JUDGMENT
Ramakrishnan, J.
1. The petitioner in this revision case is a dealer in cloth, ready-made garments and zari in Vellore. For his turnover in 1959-60 he was assessed by the Joint Commercial Tax Officer, Vellore II. Out of the assessed turnover he claimed that Rs. 15,808 represented the value of the zari work done on silk cloth amounting to works contract and not sales and therefore exempt from assessment. This claim was negatived by the Appellate Assistant Commissioner as well as by the Sales Tax Appellate Tribunal in appeal. The dealer has now come before this Court in revision.
2. The findings of the authorities below show the nature of the transaction. The appellant had with him certain designs embroidered on silk cloth. These embroidered pieces were sold to customers and in the bills the particular description of the embroidery is given and a price is fixed according to the weight of the zari. There was no evidence, which would support the claim of the assessee that the customer supplied the cloth for these embroidered pieces. The assessee himself is a cloth merchant, and it is quite possible that the customer who buys cloth from him will also buy his ready-made zari embroidered pieces, which are suitable for being stitched to several garments, like sarees, blouses etc. The lower authorities have also found that the value of cloth is very little when compared with the value of the zari work done in these pieces. That is why the appellant was able to sell these pieces by the weight of the zari that went into the embroidery work done on them.
3. In view of the specific finding of the Tribunal that the customer did not supply cloth on which the embroidery could be worked by the assessee, there is no question in this case about any contract for work and labour to be done on material either supplied by the customer himself or by the dealer who supplied it for the customer’s benefit. The goods that were sold in these cases were ready-made pieces of cloth with heavy zari embroidery worked out in the cloth in certain attractive patterns. We are therefore of the opinion that the view of the Tribunal that this is not a works contract but a sale of finished embroidery products is correct.
4. Learned counsel for the petitioner then referred to the fact that under item 4 of the Third Schedule to the Madras General Sales Tax Act, 1959, all varieties of textiles ‘would be exempt from assessment. Relying upon two decisions, one of the Supreme Court in Kailash Nath v. State of U.P. [1957] 8 S.T.G. 358, and Anr. of this Court in Kittaftpa Dress M. & E. Works v. State of Madras [1962] 13 S.T.C. 34, the petitioner contended that what was sold in this case was cloth and not embroidered pieces, and that the embroidery did not alter the nature of the substance as the cloth. We are unable to agree. Kailash Nath v. State of U.P. [1957] 8 S.T.G. 358 dealt with a special notification exempting from sales lax cotton cloth or yarn manufactured in Uttar Pradesh subject to the condition that the cloth or yarn was actually exported from Uttar Pradesh State. The assessees sold cotton cloth manufactured by them to their constituents, who thereafter dyed and printed such cloth with hand-made apparatus and exported them as hand-printed cloth. The Supreme Court held that, though the colour of the cloth had changed by printing and processing, the cloth exported was the same as the cloth sold by the petitioner, and that they were entitled to the exemption under the notification. But in the present case the embroidery by zari design on the cloth had materially altered the nature of the goods sold. The value of the cloth, as we have mentioned already, was the value of the weight of the zari that went into the embroidery. The cloth portion became trivial in value when compared with the zari portion. It is therefore idle to contend that after the working in of heavy embroidery design on the pieces of cloth, what was sold in fact, was only cloth and not some other article. The value of the articles sold to the customer was not so much the value of the cloth as the value of the embroidery therein. This circumstance provides a clear distinction in this case.
5. Again in Kittappa Dress M. & E. Works v. State of Madras [1962] 13 S.T.C. 34, a Bench of this Court dealt with small bits of silk cloth but into 7/8 yards in length suitable for stitching into cholis. By “appliqué” work some embroidery was attached in one or two places on the pieces of cloth. This addition of the embroidery enhanced the price of the cloth by a small margin varying from 4 annas to 12 annas. But the substance was sold only as cloth and the embroidery did not make any appreciable difference in the value of the material sold. That again provides a ground of distinction between the decision above cited and the facts of the present case. A further objection to this argument is that a reference to the record shows that in all these cases silk cloth was used and not cotton. There is, therefore, no question of exemption of assessment of the sales under item 4 of the Third Schedule to the Madras General Sales Tax Act, 1959, which excludes from its scope pure silk cloth.
6. Learned counsel for the petitioner as a final argument referred to item 19 of the First Schedule to the Madras General Sales Tax Act, 1959, which provides zari, as an item of goods assessable at the point of first sale in the State. According to the learned counsel, the sales in this case are subsequent sales and therefore they would be exempt, but the fallacy in this argument lies in the fact that what was sold is not zari. It is zari thread embroidered into attractive designs or patterns on silk cloth. The customer has paid in these cases not for zari material as such, but for the design worked out with zari material on silk cloth which can be used for being stitched to other garments. The argument would have been perfectly valid if what was sold was zari, plain and simple. But that is not so in this case. We therefore confirm the decision of the Tribunal and dismiss the revision case, but without costs.
