1. A processor engaged in bleaching and dyeing fabrics supplied by powerloom and handloom units challenged a textile cess demand imposed on its activities under the Textiles Committee Act, 1963. (Para 1 , 2 , 3 )
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2026 Supreme(SC) 1289
SUPREME COURT OF INDIA
S.V.N. BHATTI, N.V. ANJARIA, JJ.
The Assessing Officer, Textiles Committee – Appellant
Versus
M/s. Premium Suiting Pvt. Ltd. & Another – Respondents
Civil Appeal No. 785 of 2016
Decided On : 26-10-2026
Important Points
Undefined terms in a statute cannot be interpreted by importing definitions from other statutes unless they are pari materia or a legislative reference exists. Ancillary job-work processing of exempt textiles does not constitute 'manufacturing' for the purpose of imposing a statutory cess.
Subject
Tax Law - Indirect Tax
Act Referred
Headnote
(A) Textiles Committee Act, 1963 - Section 5A - Imposition of cess on textiles manufactured in India - Proviso to Section 5A - Exemption for textiles manufactured from out of handloom or powerloom industry - Interpretation of the word 'manufacture' - Word not defined in the Act - Definition from Central Excise Act, 1944 cannot be imported into the present Act in the absence of reference or incorporation - Definition of a term in one statute does not afford a guide to construction of the same term in another statute unless the statutes are pari materia or it is specifically provided. (Paras 5.5, 5.6, 5.7)
(B) Job work - Bleaching, dyeing and processing of fabrics by an independent unit on job work basis for handloom and powerloom manufacturers - Such activity is supplementary and ancillary to the manufacturing process - Does not result in 'textile manufactured' to attract cess - Activity viewed as an extended arm of the exempt manufacturer. (Paras 6.3, 6.5, 6.6)
Facts of the case:
A statutory body demanded textile cess from a company engaged in bleaching, dyeing, and processing of man-made fabrics supplied by powerloom and handloom units on a job work basis. The respondent claimed exemption as the fabrics were produced by small weavers categorized as powerloom industry. An appellate tribunal held that processing amounted to manufacturing, making the job worker liable. The High Court quashed the demand, holding that processing does not obliterate the status of the textile as an exempt product of the powerloom industry.
Findings of Court:
The court found that the word 'manufacture' is not defined in the Act. It is impermissible to adopt the definition of 'manufacture' from the Central Excise Act to expand the scope of the levy. The processing activities undertaken by the respondent are ancillary to the manufacturing done by the exempt powerloom industry and do not constitute a separate act of manufacturing.
Issues: Whether the activity of bleaching and dyeing of fabrics on a job work basis constitutes 'manufacture' under Section 5A of the Act and whether a definition from another statute can be imported to interpret an undefined term in the present Act.
Ratio Decidendi: Definitions from one statute cannot be read into another unless they are pari materia or there is a legislative reference. Since the fabrics originated from exempt industries and the respondent's activity was merely an ancillary processing service on job work, no new 'manufactured textile' was created to attract the cess.
Result: Appeal dismissed.
(B) Job work - Bleaching, dyeing and processing of fabrics by an independent unit on job work basis for handloom and powerloom manufacturers - Such activity is supplementary and ancillary to the manufacturing process - Does not result in 'textile manufactured' to attract cess - Activity viewed as an extended arm of the exempt manufacturer. (Paras 6.3, 6.5, 6.6)
Facts of the case:
A statutory body demanded textile cess from a company engaged in bleaching, dyeing, and processing of man-made fabrics supplied by powerloom and handloom units on a job work basis. The respondent claimed exemption as the fabrics were produced by small weavers categorized as powerloom industry. An appellate tribunal held that processing amounted to manufacturing, making the job worker liable. The High Court quashed the demand, holding that processing does not obliterate the status of the textile as an exempt product of the powerloom industry.
Findings of Court:
The court found that the word 'manufacture' is not defined in the Act. It is impermissible to adopt the definition of 'manufacture' from the Central Excise Act to expand the scope of the levy. The processing activities undertaken by the respondent are ancillary to the manufacturing done by the exempt powerloom industry and do not constitute a separate act of manufacturing.
Issues: Whether the activity of bleaching and dyeing of fabrics on a job work basis constitutes 'manufacture' under Section 5A of the Act and whether a definition from another statute can be imported to interpret an undefined term in the present Act.
Ratio Decidendi: Definitions from one statute cannot be read into another unless they are pari materia or there is a legislative reference. Since the fabrics originated from exempt industries and the respondent's activity was merely an ancillary processing service on job work, no new 'manufactured textile' was created to attract the cess.
Result: Appeal dismissed.
Legal Category Hierarchy
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administrative law
-
statutory interpretation
- importation of definitions
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taxation
- cess levy
- exemptions
-
statutory interpretation
-
industry regulation
-
textiles industry
- manufacturing versus processing
-
textiles industry
Advocates appeared:
For the Appellant(s) : Mr. Chirag M. Shroff- 1525, AOR
For the Respondent(s) Mr. Tanmaya Agarwal, AOR Mrs. Aditi Agarwal, Adv. Ms. Astha Goyal, Adv. Mr. Jayesh Sharma, Adv. Mr. Muhammad Nomaan Khan, Adv. Mr. Neel Kamal Mishra, Adv.
For the Appellant(s) : Mr. Chirag M. Shroff- 1525, AOR
For the Respondent(s) Mr. Tanmaya Agarwal, AOR Mrs. Aditi Agarwal, Adv. Ms. Astha Goyal, Adv. Mr. Jayesh Sharma, Adv. Mr. Muhammad Nomaan Khan, Adv. Mr. Neel Kamal Mishra, Adv.
Table of Contents
2. The revenue contended that processing fabrics constitutes manufacturing taxable as an ancillary activity; the taxpayer claimed exemption as the process does not qualify as manufacturing under the Act. (Para 6 )
3. The appeal is dismissed, and the demand for textile cess on the independent processing unit is quashed. (Para 7 )
JUDGMENT
N.V. ANJARIA, J.
The present appeal preferred by the Assessing Officer, Textile Committee, is directed against order dated 06.03.2013 passed by the High Court of Judicature at Allahabad [Hereinafter “High Court”] in Writ Tax No. 354 of 2006, whereby the High Court allowed the writ petition of the respondent No.1 herein.
2. The writ petition was filed challenging order dated 20.10.2005 passed by the Textiles Committee Cess Appellate Tribunal [Hereinafter “Appellate Tribunal”] in T.C.A. No. 223 of 2002. The Appellate Tribunal dismissed the appeal of the respondent No.1 herein and upheld the order of the assessing authority demanding textile cess to the tune of Rs. 2,68,293/-. The High Court quashed the textile cess demand.
3. The facts may be outlined. The appellant-Textiles Committee is a statutory body under Section 3 of the Textiles Committee Act, 1963 [Hereinafter ‘Act’] functioning under the Ministry of Textiles, Government of India with an object to ensure the quality of textiles and textile machinery, whereas respondent No.1 is a company engaged in the manufacturing of textiles. The respondent No.1 is engaged in bleaching, dyeing and processing of 100% man-made fabrics, supplied by powerloom and handloom units.
3.1 It appears that a letter dated 28.06.2001 came to be written from the office of Comptroller General of India to the Ministry of Textiles stating inter alia that in the course of the audit, it was found that out of 30 independent textiles processors, only one processor had been paying the cess during 2000–2001 in 5 Commissionerates of Central Excise of Uttar Pradesh and that the remaining 29 processors did not pay the cess which according to the office of Comptroller General of India was of the value of Rs.39.64 lacs during 1997 to 2000.
3.2 In pursuance of the aforementioned communication, respondent No.1 herein was served with show cause notice dated 20.08.2001 by the appellant-assessing officer, raising demand of Rs.2,68,293/- towards textile cess. The show cause notice was replied to on 28.08.2001. Respondent No.1’s claim for exemption from payment of cess was not accepted by the authorities. Respondent No.1 had submitted in the reply that its unit was an independent textile processor for the textiles manufactured received from the powerloom industries and it was on job work basis. It was stated that the textile (fabric) was made by small weavers in the small household industries which had powerlooms below 50 in numbers in all cases and that they did not have any spinning plants. It was contended that the Act provided and exempted all the products from the purview of applicability of the cess and the cess was not payable.
3.3 As the explanation of the appellant was not accepted, the assessment order dated 21.11.2001 came to be passed by the competent authority fixing the liability on respondent No.1 to pay textile cess to the tune of Rs.2,68,293/-. The inspecting officer by his letter dated 16.10.2001 clarified that the powerloom/handloom fabrics were exempted from cess only at the loom stage and not afterwards when they are further processed. Respondent No.1-company, aggrieved by the demand notice and the assessment orders, approached the Appellate Tribunal by filing Appeal No. 223 of 2002.
3.4 The Appellate Tribunal relied on its own decision in Chandok Textile Exporters Pvt. Ltd. vs. Assessing Officer, Textites Committee in T.C.A. No. 222 of 2002 on 30.04.2004 holding that the processing activity amounted to manufacturing under the Act and the job workers and the merchant dealers were jointly and severally liable to pay cess under the Act. The view taken in that case was that the processing fabrics out of powerloom and handloom industries for further manufacturing was not exempted under the Proviso to Section 5A of the Act. With such reasoning, entirely based on its own decision in Chandok Textile Exporters Pvt. Ltd. (supra), the Appellate Tribunal dismissed the appeal of respondent No.1 on 09.12.2005.
