1982 PLP 11 (PTD)

AJMAL MIAN, J.‑These are two references under section 17(2) of Sales Tax Act, 1851, for the financial years 1959‑60 and 1960‑

61. Since the questions framed in the above two references are common, we intend to dispose of the same by this common judgment. It may be observed that in the years 1959‑60 and 1960‑61 the applicants exported certain quantity of cotton waste and cotton yarn waste. The applicants made an application No. S. R. O. 405 dated 2‑8‑1969 for the refund of sales tax on the basis of the exemption granted under the above notification for the following item : "yarn of all sorts including sewing and knitting thread". However, the applicants' above application was declined by the Sales Tax Officer as well as by the Appellate Assistant Commissioner, Sales Tax and also by the learned Income‑Tax Appellate Tribunal. The applicants being aggrieved by the above orders have filed the present petition. In paragraph 14 of the petition the following three questions have been framed for decision by this Court:-- "(i) Whether in the facts and circumstances of the case the Tribunal was right in holding that cotton yarn waste on exportation was not entitled to exemption from Sales Tax under Item 10‑A of Sales Tax Notification No. I dated 1‑5‑1953 or under Item 48 of Sales Tax Notification No. S. R. O. 405 dated 2nd August, 1959? (ii) Whether in the facts and circumstances of the case the Tribunal is right in holding that "in its usual connotation of the term yarn is under stood to mean `spun fabrics' but in order to qualify for exemption the material must retain the qualities of yarn namely of capable of being used for weaving? (iii) Whether in the facts and circumstances of the case the Tribunal is right in holding that the question of exemption of cotton yarn waste on exportation was concluded by the order of the Appellate Assistant Commissioner confirming the original order of tae Sales Tax Officer, when in fact on appeal against the order of the Appellate Assistant Commissioner, the Tribunal bad left the question open for decision."

2. The controversy between the parties is, as to whether cotton yarn will include cotton yarn waste for the purpose of availing of the above exemp tion under the above notification. It may be observed that as regards question No. 3, it has been conceded by Mr. Iqbal Kazi, learned counsel for the respondents that the view found favour with the learned Income‑tax Appellate ' that the applicants were not entitled to raise the above claim and to re‑agitate the above point for the reason that the said question stands concluded, is not well‑founded, in view of the earlier order of the learned Income‑tax Appellate Tribunal dated 4‑10‑1966 ; wherein the following observation was made: "In this view of the matter it was common point that these two appeals have become infructuous as the appellants would be entitled to pursue their remedies against the revised orders passed by the Sales Tax Officer. These appeals, therefore, were not pressed and are accordingly dismissed. In the result the three appeals fail and are hereby dismissed." 3. (a) As regards the remaining two questions we may observe that the income Tax Authorities including Income Tax Appellate Tribunal have not approached the matter in accordance with law. The question, which required consideration was, as to whether cotton yarn waste was an independent item known in the trade different from cotton yarn. If it is a different item, the applicants have been rightly refused the exemption. However, if it is the same item known in the trade, the applicants were entitled to the exemption. Mr. Iqba1 Kazi has invited our attention to the case of Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong (P L D 1971 S C 205), at p. 210 in which the Supreme Court made the following observation "The first rule is that general statutes will prima facie be presumed to use words in their popular sense. The second rule is that if the statute is one passed with reference to a particular trade, business or transaction and words are used therein which every body conversant with that trade, business or transaction knows and understands to have a parti cular meaning in it, then the words are to be construed as having that particular meaning which may differ from the ordinary or popular meaning." It may be noticed that the Supreme Court has laid down that if a statute is passed with reference to a particular trade, business or transaction and the words are used therein, which every body conversant with that trade, business or transaction knows and understands to have particular meaning, then the words are to be construed as having that particular meaning, which may differ from the ordinary or popular meaning. (b) We may refer to para. 6 of the learned Appellate Tribunal order in question, which reads as follows "

6. We have given our very earnest consideration to the question and have examined the position from various standpoints but we are unable to accept the contention of Mr. Ali Athar. It appears to us that under item 10‑A only cotton yarn was entitled to exemption whereas under item 48 scope of exemption from payment of sales tax on yarn was enlarged, or in other words, whereas under the former notification only cotton yarn was entitled‑to‑exemption under item 48 of the subsequent notifications the privilege was conferred on all types of yarn whether natural or artificial or synthetic, as for example, whereas under the former notification yarn made of synthetic fibres or even of natural fibres other than cotton would not be entitled to exemption under item 48 of the subsequent notification they would be so entitled. But, in order to qualify for exemption they must satisfy the conditions of being yarn. Definition of yarn in the Shorter Oxford English Dictionary is : (1) Orige, Spun fibre, as of wool, flax, silk, cotton ; use fibre spun and prepared for use weaving, knitting, etc. The Chamber's 20th Century Dictionary defines the term `yarn' as `Spun thread'. From the above it will appear that in its usual connotation the term `yarn' is understood to mean `spun fibre' which is used for the purpose of being woven into fibres. But in order to qualify for exemption the material must retain its qualities of yarn, namely, of capable of being used for weaving. Although cotton yarn waste may have its origin from cotton fibre and it may be a bye product of the manufacture of cotton yarn but it has lost its character as yarn and is incapable of being used as such, or, in other words, cotton yarn waste cannot be used for the purpose of being woven. Mr. Ali Athar has submitted that cotton yarn waste can also be used for the purpose of weaving after the same is subjected to a process of being disentangled and given a continuous texture and form. But since it is admitted that cotton yarn waste is not capable of being immediate ly woven without undergoing an intermediate process it amounts to admission of the fact that it has lost its identity or character as yarn which is immediately capable of being woven". It is evident that the Sales Tax Authorities as well as the learned Income tax Appellate Tribunal relied upon the ordinary meaning of the word "yarn" given in the Shorter Oxford English Dictionary and in the Chambers 20th Century Dictionary without referring to the meaning which may have been assigned to the above words, i.e. "cotton yarn" and "cotton yarn waste" in the trade in question.

4. In our view on the state of record of the instant cases question No. 1 cannot be answered, as its answer will depend on the finding of fact on question No. 2, namely, whether in the trade in question ‑the terms "cotton yarn" and "cotton yarn waste" are assigned different meanings. In other words, whether cotton yarn waste is a distinct item from cotton yarn. However, our answer to question No. 2 is as follows: The interpretation placed on the word, yarn contained in the above‑quoted para. 6 of the learned Income‑tax Appellate Tribunal's order without ascertaining its meaning in trade is not in accordance with the afore said decision of the Supreme Court, reported in P L D 1971 S C

205. The above two references stand disposed of in the above terms. Order accordingly.