Authority: Supreme Court of India, Civil Appellate Jurisdiction
Order Date: 26 October 2026
Case Overview
- Parties: Assessing Officer, Textile Committee (Appellant) vs. M/S. Premium Suiting Pvt. Ltd. & another (Respondents).
- Appeal No.: Civil Appeal No. 785 of 2016.
- Procedural History:
- The dispute originated from a show‑cause notice dated 20 August 2001 demanding Rs 2,68,293 as textile cess under Section 5A of the Textiles Committee Act, 1963.
- Respondent argued exemption because its unit performed only bleaching, dyeing, and other processing on fabrics supplied by powerloom/handloom units on a job‑work basis.
- The assessing officer rejected the exemption; an assessment order dated 21 November 2001 fixed liability of Rs 2,68,293.
- The appellant‑assessing officer also issued a separate notice on 6 January 2006 demanding Rs 1,43,176 for the period April 2001‑December 2003.
- The respondent appealed to the Textiles Committee Cess Appellate Tribunal (TCAT) (T.C.A. No. 223 of 2002). The Tribunal, relying on its own decision in Chandok Textile Exporters Pvt. Ltd. vs. Assessing Officer (T.C.A. No. 222 of 2002), held that processing amounted to “manufacture” and dismissed the appeal on 9 December 2005.
- The respondent then filed Writ Tax No. 354 of 2006 before the High Court of Judicature at Allahabad. The High Court, on 6 March 2013, quashed the cess demand, holding that bleaching and dyeing by job workers does not remove the exemption granted to handloom/powerloom textiles under the proviso of Section 5A.
- The Assessing Officer appealed the High Court order to the Supreme Court.
- Legal Issues:
1. Whether the term “manufacture” in Section 5A should be interpreted by importing the definition from the Central Excise Act, 1944.
2. Whether bleaching, dyeing, and other processing performed on fabrics received from handloom/powerloom manufacturers constitute “manufacture” liable to cess.
3. Whether the exemption for textiles manufactured in the handloom or powerloom industry under the proviso of Section 5A applies to the respondent’s activities.
- Statutory Provisions Discussed:
- Section 5A of the Textiles Committee Act, 1963 (cess on all textiles and textile machinery, except those manufactured from handloom or powerloom industry).
- Definition of “textiles” (Section 2(g)) and “powerloom” (Section 2(da)) and “powerloom industry” (Section 2(db)).
- Absence of a definition for “manufacture” in the Act; the Court rejected the argument to import the definition from the Central Excise Act.
- Court’s Reasoning:
- The Court emphasized that a word not defined in a statute cannot be borrowed from another statute unless expressly incorporated.
- Citing Union of India vs. R.C. Jain and principles of statutory interpretation, the Court held that the meaning of “manufacture” must be derived from the context of the Textiles Committee Act itself.
- The Court observed that the exemption in the proviso of Section 5A is clear: no cess on textiles manufactured by handloom or powerloom industry, and the processing performed by the respondent is merely an ancillary activity, not a new manufacture.
- Consequently, the respondent’s job‑work processing does not create a “textile manufactured” within the meaning of Section 5A, and the cess demand is untenable.
Final Outcome
- The Supreme Court dismissed the appeal filed by the Assessing Officer, Textile Committee, finding it meritless.
- The High Court’s order quashing the textile cess demand of Rs 2,68,293 (and the subsequent demand of Rs 1,43,176) stands affirmed.
- No interlocutory applications, if any, survive the disposal of the appeal.
Topics: Textile Cess, Statutory Interpretation, Exemption for Handloom/Powerloom Textiles