what the assessee deals in was clothes and not cloth. The assessee appears to have sold them in the same condition in which it had purchased them and that being so they would be treated as cloth in its hand. The disputed handloom scarfs, therefore, do not fall within the category of woollen goods as appearing in entry No. 106 of Notification No. ST-332 dated 15th November, 1971, or Notification No. 3613 dated 1st July, 1969.
15. As mentioned above, in the case of Lakshmiratan Cotton Mills Company [1962] 13 STC 1031, the difference between cloth and clothes was elaborated. In that case, dhotis, sarees, chadars, etc., manufactured by the assessee were treated as cloth under entry No. 2 of List I of Notification No. ST-117 dated 8th June, 1948. Those items represented the cloth manufactured by the assessee as such and the view taken was that the size of a particular cloth or its adaptability for a particular use or the fact that it can straightaway be used as a garment would not mean that the cloth so manufactured by a mill ceases to be cloth. In the present case, in the absence of any material on the record to show that the woven handloom scarfs purchased by the assessee had been subjected to any process either by human or machine agency it is not possible to treat them as clothes. There is also nothing on the record to show that these scarfs were not manufactured by the mills as such and simply because the cloth was of a particular size or could be adapted for a particular use would not mean that the cloth so manufactured ceased to be a cloth.
16. In Porritts & Spencer (Asia) Ltd. [1978] 42 STC 433 (SC) the word "textiles" occurring in item No. 30 of Schedule B to the Punjab General Sales Tax Act, 1948, had come up for consideration. In that case the assessee made dryer felts out of cotton or woollen yarn by the process of weaving according to the warp and woof pattern and it was held that the word "textiles" may be interpreted according to its popular sense meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. That being so, only one meaning can be attributed to this word and it is "a woven fabric". It was also held that the mode of weaving, any particular size, strength or weight or the use to which it may be put are not material for the purpose. What is necessary is "no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric".
17. In our opinion, on the facts on the record, these decisions do help the assessee.
18. We, therefore, answer question No. (1) by saying that sales of woven woollen handloom scarfs which the assessee had purchased from the Kanpur Woollen Mills, Kanpur, and which fall in the category of woollen cloth were exempt from tax and the view taken by the Additional Judge (Revisions) is correct.
19. In so far as question No. (2) is concerned, the first part of it does not arise from the facts of the case and so far as the second limb of the question is concerned, for the reasons stated above, we have not gone into it and hence this entire question is returned unanswered.
20. In the circumstances, we direct the parties to bear their own costs. A copy of this Judgment may be sent to the Sales Tax Tribunal as required by Section 11(8) of the Act.