Page 1 of 2 IN THE HIGH COURT OF ORISSA AT CUTTACK STREV No.94 of 2010 M/s. Krishna Textile Agency …. Petitioner Mr. Jagabandhu Sahoo, Sr. Advocate -versus- State of Odisha …. Opposite Party Mr. Sunil Mishra, ASC(CT) CORAM: THE CHIEF JUSTICE JUSTICE R. K. PATTANAIK Order No. ORDER 20.07.2022 Dr. S. Muralidhar, CJ. I.A. No.183 of 2010 03. 1. This I.A. by the assessee is for modifying/recalling of the order dated 21st December, 2010 which purportedly disposed of the petition by treating it as a writ petition and permitting the Petitioner to challenge the correctness of the decision of the Full Bench of the Tribunal in the ‘appropriate forum’. Considering that this is a sales tax revision petition and not a writ petition there is obvious error apparent on the face of the order. Accordingly, the order dated 21st December, 2010 is recalled and STREV No.94 of 2010 is restored to file. STREV No.94 of 2010 2. This is a revision petition by the Assessee arising out of an order dated 20th September, 2010 passed by the Full Bench of the Orissa Sales Tax Tribunal, Cuttack (Tribunal) in S.A. No.277(ET) of 2007-08 for the financial year 2002-03. Page 2 of 5 3. Admit. The following questions are framed for consideration: “(A) Whether the Full Bench, Orissa Sales Tax Tribunal is legally justified in coming to hold that ‘Cotton Yarn in Hank” is same as cotton and waste cotton and therefore is subject to Orissa Entry Tax @ 1%? (B) There being no specific entry for “Cotton Yarn in Hank” under the schedule to the Orissa Entry tax Act whether the Full Bench, Orissa Sales Tax Tribunal is justified in law in imposing Entry Tax @ 1% on ‘Cotton Yarn in Hank’ by bring it under Entry 2 of the schedule to the Orissa Entry Tax Act, 1999?” 4. The back ground facts are that the Petitioner is a registered dealer dealing inter alia ‘Cotton Yarn in Hank’ which is used by handloom weavers as opposed to cotton yarn which is used in power looms. The Petitioner submitted its return under the Orissa Sales Tax Act, 1947 (‘OST Act’) for the year in question excluding the turnover relating to sale of ‘Cotton Yarn in Hank’ since, admittedly, it figures as such in Entry -7 of exempted list under the OST Act. 5. As far as, the Orissa Entry Tax Act (OET Act) is concerned, the Petitioner states that although cotton yarn in hank does not figure in the schedule to the OET Act and therefore is not amenable to entry tax, the Petitioner paid for the year in question Rs.8,88,674.12 as entry tax under mistake. The order passed by the Sales Tax Officer (STO) raising a demand for the above amount as Page 3 of 5 entry tax on purchases by the Petitioner cotton yarn in hank was challenged by it unsuccessfully before the Assistant Commissioner Sales Tax (ACST) who dismissed the Petitioner’s appeal by an order dated 20th May, 2007. Thereafter the assessee went before the Tribunal in appeal. 6. In the impugned order, Tribunal held that cotton yarn in hank is not exempted from sales tax when it sold to any other person except to handloom weavers. However, in the present case, it was stated that according to common sense ‘cotton yarn is the thin spun from cotton which is used for weaving cloth’ and therefore, the entry ‘cotton yarn’, in the OET Act ‘will certainly include the cotton yarn’. Accordingly, it is held that cotton yarn in hank is not different from cotton yarn and exigible to entry tax. 7. This Court has heard the submissions of Mr. Jagabandhu Sahoo, learned counsel for the Petitioner and Mr. Sunil Mishra, learned Additional Standing Counsel for the Department. 8. The legislative history of excluding cotton yarn in hank from the purview of exigibility to sales tax reveals that even under the OST Act, there was a notification which exempted cotton yarn in hank from sales tax. Initially, the exemption notification was in force for the period 1st March, 2002 to 6th October, 2002 and it was made conditional on the product being sold to handloom weavers satisfied with the Director, Textile and Handloom, Odisha for use as raw material in the production of handloom fabrics in the State. At the same time ‘cotton yarn’ was subject to 4% tax under the Page 4 of 5 OST Act. Therefore, there was a clear distinction drawn between ‘cotton yarn’ and ‘cotton yarn in hank’ for the purposes of the OST Act. Even under the OVT Act, 2004 cotton yarn in hank was exempted goods under schedule-A. However, at the same time cotton and cotton waste were made exigible to tax at 4%. This again clearly showed that cotton, cotton waste, and cotton yarn in hank have been treated as different products even for the purposes of the OVAT Act. 9. Mr. Jagabandhu Sahoo also placed before the Court copy of the order passed on 16th April, 2007 by the Tribunal in S.A. No.319 (ET) of 2005-06 (Shree Ganesh Textile Agency v. State of Orissa) holding that cotton yarn in hank is not part of the schedule goods of the OET Act and therefore its purchases are not amenable to entry tax. This was also followed in two orders of the ACST involving other assesses. The above order of the Tribunal in Shree Ganesh Textile was not challenged by the State. 10. This Court is unable to concur with view expressed by the Tribunal in the instant case that for purpose of OET Act cotton yarn and cotton yarn in hank are and the same product. It appears that the State has made a distinction between the two products depending on its users. Considering that the cotton yarn in hank is used by handloom weavers, as a policy the State decided not to make an amenable either to sales tax at time of sale or to entry tax at the time of purchase. This is the rationale behind treating cotton yarn in hank differently from cotton yarn for the purpose of the OST Act, the OVAT Act and the OET Act. Page 5 of 5 11. For the aforementioned reasons the questions framed are answered in the negative i.e. in favour of the Assessee against the Department by holding that cotton yarn in hank is not the same as waste cotton or cotton and therefore is not subject to the OET Act and exigible to entry tax at 1%. The impugned order of the Tribunal is accordingly set aside as are the corresponding orders of the ACST and the STO. 12. The revision petition is disposed of in the above terms. (Dr. S. Muralidhar) Chief Justice (R. K. Pattanaik) Judge TUDU