The judgment of the Court was delivered by

DR. B. P. SARAF, J. - By this reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the Revenue, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion :

"Whether, on the facts and circumstances of the case, the Tribunal was correct in law in holding that absorbent cotton wool I.P. was in its unmanufactured state and was thus covered by entry 2 of Schedule B to the Act by virtue of rule 3(xviii) of the Bombay Sales Tax Rules, 1959."

The material facts are as under :

The assessee, who is a registered dealer under the Bombay Sales Tax Act, 1959 ("the Act") sells and supplies absorbent cotton wool. He made an application to the Commissioner of Sales Tax, Maharashtra State, Bombay, under section 52 of the Act for determination of the rate of tax payable under the Act on the sale of absorbent cotton wool made by him. Before the Commissioner, the assessee described the process applied to cotton for converting it into absorbent cotton wool as follows :

"The broken seed leaf and dirt in raw cotton are removed and the opened cotton is boiled with caustic so