Holding

The unstitched suits are not "textiles" under Entry 21 nor "other textile made‑ups" under Entry 16; they are classified under the residuary entry of Schedule V and taxed at 12.5%.

Summary

The Commissioner of Commercial Tax, U.P. appealed against the classification of unstitched ladies' suits sold by S/S Rujhan Studio. The studio purchased bulk textile, cut it to suit dimensions, performed limited embroidery and 'peco' work, and sold the items as unstitched suits. The issue was whether these goods qualified as "textile" under Entry 21 of Schedule I (exempt), as "other textile made‑ups" under Entry 16 of Schedule II (4% tax), or fell under the residuary entry of Schedule V (12.5% tax) of the Uttar Pradesh Value Added Tax Act, 2008. The Court examined the definition of "manufacture" in Section 2(t) and held that the work performed transformed the material into a distinct article, not a textile fabric, and that "other textile made‑ups" must be read ejusdem generis with bedsheets and pillow covers. Consequently, the goods do not fall under Schedule I or II and are classified under Schedule V. The appeal was allowed, setting aside the High Court judgment and restoring the assessing authority’s order.

Issues considered

Whether the unstitched ladies' suit qualifies as a "textile" under Entry 21 of Schedule I of the UP VAT Act, 2008.
Whether the product falls within Entry 16 of Schedule II as "other textile made‑ups" subject to 4% tax.
Whether the appropriate classification is the residuary entry of Schedule V, attracting 12.5% tax.
Interpretation of the term "manufacture" under Section 2(t) of the UP VAT Act for tax classification.

Legislation cited

Uttar Pradesh Value Added Tax Act, 2008s. 2(t)

Subjects

VATtax classificationSchedule ISchedule IISchedule Vmanufacture definitionunstitched suittextileUttar Pradeshsales tax

Judgment

[2021] 4 S.C.R. 511 511

THE COMMISSIONER, COMMERCIAL TAX, A
U.P., LUCKNOW
v.
S/S RUJHAN STUDIO
(Civil Appeal No 793 of 2021)
B
MARCH 02, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
M. R. SHAH, JJ.]
Uttar Pradesh Value Added Tax Act, 2008: Schedule I Entry
21 – Classification of unstitched suits – Assessee respondent C
engaged in selling dress material/unstitched suits for women – It
purchases textile material in bulk which is cut to the length of a
salwar kameez suit for women – The work of sewing, design and
embroidery is carried out on the neck portion of the kameez or
kurta and the dupatta is subjected to ‘peco’ work and then it is sold
as an unstitched suit – As a result of the work which is carried out D
by the respondent in the factory, the material ceases to be textile
within the meaning of Entry 21 and assumes the character of an
article which has a distinct meaning and description – The product
can certainly not be called ‘a textile made up’ under Entry 16 of
Schedule II as it is used in conjunction with the expression E
“bedsheets and pillow covers” – The expression “other textile made
ups” must be read ejusdem generis with the articles which precede it
and should hence comprehend goods of the same class and
description – Hence, the product would not fall within the purview
of Entry 16 of Schedule II – The product would fall for classification
under Serial 1 of Schedule V which is a residuary entry which covers F
all goods except those which are mentioned and described in
Schedules I, II, III and IV.
Disposing of the appeals, the Court
HELD : 1. The definition of the expression “manufacture” G
is in broad and comprehensive terms. The definition, inter alia,
includes altering, ornamenting, finishing or otherwise processing,
treating or adapting any goods. The respondent purchases textile
material in bulk which is then cut to the length of a salwar kameez
suit for women. The work of sewing, design and embroidery is
H
511
512 SUPREME COURT REPORTS [2021] 4 S.C.R.

A carried out on the neck portion of the kameez or kurta. No stitching
is done on the salwar. The dupatta is subjected to ‘peco’ work.
Entry 21 deals with silk fabric, handloom cloth of all kinds and
textiles of several varieties manufactured on power loom
excluding items which are described in the Second Schedule. This
includes cotton fabric of all varieties, rayon or artificial silk fabric,
B
woolen fabric made of a mixture of two or more of the listed fabrics
and canvass cloth. It is evident from the work which is carried on
by the respondent in its factory that the textile material which is
purchased in bulk is cut to the size of a salwar kameez. The court
must have regard to the common parlance meaning and
C understanding of the expression ‘textile’. Evidently, the
respondent cuts the textile material which is then subjected to
the work of embroidery on the neck portion. The textile material
which is cut may not assume the character of a final article of
apparel which can be worn by the consumer because the final
work of stitching is not carried out by the respondent. This is
D
done to ensure that the ultimate consumer may get the salwar
kameez stitched to their specifications and dimensions. What is
sold is an unstitched ‘suit’ and not textile fabric. The important
point to note is that as a result of the work which is carried out by
the respondent in the factory, the material ceases to be textile
E within the meaning of Entry 21 and assumes the character of an
article which has a distinct meaning and description.
[Paras 11, 12][517-G-H; 518-A-F]
2. Entry 16 of Schedule II refers to bedsheets (other than
unstitched bedsheets), pillow covers and “other textile made
F ups”. The appellant submits that the expression “other textile
made ups” is not a stand-alone entry, but occurs in the same
entry together with bedsheets (other than unstitched bedsheets)
and pillow covers. Hence, the expression “other textile made
ups” should be read in conjunction with the other goods which
are specified in Entry 16. A textile made up is an article which is
G manufactured or stitched from any type of cloth. In the instant
case, going by the case of the respondent, the product is
unstitched because the ultimate work of stitching the salwar
kameez is yet to be performed and is not carried out by the

H
THE COMMISSIONER, COMMERCIAL TAX, U.P., v. 513
S/S RUJHAN STUDIO

respondent. In the circumstances, the product can certainly not A
be called as a textile made up. Secondly, the entry “other textile
made ups” is not a residuary entry for Schedule II, but is used in
conjunction with the expression “bedsheets and pillow covers”.
The expression “other textile made ups” must be read ejusdem
generis with the articles which precede it and should hence
B
comprehend goods of the same class and description. The general
entry “other textile made ups” must receive a meaning and
connotation bearing in mind the preceding items of Entry 16.
Hence, it is not possible to accept the view that the product falls
within the purview of Entry 16 of Schedule II. The product would
fall for classification under Serial 1 of Schedule V which is a C
residuary entry which covers all goods except those which are
mentioned and described in Schedules I, II, III and IV.
[Paras 13, 14 and 15][518-H; 519-A-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 793 of
2021. D
From the Judgment and Order dated 11.09.2019 of the High Court
of Judicature at Allahabad in Sales/Trade Tax Revision Defective No.
95 of 2019.
With
E
Civil Appeal Nos. 794, 795 of 2021
R.K. Raizada, Sr. Adv., Bhakti Vardhan Singh, Ms. Nidhi, Ms.
Manvi Dixit Sharma, Advs for the appellant.
The Judgment of the Court was delivered by
F
DR. DHANANJAYA Y CHANDRACHUD, J.
Civil Appeal No 793 of 2021 [Arising out of SLP(C) No 3885 of
2021]
1. Delay condoned.
2. Leave granted. G

3. By a judgment and order dated 11 September 2019, a Single
Judge of the High Court of Judicature at Allahabad dismissed a Sales/
Trade Tax Revision1 instituted by the Commissioner of Commercial Taxes.
1
Sales/Trade Tax Revision Defective No 95/2019 H
514 SUPREME COURT REPORTS [2021] 4 S.C.R.

A 4. The respondent is a dealer registered under the provisions of
the Uttar Pradesh Value Added Tax Act 2008 (“UP VAT Act 2008”).
The respondent carries on the business of purchasing textiles and selling
dress material for women. A survey was conducted at the establishment
of the respondent on 9 March 2010 by the Special Investigation Branch.
During the course of the survey, the statement of a partner of the
B
respondent was recorded in which the nature of the business was
described in the following terms:
“The business of manufacture and unstitched suit, salwar, kameeze,
dupatta etc. is carried out. The work of design/embroidery is
carried out on kameeze, Kurta and Dupatta. The sewing process
C is carried out in the neck portion of the kameeze/kurta. No stitching
is done on Salwar. “PECO” is done on the borders of Dupatta.
The entire activity is got completed with the help of machine/
manual labour. The process of “Tanka” as carried out on Kurta/
Kameeze is commonly known as “Rough Stitching” i.e., “Kachchi
D Silai”.”
5. During the course of the assessment, a similar statement on
oath was made by the representatives of the dealer before the Assessing
Authority, which was recorded by the Tax Assessment Officer in the
following terms:
E “...Shri Bhushan Kumar Malhotra, authorised the representative,
appeared on behalf of the trader and stated on oath that the business
is of unstitched dress material. The cloth is purchased in bulk.
Thereafter, by cutting it as per the length of the suit of the ladies
and cutting as per the size of the neck of the shirt, the cutting of
F different sizes of neck is done and thereafter, the embroidery of
the same is done. The head scarves/chunni, which is made of the
thin cloth, the edges of the same are picoed. All the head scarves
are not picoed. No work is done on the lower garment (salwar).
The pieces of the same are cut and by matching with the shirt and
headscarf, the set of the same is made out. We do only the cutting
G and embroidery work in the factory. This is the 1st year of the
business and even now the business is continuing. From the
business year 2008 – 09 till now, the nature has remained the
same.
The cloth, threads, stars, beads are used as the material...”
H
THE COMMISSIONER, COMMERCIAL TAX, U.P., v. 515
S/S RUJHAN STUDIO [DR. DHANANJAYA Y CHANDRACHUD, J.]

6. The dealer was assessed to a tax of Rs 99,42,870 for assessment A
year 2009-2010, by treating the product as an unclassified item under
Schedule V of the UP VAT Act 2008, under which the rate of tax is
12.5%. The respondent filed an appeal 2 before the Additional
Commissioner, Gr.-2, (Appeal) IV, Ghaziabad. By an order dated 13
February 2013 the first appellate authority partly allowed the appeal and
B
classified the goods as “textile made ups” which are subject to a duty of
4% under Serial Number 16 of Schedule IIA. The order passed by the
appellate authority was assailed by the appellant and by the respondent
before the Commercial Tax Tribunal (“Tribunal”). By an order dated
27 April 2019, the Tribunal allowed the appeal filed by the respondent
and rejected the appeal of the Revenue. The product sold by the C
respondent was classified as a ‘textile’ within the meaning of Entry 21
of Schedule I and was, therefore, held to be exempt from tax. The
appellant unsuccessfully challenged the decision in a revision before the
High Court which has been dismissed in limine by the impugned judgment
and order dated 11 September 2019.
D
7. Notice was issued in the Special Leave Petition filed by the
appellant on 28 August 2020. The Office Report indicates that the
respondent has been served. No appearance has been entered on behalf
of the respondent.
8. In order to facilitate the disposal of the appeal, it would be E
necessary to advert to the relevant entries in the Schedules to the UP
VAT Act 2008 which have a bearing on the controversy. Schedule I
provides a list of exempt goods. Serial No 21 of Schedule I is extracted
below, both in its English and Hindi descriptions:
Sr. No. Name and description of goods
F
21 Silk Fabrics; Handloom cloth of all kinds; handloom shawls & lois
whether plain, printed, dyed or embroidered; Dhoties and Saris;
textiles of following varieties manufactured on power- loom excluding
the items described in schedule-II:-
(a) cotton fabrics of all varieties; G
(b) rayon or artificial silk fabrics, including staple
fibre fabrics of all varieties;
(c) woolen fabrics of all varieties;
(d) fabrics made of a mixture of any two or more of the above fibres,
2
Appeal No 83/2013
H
516 SUPREME COURT REPORTS [2021] 4 S.C.R.

A

B

C

D

E

Schedule II provides a list of goods which are taxed at 4%, of
which Entry 16 is in the following terms:

F

G

H
THE COMMISSIONER, COMMERCIAL TAX, U.P., v. 517
S/S RUJHAN STUDIO [DR. DHANANJAYA Y CHANDRACHUD, J.]

Finally, it is necessary to advert to Schedule V which furnishes a A
list of goods which are taxed at 12.5%. The residuary entry in that regard
is as follows:

B

C

9. The issue which falls for consideration in the present appeal is
whether the commodity which is described as an “embroidered ladies D
suit”, which the respondent claims to be unstitched, would fall within the
description of a ‘textile’ under Entry 21 of Schedule I (as the respondent
asserts). The other competing entries are Entry 16 of Schedule II which
is “other textile made ups” and the residuary entry in Schedule V.
10. We would first deal with the question as to whether the product E
falls within the description of Entry 21 of Schedule I. Before dealing
with the nature of the product, it would be material to advert to the
definition of the expression “manufacture” in Section 2(t) which reads
as follows:
“2(t) “manufacture” means producing, making, mining, collecting, F
extracting, mixing, blending, altering, ornamenting, finishing, or
otherwise processing, treating or adapting any goods; but does
not include such manufacture or manufacturing processes as may
be prescribed;”
11. The definition of the expression “manufacture” is in broad G
and comprehensive terms. The definition, inter alia, includes altering,
ornamenting, finishing or otherwise processing, treating or adapting any
goods. The respondent purchases textile material in bulk which is then
cut to the length of a salwar kameez suit for women. The work of sewing,
H
518 SUPREME COURT REPORTS [2021] 4 S.C.R.

A design and embroidery is carried out on the neck portion of the kameez
or kurta. No stitching is done on the salwar. The dupatta is subjected to
‘peco’ work.
12. The respondent contended before the Tax Assessment Officer
that it carries on the work of cutting and embroidery in its factory. On
B the basis of the description which was indicated by the respondent, it is
difficult to accede to the view of the Tribunal that the product will fall
within the description contained in the list of exempt goods in Schedule I,
more particularly, Entry 21. Entry 21 deals with silk fabric, handloom
cloth of all kinds and textiles of several varieties manufactured on power
loom excluding items which are described in the Second Schedule. This
C includes cotton fabric of all varieties, rayon or artificial silk fabric, woolen
fabric made of a mixture of two or more of the listed fabrics and canvass
cloth. It is evident from the work which is carried on by the respondent
in its factory that the textile material which is purchased in bulk is cut to
the size of a salwar kameez. The court must have regard to the common
D parlance meaning and understanding of the expression ‘textile’. Evidently,
the respondent cuts the textile material which is then subjected to the
work of embroidery on the neck portion. The textile material which is
cut may not assume the character of a final article of apparel which can
be worn by the consumer because the final work of stitching is not
carried out by the respondent. This is done to ensure that the ultimate
E consumer may get the salwar kameez stitched to their specifications
and dimensions. What is sold is an unstitched ‘suit’ and not textile fabric.
The important point to note is that as a result of the work which is
carried out by the respondent in the factory, the material ceases to be
textile within the meaning of Entry 21 and assumes the character of an
F article which has a distinct meaning and description.
13. This leaves the Court with the issue as to whether the view of
the Assessing Authority was correct or whether the order of the first
appellate authority should be maintained. The Assessing Authority taxed
the product under the residuary entry in Schedule V and subjected it to
G at the rate of duty of 12.5%. The First Appellate Authority on the other
hand took the view that the product should be classified under Entry 16
of Schedule II and would be subject to the rate of 4%. The residuary
entry would be attracted if no other specific entry applies. The appellant
had also challenged the order of the first appellate authority before the
Commercial Tax Tribunal. Entry 16 of Schedule II refers to bedsheets
H
THE COMMISSIONER, COMMERCIAL TAX, U.P., v. 519
S/S RUJHAN STUDIO [DR. DHANANJAYA Y CHANDRACHUD, J.]

(other than unstitched bedsheets), pillow covers and “other textile made A
ups”. This description in the English version is also in accordance with
the text in Hindi.
14. Mr R K Raizada, learned senior counsel appearing on behalf
of the appellant submits that the expression “other textile made ups” is
not a stand-alone entry, but occurs in the same entry together with B
bedsheets (other than unstitched bedsheets) and pillow covers. Hence,
the learned counsel submitted that the expression “other textile made
ups” should be read in conjunction with the other goods which are
specified in Entry 16. There is merit in the submission which has been
urged, for two reasons. Firstly, the expression in Entry 16 of Schedule II
is “other textile made ups”. A textile made up is an article which is C
manufactured or stitched from any type of cloth. In the present case,
going by the case of the respondent, the product is unstitched because
the ultimate work of stitching the salwar kameez is yet to be performed
and is not carried out by the respondent. In the circumstances, the product
can certainly not be called as a textile made up. Secondly, the entry D
“other textile made ups” is not a residuary entry for Schedule II, but is
used in conjunction with the expression “bedsheets and pillow covers”.
The expression “other textile made ups” must be read ejusdem generis
with the articles which precede it and should hence comprehend goods
of the same class and description. The general entry “other textile made
ups” must receive a meaning and connotation bearing in mind the E
preceding items of Entry 16. Hence, it is not possible to accept the view
of the first appellate authority that the product falls within the purview of
Entry 16 of Schedule II.
15. In view of the above discussion, the product would fall for
classification under Serial 1 of Schedule V which is a residuary entry F
which covers all goods except those which are mentioned and described
in Schedules I, II, III and IV.
16. The High Court declined to exercise its jurisdiction in the
revision which was filed by the Department. The High Court was of the
view that the factual findings of the Tribunal did not warrant interference. G
The High Court has manifestly erred in ignoring the plain meaning of the
entries in the Schedules to the UP Vat Act 2008 which have been
discussed earlier in the course of this judgment.
17. For the above reasons, we allow the appeal and set aside the
impugned judgment and order of the Single Judge of the Allahabad High H
520 SUPREME COURT REPORTS [2021] 4 S.C.R.

A Court dated 11 September 2019. For the reasons which we have indicated,
we are also of the view that the judgment of the Tribunal as well as of
the first appellate authority would have to be set aside. The order of the
Assessing Authority would stand restored.
18. The appeal shall stand disposed of in the above terms. There
B shall be no order as to costs.
19. Pending applications, if any, stand disposed of.
Civil Appeal No 794 of 2021 [Arising out of SLP(C) No
3886 of 2021] &

C Civil Appeal No 795 of 2021 [Arising out of SLP(C) No
3887 of 2021]
1. Leave granted.
2. These appeals arise from a judgment and order of the Allahabad
High Court dated 11 September 2019 in a batch of three Sales/Trade tax
D revisions. The High Court has disposed of the revisions by a common
judgment and order. For the reasons which are indicated above while
allowing the appeal filed by the Department against the judgment of the
High Court, the present appeals shall stand disposed of in terms of the
judgment in Civil Appeal No 793 of 2021.
E 3. Pending applications, if any, stand disposed of.

Devika Gujral Appeals disposed of.

F

G

H