B.C. Patel, C.J.

In this bunch of matters, there are three groups. Group I covers 29 matters (CWP Nos. 2341, 2552, 2354, 2964, 2965, 2966, 2967, 2968, 2970, 2971, 2981, 2986, 2987, 2988, 2994, 2995, 2996, 2998, 2999, 3011, 3012, 3013, 3014, 3742, 3748, 3753, 4773, 3721, 3739) out of which we have taken CW 2431/2003 filed by Hoshyar Singh Suresh Chandra Sarees Pvt Ltd as the lead case. In these cases, after completion of assessments, notices were issued and after reopening, reassessments have been completed. Group II consists of ten cases (CWP. Nos. 2337, 2338, 2340, 2351, 2353, 2355, 2356, 2361, 2362, 2339/2003). When the petitions were filed assessments had not been completed in these cases. Thereafter, during the pendency of the petitions, assessments have been completed. In Group III, there are nine matters (CWP Nos. 3325, 3324, 3327, 3341, 3342, 3370, 3373, 3398, 3767), where assessments have been completed but have been re-opened.

2. In all these petitions a pure question of construction and interpretation of entry No.34 of Schedule I vis-a -vis entry No.60 of Schedule III to Delhi Sales Tax Act, 1975 is involved. The question is whether silk sarees (or spelled as saris) merit classification as silk fabrics or garments made of silk. According to the petitioners, the long-standing tradition/practice of classifying silk sarees as silk fabrics is the only correct method. If silk sarees fall within silk fabrics then they would be placed in Entry No.60 of Schedule III and would not attract any sales tax. On the other hand, if silk sarees are construed as garments made of silk then they would merit classification in Entry No.34 of Schedule I and would be exigible to sales tax @ 12%.

3. That as per provisions contained in the, Section 4 thereof indicates a schedule of rates at which the tax shall be levied on the taxable turnover.

4. In view of sub clause (d) of Sub-section (1) of Section 4 of the Act, any other goods not covered by any of aforesaid entries, is subject to tax @ 8 paise in a rupee. As aforesaid, Entry No.34 in Schedule-I refers to silk and garments made of silk, however, silk fabrics finds its place at Entry No.60 in Schedule III.

5. We have taken the facts of the lead case (CW 2341/2003). This petition has been filed by the petitioner, inter alia, praying for issuance of an appropriate Writ, order or direction declaring that silk sarees are silk fabrics and are classifiable under Entry No.60 of Schedule III to the Delhi Sales Tax Act, 1975, (hereinafter referred to as the) for the purpose of levy of tax under Section 4 of the said Act and to quash the assessment order / demand notice dated 24.3.2003 as well as notice issued under Section 24 dated 24.3.2003 seeking to reopen the assessment.

6. The petitioner M/s. Hoshyar Singh Suresh Chandra Sarees Pvt. Ltd., is a company incorporated on 16.10.1995 (hereinafter referred to as the assessee). The assessee is dealing in all kinds of sarees including silk sarees for the last eight years and was registered on 27.2.1996 under the Delhi Sales Tax Rules, 1975 (hereinafter referred to as the Rules).

7. The petitioner has placed on record an assessment order for the period of assessment 2000-2001 made on 26.9.2002 vide Annexure-1. The assessing officer had granted exemption from payment of tax.

8. Thereafter vide Annexure-2 dated 9.1.2003, notice was issued under Section 23 of the Act, calling upon the assessee with details of sale / purchase of silk sarees during 2001-2002 amount-wise with opening stock as on 1.4.2001 and also to show cause as to why penalty under Section 55 of theshould not be imposed on the assessee. In the notice, it was pointed out that the return filed by the assessee revealed that no sales tax @ 12% had been reflected in the return and the return filed by the assessee is incorrect.

9. The assessee pointed out vide his reply dated 10.3.2003, vide Annexure-3, that the department is interpreting wrongly by construing silk sarees to mean garments made of Silk which attracts tax at 12% as per Entry No.34 of Schedule I. silk sarees are not intended in the to be termed as garments made of silk. The assessee further pointed out that since a number of years silk fabrics and silk sarees are treated as one and the same thing and the assessee has never dealt in garments made of silk. It was further pointed out to the assessing officer that w.e.f. 1.4.2001, the item silk fabrics was moved from Schedule-I to Schedule-III and thus exempted from the tax. It is in view of this, the assessee neither collected any sales tax on the items nor kept any segregated record of taxable and non-taxable items. It was also pointed out that for the financial year 2001-2002, quarterly returns were filed and at no point of time it was pointed out to the assessee that the returns were incorrect. For the assessment year 2001-2002, the assessing officer made assessment under Section 23(3) of theon 28.8.2003. A copy, which is produced at Annexure-4.

10. On behalf of the respondent No.1 it was contended that silk sarees in common parlance are not to be understood as silk fabrics. According to respondent No.1, silk fabric / silk cloth in common parlance would mean that cloth / fabric which comes straight from the manufacturer. According to respondent No.1 though fabrics go out straight from textile factory, the sarees are in the nature of clothes / garments. Because it is later on cut to the standard size and reaches the retailer after the process of hemming is done on it to prevent fraying. According to respondent No.1, the difference between the fabric which is cut to size for shirts or trousers is that person can take that cut piece to the tailor and get it stitched, but sarees after the above stated work go straight to the showrooms and are displayed for sale. The process of hemming itself will change the nature of article and will not fall in the expression fabrics and this process itself amount to manufacture as defined in Section 2(h) of the Delhi Sales Tax, 1975. In point of fact, the respondents rely on the Supreme Court decision in the case of Kapri International v. Collector of Central Excise, Meerut reported as 2003 (142) ELT 10 (SC) to contend that the act of cutting the fabrics and hemming results in new article. We shall deal with the question of applicability of this decision to the cases before us. Suffice it to say at this stage that the said decision of the Supreme Court was dealing with the concept of manufacture under the Central Excise Act, 1944 where the taxable event is manufacture. Here, we are concerned with sales tax where the taxable event is not manufacture but sales.

11. On behalf of respondent No.1, it was submitted that the silk sarees which are in use for centuries are nothing but garments and reliance is placed on the expression saree as defined in Fairchilds Dictionary of Textiles by Dr. Isabell B. Wingate, which reads as under:

The principal costume of the Hindu women, for centuries, the term sari is also applied to the fabric woven especially for saris. The sari costume is one of the best surviving examples of the ancient, purely draped costume of the warm climates in which the garment is constructed entirely by draping - without cutting. Saris were hand woven of fine cottons and silk often decorated (usually borders and ends) with metal threads. The pieces were about 12 feet (3.66 m) long and from 36 to 50 inches (91.44 to 127 cm) wide. Today, fine expensive saris are hand woven or machine made in cotton or silk, in pieces from 12 to 16 feet (3.66 to 4.88 m) long while the less expensive saris are machine made, mostly in cotton and are cut from long pieces. Also spelled sarrie, saree.

12. The learned Counsel for respondent No.1 drew our attention to Schedule III to the where at Entry No.12 varieties of cotton fabrics are defined as under:

All varieties of cotton fabrics, man made fabrics and woolen fabrics excluding imported varieties of such fabrics.

(Explanation: The expressions cotton fabrics, man-made fabrics and woolen fabrics shall have the same meaning as are respectively assigned to them in the Central Excises and Salt Act, 1944 (1 of 1944).

So far as silk fabric is concerned, out attention was drawn to Schedule I of the. Entry NO.34 thereof reads as under:

Silk and garments made of silk (the words silk fabrics have been omitted vide No.E.4(75) / 99-Fin.(G) dated 31.3.2000 w.e.f. 1.4.2000).

Our attention was also drawn to Schedule III wherein at entry No.60 Silk fabrics has been added with effect from 1.4.2001. Entry No.34 in Schedule I included silk fabrics but, with effect from 1.4.2001 the same has been removed and put in Entry No.60 of Schedule III having 0% tax. Reliance was also placed on a departmental clarification by the respondents, a copy of which was produced at page 29 of the paper book. A question was raised in some Commission rates whether dhotis and sarees which were woven in running length and after processing were sold as such by mere cutting at demarcated places and so far were being classified as fabric under Chapters 52/54/55, have now to be classified as made up articles under Chapter 63. It must be noted that this classification was issued under the central Excise regime. In paragraph 3 thereof it is pointed out as under:

In 1995, Section XI on Textiles and textile articles was aligned with corresponding section on Textiles in HSN. Note 5 of Section XI of Central Excise Tariff incorporated in the Tariff even prior to the alignment, defines made-up and corresponds to Note 7 of Section XI of HSN. As per explanatory Note of HSN (P.714), vide note (2), the rectangular (including square) are simply cut out from larger pieces without other working and not incorporating fringes formed by cutting dividing threads are not regarded as produced in finished stage. The fact that these articles may be presented folded or put up in packing (for example for retail sale) does not affect their classification. Similarly, as per Explanatory Note (3) the expression made-up excludes fabrics the cut edges of which have been prevented from unraveling by whipping or by other simple means.

13. As mentioned above, the assessing officer placed reliance on the decision of the Supreme Court in the case of Collector, Central Excise v. Kapri Internatinal Pvt. Ltd. III (2002) SLT 417=2002 (4) SCC 710 [LQ/SC/2002/583] . In that case the facts were that by cutting cotton fabrics from running length into small pieces and giving them a definite required shape to form new articles like bed sheet, bed spread, table cloth, etc., a new commodity having a distinct commercial identity was prepared / manufactured. The assessing officer in this case held that silk fabrics manufactured in mills in running length was cut into pieces having definite length, called Silk Sarees i.e. new articles having different identity emerged. It is in view of this that the assessing officer held that sarees are not covered under silk fabrics as sarees that the assessee did not disclose the sale of silk sarees and taxed the assessee considering the purchase and then by adding gross profit @ 6% and taxed @ 12% and other sarees, etc. were taxed at 4%. For the said period, notice was also issued under Section 55 of the. We need not refer to the notice of demand or notice issued under Section 23 of the.

14. The learned Counsel for the petitioner submitted that the assessing officer has committed a grave error in not appreciating the said Supreme Court judgment in the proper perspective. He submitted that the case before the Supreme Court was a matter pertaining to exigibility to excise duty. The Assistant Collector of Central Excise had made a demand on Kapri International Pvt. Ltd. for clandestine clearance of bed sheets and bed spread which were confirmed by the Commissioner of Central Excise along with the demand for wrongful availment of benefits. On further appeal being preferred before the CEGAT, the same was allowed by an order dated 3.8.1998. On behalf of the revenue, it was urged that the items, namely, bed sheets, bed spread, table cloth and napkins, etc. were manufactured by the respondent by cutting cotton fabrics from the running length through their sister concern, the finished products were totally new marketable commodities having distinct market identity. It was submitted that even though the material, namely, cotton fabrics, was earlier subjected to duty, in view of the fact that a new product after process of manufacture had emerged, which are marketable on their identity as bed sheets, bed spread, table cloth and napkins, pillows made of cotton fabrics, the same are exigible to duty again. In para 3 of the judgment, the Supreme Court pointed out:

We have no doubt that by cutting cotton fabrics from running length into small pieces and giving them a definite required shape to form new articles like bed sheets, bed spread and table cloth, etc. the respondent has produced a new commodity which has a definite commercial identity in the market.;

The Tribunal held that since the raw material had already suffered a duty under a particular tariff item, namely, tariff item No.19(1), the product manufactured by such material is to exigible to levy of duty. The Court negatived the finding and pointed out that manufacturing is bringing into goods known in the excise laws i.e. known in the market having distinct and separate identities. It is in view of these facts, according to the learned Counsel appearing for the petitioners, the items were held exigible to excise duty.

15. However, in the instant case, according to the learned Counsel, the petitioners were supplying silk sarees to the buyers in the same condition in which they purchased from the manufacturers. Learned Counsel further submitted that it is not the case of the revenue that the assessee is purchasing silk fabrics and thereafter the assessee is cutting silk fabrics into pieces of required size and is selling the same to the ultimate buyers. According to the learned Counsel, the manufacturer produced silk fabrics of a particular size and without making any addition or alteration, the said articles, namely, sarees were being sold to the buyers and therefore it retains it character as silk fabrics.

16. The learned Counsel for the petitioner drew our attention to the judgment delivered by CEGAT in the case of Kapri International Pvt. Ltd. v. CCE Meerut, 1999 (110) Excise Law Times 937, to point out that Kapri International Pvt. Ltd. was receiving duty-paid fabric in running lengths and was manufacturing items like bed sheets, bed spread, table cloth and napkins of required sizes and then was hemming and stitching them. It is also pointed out that fabrics in running length was sent to fabricator / job workers. The articles were manufactured by the job workers / fabricators. Thus, admittedly after receipt of cotton fabrics in running length and after cutting the same in pieces further work was executed so as to manufacture new articles. The cotton fabric manufactured by the manufacturer thus lost its original identity. In the instant case, it was submitted by the learned Counsel for the petitioner that as the petitioner is selling silk sarees to the buyers in the same condition in which the same were received, it cannot be said that any manufacturing process was done at the hands of the assessee so as to convert the original silk fabric into different articles.

17. It is at this juncture, that our attention was drawn to section 2(h) of theto point out what manufacture means. Said sub-clause (h) of Section 2 reads as under:

(h) manufacture with its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods, but does not include any such process or mode of manufacture as may be prescribed.

18. It was emphasized that no activity is carried out by the dealer at his end so as to attract this definition. It was submitted that there was no procedure for alteration finishing and ornamenting, etc.

19. The learned Counsel for the petitioner drew our attention to a decision of the Supreme Court in case of Commissioner of Sales Tax UP v. Lal Kunwa Stone Crusher (P) Ltd., III (2000) SLT 66=2000 (3) SCC 525 [LQ/SC/2000/522] . In that case, a notification dated 7.9.1981 was issued bringing to sales tax the following items at the point of sale to the consumer: Ramraj, geru, surkhi, sand, lime, bajri, marble chips, moram, gitti, kankar, stone ballast, stone and articles of stone except of glazed stone. The assessee was engaged in purchase of stone boulders and crushing them in stone chips, gitti, dust for the purpose of further sale. It was contended that at the time of purchase of boulders tax has been paid and hence goods emerging out of the same is smaller stone or dust, which is not liable to be taxed again. It was contended before the Court that the definition of the word manufacture makes it clear that every activity in relation to goods not only alter the same but also processing the same has also been included. The Supreme Court in para 4 pointed out:

The purpose of sales tax is to levy the tax on sale of goods of each variety and not the sale of the substance out of which this may have been made. As soon as separate commercial commodity is emerged by the coming into existence they became separately taxable goods for the purpose of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing, they may remain commercially the same goods which cannot be taxed again in a series of sales, so long as they retain their identity as goods of a particular type. We are fortified in this view by the decision of Govt. of Tamil Nadu v. Pyare Lal Malhotra and Ors, 1976 (1) SCC 834 [LQ/SC/1976/16] . What is to be seen in the present case is whether stone gitti, chips, etc continue to be identifiable with the stone boulder which has been bought by the dealer.

20. The Court further pointed out in para 5:

Where the dealer had brought into existence new commercial goods by consuming the boulders to bring out small pieces of stone, it was held that such activity attracted purchase tax. In the present case, however, stone, as such, and gitti and articles of stones are all of similar nature though by size they may be different. Even if gitti, kankar, stone ballast, etc. may all be looked upon as separate in the commercial character from stone boulders offered for sale in the market, yet it cannot be presumed that Entry 40 of the notification is intended to describe the same as not stone at all. In fact, the term stone is wide enough to include the various forms such as gitti, kankar, stone ballast. In that view of the matter, we think that the view taken by the majority of the Tribunal and affirmed by the High Court stands to reason.

It is in view of this, even the pieces cut from funning length of silk fabrics would not lose its character as the silk fabric. However, if the pieces are subjected to any process such as hemming and stitching as a result of which a new article comes into existence, the matter would be different.

21. The learned Counsel for the petitioner drew our attention to a decision of the Supreme Court in the State of Maharashtra v. Maha Lakshmi Stores, VII (2002) SLT 29=2003(1) SCC 70. That was also a case of crushing of stones into gitti. The Court after considering Section 2(17) of Bombay Sales Tax Act, 1959, which defines the term manufacture, took the same view which has been taken in the case of Lal Kunwa (supra).

22. The learned Counsel further submitted that it is open for the Legislature to impose tax on a particular commodity. In this context he pointed out that for the period 1.4.1998 to 31.3.1999, silk fabrics was placed at entry No.84 of Schedule III and was exempted. Prior thereto from 21.10.1975 to 31.3.1998 silk fabrics was taxed at 3%. Again from 1.4.1998 to 15.1.2000 the same was taxed at the rate of 3%. From 16.1.2000 to 31.3.2000 silk, silk fabrics and garments made of silk were covered vide Entry No.34 of Schedule I and were taxed at 12%. Thereafter from 1.4.2000 to 20.5.2003, silk fabrics was taken out from entry No.34 of Schedule I and silk and garments made of silk were retained at entry No.34 of Schedule I and tax was imposed at the rate of 12%. Raw Silk was put in Schedule II at Entry No.30. from 1.4.2000 and onwards and tax is imposed at the rate of 4%. silk fabrics which was at Entry No.34 of Schedule I for the period from 16.1.2000 to 31.3.2000 was removed from that Entry and for the period from 1.4.2000 to 31.3.200 it was placed at Entry No.62 of IInd Schedule and silk fabrics was subject matter of a tax at the rate of 4%.

From 1.4.2001 and onwards silk fabrics has been placed at Entry No.60 in Schedule III and is exempted from payment of tax. Again from 20.5.2003 to 3.7.2003, silk and garments made of silk but not including sarees made of silk, blended silk and raw silk were placed at Entry No.34 of Schedule I and were taxed at the rate of 12%. Sarees made of silk, blended silk and raw silk for the said period were placed at Entry No.77 of Schedule II and was subject matter of tax at the rate of 4%.

All kinds of sarees excluding sarees made of silk, blended silk and raw silk were placed at Entry NO.68 of Schedule III and was exempted from payment of tax. From 3.7.2003 on wards silk and garments made of silk but not including sarees made of silk were placed at Entry No.34 of Schedule I and tax imposed was at the rate of 12%.

So far, as sarees made of silk are concerned, these were placed at Entry No.34 of Schedule II and were charged tax at the rate of 4%. All kinds of sarees excluding sarees made of Silk were placed at Entry No.68 of IIIrd Schedule and thus were exempted from payment of tax. From 1.4.2000 onwards Readymade garments but not including those made of leather, fur, khadi and silk were taxed at 4% and were covered by Entry No.20 of Schedule II.

23. The learned Counsel for the petitioner submitted that till the judgment in Collector, Central Excise v. Kapri International Pvt. Ltd., (supra) silk sarees were considered as silk fabrics. The Sales Tax Officers, without appreciating the distinction between the facts of the present case and those in the decision delivered by the Supreme Court, came out with a version that silk sarees are to be treated as garments made of silk. For the earlier periods, whenever there was no reference to silk sarees they were considered as silk fabrics.

24. In the case of Pravin Bros. V. The State of Gujarat, reported in (1964) 15 S.T.C. 478 before the Division Bench, the admitted facts were that the five yards pieces were cut from malmal and voil takas (fabrics packed in longer running cloth) and embroidery work was thereafter superimposed on them. The embroidered piece of three yards also was similarly prepared. The five yards pieces were intended to be used as sarees and the three yards pieces were meant for preparing ladies underwear. There was specific entry with regard to embroidered sarees at entry 3(i) in Schedule E of the. The Court examined item No.19 in the First Schedule to the Central Excises and Salt Act, 1944: cotton fabrics meant at varieties of fabrics manufactured either wholly or partly from cotton, and included, dhotis, sarees, chadars, etc., but did not include any such fabric if it contained 40% or more by weight of wool, if it contained 40% or more by weight of silk, if it contained 60% or more by weight of rayon or artificial silk, or if manufactured on a handloom. The Tribunal came to the conclusion that since embroidery was superimposed on pieces, after the same were cut from takas, were completely manufactured, it was not a process which was either incidental or ancillary to their manufacture and, therefore, the sarees, after they were embroidered, were not cotton fabrics, as defined in Item 19, but something else.

24.1. The question before the Court was whether after embroidery is superimposed upon the pieces for the purpose of selling as embroidered sarees, such articles can still be said to be cotton fabrics within the meaning of Entry 15. The Court drew the distinction between sarees which are decorated during the course of weaving and those which are decorated after the process of their manufacture is completed, that is to say, sarees upon which, after their manufacture is completed, some decoration through an additional process distinct from the process of manufacture is superimposed. The Court held that cotton sarees may, in ordinary parlance be called cotton fabrics, if such sarees are embroidered or decorated, but such embroidery or decoration is superimposed upon them after the process of their manufacture is over, they would be dealt with differently. Thus the process of manufacturing of a cotton fabric and on such manufacture of cotton fabric, the same is embroidered then, both would be distinct articles. After the manufacture of cotton fabrics is complete and the process of embroidery is over, so as to make them embroidered sarees, the dealer sell such articles not as cotton fabrics but as embroidered sarees. The Court pointed out that it is this additional process, which results in embroidered sarees, a process which is neither incidental nor ancillary to their manufacture as cotton fabrics. The Court pointed out that-

In our view, if a saree piece which is a cotton fabric, is subjected to the process of embroidery after its manufacture as cotton fabric has been completed, it can not longer be called a cotton fabric as defined by entry 19 of Schedule I to the Central Excise and Salt Act and it becomes an embroidered saree within the meaning of Entry 3 of Schedule E.

24.2. It is also interesting to note that with regard to three yards piece of a cotton fabric, the Court pointed out that because of embroidery having been subsequently superimposed on the cloth and it being not incidental or ancillary process to its manufacture, the three yards piece also is not a cotton fabric.

24.3. It is very clear that the article must maintain its identity as manufactured by the manufacturer till it is disposed of by the dealer. After receipts of a manufactured article, namely, sarees, if any process is carried out, which is not ancillary or incidental, then the article will change its shape, show, design, nature, etc. and in case of an item, if, after the same is manufactured, it is embroidered or stitched, it would get different identity.

25. A Division Bench of the Gujarat High Court in the case of Shree Ram Industries v. The State of Gujarat reported in (1971) 34 S.T.C. 153 had an occasion to consider the case of sales of sarees of art silk fabrics to which zalars, i.e., borders are attached by stitching on sarees after the process of manufacture is completed. The Court pointed out that the artificial silk sarees were first produced. After the production was complete, the process of attaching zalar was employed so as to make them embroidered or decorated sarees. The additional process of attaching zalar to the sarees is an independent process and not ancillary to the manufacturing of the art silk sarees. The Court pointed out that, therefore, the article thus produced by the process of attaching zalar is a different article and known in common parlance as embroidered or decorated sarees. It is a different article because something is superimposed upon it by an independent process.

26. Therefore, in case of fabrics manufactured by the manufacturer, if some process is carried out, on such fabrics, then in that case the question may be a different one. In the instant case, the Court is not called upon to examine such a question. The only question is with regard to silk sarees silk fabrics or garments made of silk. We are not concerned in this case with manufacture and that too with the concept of manufacture for the purpose of exigibility to excise duty for which the taxable event is manufacture or production. In view of what is stated hereinabove, a saree is nothing but an article of either silk or cotton fabrics manufactured by a manufacturer. Merely because, without any further process being carried out on the manufactured article, a person can put it on, it cannot be branded as a garment. When the Legislature wanted silk saree to be taxed specifically, the same has been taxed. Any sort of length of silk fabrics would remain silk fabrics and even if it is cut into pieces without any further process / work carried out on such pieces, the pieces would remain silk fabrics.

27. The simple dictionary meaning of cloth and clothes would be relevant to decide this matter. The essential difference between cloth and clothes is that cloth is what comes straight from the textile factory whereas, clothes are articles after the cloth has been converted by cutting, stitching and /or some further process having been done to cloth, either by a man or a machine to make that cloth into a garment or wearing apparel. Whether in view of the size in which a particular cloth is manufactured, or its adaptability for a particular use, or the fact that it can straightaway be used as a garment, cloth manufactured by a manufacturer ceases to be cloth is the question Wherever cloth has been manufactured and something more is done to it by some other agency, which makes a different kind of product which makes it adaptable for a particular kind of use, it ceases to be cloth simpliciter and will have to be described by a different name.

28. In the case of Jaswant Rai Jai Narain v. Sales Tax Officer and Others, (1955) 6 STC 386, a Division Bench of the Allahabad High Court, pointed out that the word cloth is distinct from clothes or garments. Cloth is fabric or material from which clothes are made as wearing apparel or as other articles of personal use. In that case in a Government Notification, cloth manufactured on handloom was exempt from sales tax. The petitioner in that case, held a licence under the U.P. Hand Printers and Hand Dyers Licensing Order, 1949. He was carrying on the business of selling saris, liahafs, fards and bed covers after cutting handloom cloth into specific sizes, and printing on them. It was the petitioners case that the cloth sold by him did not lose its character of handloom cloth by the mere fact that it had been printed and put in the form of saris, covers for quilts and bed covers. The case of the department there was that the printed handloom articles, sold by the petitioners, in that case, were not cloth, but readymade garments, fit for personal wear and use, and were, therefore, not covered by the notification. Thus, before he sold that cloth he cut it and prepared pieces from it, suitable for use as wearing apparel and for other purposes. He mingled his labour with it and printed on it. He changed the material or articles, and converted it into a different kind of material or article. It was rightly held in that case, that the articles sold by the petitioner, were not entitled to exemption as cloth manufactured on handlooms. As after cutting the cloth, the same was printed before selling and thus a different article emerged.

29. In the case of Lakshmiratan Cotton Mills Co. Ltd. v. STO reported in 13 STC 1031 [LQ/AllHC/1961/217] , the Court was examining two entries cloth manufactured by the mills and the articles i.e. dhotis and saris, chadars, towels, canvas, rags and fents. So far as dhotis and saris and concerned, the Court pointed out that the articles were sold as they come out of the mills without anything more at all done to them by any other agency. There was no conversion of one kind of product into a different kind of product by any additional expenditure of human labour and skill. The Court pointed out that mere fact that dhotis and saris are of particular sixes, whereas generally speaking cloth manufactured by the mills is of much greater length does not also furnish any distinguishing feature. The Court further pointed out that it is well known that rolls of cloth come in different sizes, some rolls being of 40 yards, others of 24 yards, still others of 20 yards. Some expensive suiting is manufactured only in length of 3 ½ yards, (known as suit length) so that there may be no two pieces available of the same kind, and the wearer may have the unique distinction that no other person has a suit, like the one, which he has. The adaptability of a particular cloth for a particular kind of use can also furnish no guide. The Court pointed out that therefore, the mere fact that dhotis are adaptable for use by men, and saris for use by women can also not make these lose their character as mill-made cloths.

30. After considering the dictionary meaning, in the case of L. Cotton Mills (supra), the Court pointed out that in the English language dhotis and saris are pieces of cloth even though they might be adaptable for use as garment without anything more being done to them after having been manufactured. Thus, neither the size in which a particular cloth is manufactured, nor its adaptability to have a particular use, nor the fact that it can straightway be used as a garment make cloth manufactured by a mill cease to be cloth. Of course, 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 it adaptable for a particular kind of use, it would cease to be cloth simpliciter and will have to be described by a different name.

31. The Court rejected the contention of the petitioner that dhotis, saris, being wearing apparel, chaddar and towel being manufactured in particular size and adaptable for particular use, and rags and fents being pieces of cloth of varying size attract lower rates of duty and cannot be treated as cloth manufactured by mills.

32. In Kittappa Dress M & E Works v. State of Madras, (1962) 13 STC 34 [LQ/MadHC/1961/210] , the Court examined the question of whether Cholibits and saris were cloth and not clothes. Choli bits are mere pieces or lengths of cloth in a state of adaptability to be transformed into garments like bodices but by themselves they are neither wearing apparel nor garments. Saris also are pieces of cloth and can hardly be called garments merely because they are draped round the body of woman. They are not articles of dress like gowns, frocks and other tailored articles used by women mostly in countries other than India.

33. The term cloth in accordance with its dictionary meaning and in its ordinary popular meaning has to be understood as any woven fabric or stuff till it is transformed into an article like dress, garment or bed cover, etc. which comes into ready use as such articles. After such transformation the articles can no longer retain its previous state of cloth though it is made of cloth. Any workmanship or embroidery made upon a length of cloth should not, by reason of some labour or money being spent over the cloth, deprive the cloth of its true and existing character. In the aforesaid judgment, the Madras High Court further pointed out that-

No tax law can impose a burden on the subject without clear and express words prescribing the obligation. There is no scope for intendment, implication or presumption regarding assessment of tax. The Court whose plain duty is only to interpret and apply the statute, and not to legislate, should not get bogged in the quicksand of the policy of Legislature or the background of legislation. The only criterion is whether or not the words of the have reached the alleged subject of taxation. If the answer to this question is in the affirmative, after giving the words their plain grammatical meaning, that ought not to be construed to afford the subject means of evasion or avoidance of tax. If the answer is in the negative the subject goes free and the State cannot strain the language to give effect to their supposed intentions.

34. In that case, the question was whether the assessee was liable to pay sales tax at the enhanced levy or at the normal rate The Appellate Tribunal opined that the appellants cut crepe silk cloth into pieces of 7/8 yards in length, which is said to be the average length required to stitch a choli or the upper garment of a woman. They get small pieces of embroidery made by a process called appliqué work, affixed in one or two places on the piece of the cloth selected to coincide roughly with the place where the arms of the wearer would be when the cloth gets ultimately stitched into a choli. These choli bits are therefore mere cut pieces of a particular dimension, 7/8 yards, from a large piece of cloth suitable for being converted into a bodice or the upper garment of a woman. Of course, with embroidery work for the ready adaptability of being made into a womans garment. The Court observed that, A sari is the familiar womans dress in India and it needs no annotation to understand what it is. A reference was also made to the dictionary meaning of the term sari, The Chambers Dictionary gives the meaning as a long cloth wrapped round the waist and passed over the shoulder and the head. The Oxford Concise Dictionary gives the meaning as a length of cotton or silk wrapped round the body; worn as main garment by Hindu women. The Court also examined the meaning of cloth as set out in various dictionaries to the following effect:

The Oxford English Dictionary: A piece of pliable woven or felted stuff, suitable for wrapping or winding round, spreading or folding over, dying, wiping, or other purpose; a swaddling or winding cloth, wrap, covering, veil, curtain, handkerchief, towel, etc.

Websters New Twentieth Century Dictionary: A woven, knitted or pressed fabric of fibrous material, as wool, hair, cotton, flax hemp synthetic fibers, etc., used for garments or other covering, and for various other purposes, as household furnishing

Twentieth Century Chambers Dictionary: Woven material from which garments or coverings are made; a piece of this material; clothing, the usual dress of a trade or profession, esp. the clerical; a table-cloth; sails, a theatre curtain

The term clothes has received the following meanings:

Oxford Concise Dictionary: Wearing apparel.

Chambers Dictionary: Garments or articles of dress.

35. On behalf of the petitioner, in the case of Kittappa Dress (supra), it was contended that silk choli bits and saris do not answer the description of cloth. It was further contended that choli bits and saris are garments or clothes and not cloth. Considering what we have extracted above, the Court did not agree with the contention aforesaid raised by the petitioner that choli bits and saris are clothes and not cloth. The Court pointed out that choli bits are pieces or lengths of cloth in a state of adaptability to be transformed into garments like bodices but by themselves they are neither wearing apparel nor garments. Saris, also, are pieces of cloth and can hardly be called garments merely because they are draped round the body of a woman. They are not articles of dress like gowns, frocks and other tailored articles used by women mostly in countries other than India. Having regard to the plain dictionary meaning of the term cloth the Court had no hesitation in holding that the silk choli bits and saris fell within the ambit of cloth.

36. In Sharfaji Rao v. Commissioner of Sales Tax, (1953) 4 STC 6, the Chief Justice delivering judgment on behalf of the Bench observed at page 36:

The goods which are sold by the assessee are ready-made garments. The assessee after he had bought the cloth from the mills had to make garments out of the same by applying some process, e.g., by cutting the said cloth and sometimes by stitching one piece to the other. It cannot be said that the goods, which came into existence after the assessee applied all these processes, are still the textiles, manufactured by the mills.

37. In the case of Government of Andhra Pradesh v. Venkateswarlu, (1960) 11 STC 561 [LQ/TelHC/1960/118] , the Court was required to examine whether cotton cloth included sarees and dhotis. The Court pointed out that the word cloth is used to denote every fabric used for any purpose including the use as a wearing apparel. A cloth does not cease to be cloth merely because it is used as dhoti or a saree.

38. The learned Counsel for the petitioner drew our attention to a judgment of a Division Bench of this Court in the case of Jinda Photo Films Ltd. v. Deputy Commissioner of Income Tax and Another reported in (1998) 234. I.T.R. 170. In that case the Income Tax Officer made an attempt to reopen an assessment because the opinion formed earlier by him was, in his view, incorrect. The Division Bench pointed out that the power to reopen an assessment was conferred by the Legislature not with the intention to enable the Income Tax Officer to reopen the final decision made against the Revenue in respect of questions that directly arose for decision in earlier proceedings. If that were not the legal position it would result in placing an unrestricted power of review in the hands of the assessing authority depending on their changing moods. If an expenditure or deduction was wrongly allowed while computing the taxable income of the assessee, the same could not be brought to tax by reopening the assessment merely on account of the Assessing Officer subsequently forming an opinion that earlier he had erred in allowing the expenditure or the deduction.

39. In the Jindal Photo (supra) the Court pointed out that from the date of orders of assessment sought to be reopened and the date of forming of opinion by the Income Tax Officer, there was no change of law. No new material had come on record. No information had been received. It was merely a fresh application of mind by the Assessing Officer to the same set of facts. The Court pointed out that while passing the original orders of assessment, the order dated February 28, 1994, passed by the Commissioner of Income Tax (Appeals) was before the Assessing Officer. The Court pointed out that it was a case of mere change of opinion, which did not provide jurisdiction to the Assessing Officer to initiate proceedings under Section 147 of the Income Tax Act. The Court pointed out as under:

The power of reopen an assessment was conferred by the Legislature not with the intention to enable the Income Tax Officer to reopen the final decision made against the Revenue in respect of questions that directly arose for decision in earlier proceedings. If that were not the legal position it would result placing an unrestricted power of review in the hands of the assessing authorities depending on their changing moods. (See CIT v. Rao Thakur Narayan Singh, (1965) 56 ITR 234 [LQ/SC/1964/299] , 239 (SC).

In Phool Chand Bajrang Lal, (1993) 203 ITR 456 [LQ/SC/1993/521] , 477 (SC), Their Lordships have held while interpreting Section 147 as it stood in the assessment year 1963-64;

An Income Tax Officer acquires jurisdiction to reopen an assessment under Section 147(a) read with Section 148 of the Income Tax Act, 1961, only if on the basis of specific reliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings, either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere charge of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a like link for the formation of the requisite belief.

40. The learned Counsel for the petitioner also relief upon the decision in the case of Oil and Natural Gas Corporation Ltd. v. Deputy Commissioner of Income Tax and Others reported as (2003) 262 I.T.R. 648 and submitted that there was no failure on the part of the assessee to disclose material facts necessary for assessment. Therefore, it was not open for the respondent No.1 to reopen the assessment.

41. In the Central Excise and Salt Act, 1944 in Schedule I, cotton fabrics, silk fabrics and woolen fabrics are also defined. It may be noted that while considering the taxability of a particular commodity, it cannot be decided on the basis of other statutes but it is to be decided on the basis of the itself. In the given set of circumstances, one has to look to the entry in Schedule I or Schedule II or Schedule III of the to find out the tax imposed on articles. If silk sarees are specifically mentioned, then in view of that specific entry tax will be levied. Fabrics either of silk or cotton are manufactured by a manufacturer. They may be of different sizes. The manufacturer may supply either cotton or silk fabrics in different lengths but so far as the article manufactured by the manufacturer is not converted into any other article by following any other process, it cannot be identified as a different article but would remain as fabric. Merely because it is capable of being worn as a saree, it would not fall within the ambit of the words garments made of silk. It would remain as silk fabrics. We have pointed out earlier that if the fabric is cut into pieces and some other process is carried out so as to have a different article having a distinct identity different from the original one, then in such case it cannot be said to be the same article manufactured by a manufacturer. Such as embroidered sarees made by persons after the manufacturing process of fabric is completed by the manufacturer [See Pravin Bros v. The State of Gujarat, (1964) 15 STC 478 [LQ/GujHC/1963/128] ).

42. It is this decision on which reliance is placed by the respondents. However, there is nothing on the record to show that dealers after receiving the manufactured silk fabrics from the manufacture, carried out any process as a result of which the original identity of fabric was lost.

43. On behalf of the respondents, reliance is placed on Section 2(h) of the Delhi Sales Tax Act, 1975 wherein the word manufacturer is defined, which we have already reproduced earlier. However, there is nothing on the record to show that after manufactured articles which are received by the dealers, any kind of process is done by the dealers, such as, altering, ornamenting, finishing, etc. While interpreting the provision contained in the, the Court is not required to examine the provisions contained in Section 2 of the Central Excise Act, 1944. Before the Court the case of the dealers simplicitor is that they are supplying articles to the consumers in the same condition in which they are receiving from the manufacturer. It is in view of this they are dealing in silk fabrics, which they receive from the manufacturers without making any change whatsoever.

44. We are also of the opinion that in the instant case there was no fresh material with the assessing officer and there was no information with the assessing officer nor is there anything to show that the assessee concealed some material from the assessing officer so as to enable him to reopen the case. In view of the law which we have discussed above and other decisions it is clear that, merely because the assessing officer has changed his opinion, the assessing officer cannot call upon the assessee for reassessment and cannot issue coercive notice.

45. In view of the above discussions, all the petitioners are allowed. It is directed that in 29 petitions wherein re-assessment orders have been made by the Assessing Officer, are quashed. In the second group of ten matters, during the pendency of the proceedings re-assessment have been completed by the assessing officer and the same are hereby quashed. As regards the third group of nine matters wherein assessment have been re-opened the said proceedings are also quashed. All the petitions are allowed with costs.