Summary
The Supreme Court classified the dealer’s cut and embroidered unstitched salwar-kameez sets under the UP VAT residuary entry taxable at 12.5% for the assessment in question. Processing gave the fabric the distinct character of an unstitched suit, defeating the textile exemption. It was also outside the 4% entry for other textile made-ups, read with bedsheets and pillow covers. The assessment was restored and the connected appeals disposed of on the same basis.
Issues
- Whether the processed unstitched suits were exempt textiles, taxable textile made-ups or residuary goods.
Provisions considered
- Section 2(t); Schedule I Entry 21; Schedule II Entry 16; Schedule V Entry 1, Uttar Pradesh Value Added Tax Act, 2008Manufacturing processes and the competing entry descriptions placed these processed suit sets in the residuary category for the relevant assessment. (¶ 8-15)
Held
- The broad manufacture definition included altering, ornamenting and finishing. Cutting to suit size, neck work and embroidery produced an identifiable unstitched suit rather than textile fabric in common understanding, despite final stitching being left to the customer. (¶ 10-12)
- Other textile made-ups was not a freestanding residuary category; it had to be read ejusdem generis with bedsheets and pillow covers. The dealer’s unstitched product did not fall within that entry. (¶ 13-14)
- With neither specific entry applicable, the product fell under Schedule V’s residuary entry at the rate applicable to the assessment. The Tribunal, first appellate and High Court decisions were set aside and the assessing order restored. (¶ 15-18)
Result
Revenue’s principal appeal allowed and assessment restored; connected appeals disposed of in the same terms. No costs.