Law: Sales Tax Act, (III of 1951)

Section: 3

Sales Tax Act (III of 1951)--S. 3 Mazri cloth, raw material for Manufacture of yarn from ginned cotton Merely a stage in manufacture of end product namely mazri cloth Ginned cotton and not yarn constituted raw material for manufacture of mazri cloth Tribunal, held, justified in holding that cotton constituted raw material for manufacture of mazri cloth. Commissioner of Sales Tax, Lahore v. Messrs Crescent Textile Mills Ltd., Lahore T. R. No. 25 of 1967 fol. JUDGMENT MUHAMMAD AKRAM, J. The Income tax Appellate Tribunal Pakistan, Lahore, has refered the following question of law said to arise out of its appellant's order passed in S. T. A. No. 3 of 1968 69, to the High Court for its opinion: "Whether on the facts and circumstances of the case, the Tribunal was justified in holding that cotton constituted raw material for mazri cloth and not the yarn consumed in the manufacture of mazri cloth?" 2. Briefly the relevant facts are that the respondent assessee is a licensed manufacturer and during the year under consideration manufactured cloth which was exempt from levy of sales tax. On the strength of the manufacturing licence the assessee had purchased cotton from the dealer without paying any sales tax for the manufacture of yarn utilized in the production of the mazri cloth. In the opinion of the Sales Tax Officer, Co. Ward III, Lahore, vide his order 10th June, 1967, the mazri cloth was exempt from tax, but the assessee was liable to be taxed on the raw material. He treated the yarn consumed in the production of the mazri cloth as the raw material, which was brought to tax. .The assessee went up in appeal against the order before the Appellate Assistant Commissioner of Sales Tax, B Range, Lahore, who on 11th April, 1968, upheld the contention of th; assessee and ordered that the sales tax should be levied on the purchase of the cotton and not on the estimated value of the yarn consumed in the production of the mazri cloth. This gave rise to the appeal (S. T. A. No. 3 of 1968 69) filed by the Department against the order before the…

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