The judgment of the court was delivered by

GULATI, J. - This is a reference under section 11(1) read with section 11(3) of the U.P. Sales Tax Act submitted by the Additional Revising Authority, Sales Tax, Varanasi, at the instance of the Commissioner of Sales Tax, Uttar Pradesh. The question submitted for the decision of the court is :

"Whether twisted yarn could be allowed absolute exemption being included in 'hand-spun yarn' appearing at item No. 7 of List II of Notification No. ST-911/X dated 31st March, 1956."

The assessee is a dealer in silk yarn. In respect of the assessment year 1957-58 the assessee disclosed a gross turnover of Rs. 10,93,440-14-0. This figure included a sum of Rs. 4,80,726-13-0 representing the sale of hand-spun yarn. The assessee claimed exemption from the levy of sales tax in respect of his turnover of hand-spun yarn on the basis of a notification, No. ST-911/X dated 31st of March, 1956, which exempts from sales tax the turnover of hand-spun yarn. The Sales Tax Officer accepted the assessee's claim to the extent of Rs. 3,80,726-13-0 but refused exemption in respect of the remaining turnover of Rs. 1,00,000 on the ground that the same represented the sale of hand-spun yarn which after undergoing a process of twisting became manufactured yarn. The assessee appealed but he did not succeed in his contention. The Judge (Appeals) also endorsed the view of the Sales Tax Officer and relied upon the fact that the twisting had been done by machine involving a huge expenditure of Rs. 16,069. This according to him was a process of manufacture which changed the identity of the yarn. The assessee then went up in revision and the Additional Revising Authority accepted the assessee's contention and held that the assessee was entitled to exemption in respect of the twisted yarn also because even after twisting, the yarn did not cease to be hand-spun yarn. The Commissioner was not satisfied with this order of the Additional Revising Authority and at his instance the present reference has been submitted to this court.

Form the order of the Additional Revising Authority passed under section 10 of the Act, it is clear that the process of spinning is only a mechanical one in which two or more threads of yarn are twisted together to form a thicker yarn which is suitable for weaving purposes. It is clear, therefore, that the hand-spun yarn even after twisting does not lose its identity but continues to be yarn even thought the twisted yarn is of thicker variety. No materials has been placed before us to show that the twisted yarn is commercially a different commodity, or that the twisted yarn does not serve the purpose which untwisted yarn does. The intention behind the notification of 31st of March, 1956, appears to be to exempt from sales tax the turnover of "hand-spun" yarn as opposed to "mill-spun" yarn. So long as yarn is hand-spun it would continue to enjoy the exemption granted by the notification even after it undergoes the process of twisting. The process of twisting has nothing to do with the process of spinning. The emphasis in the notification is obviously on the process of spinning. Any subsequent treatment of the yarn by way of colouring and twisting will not destroy its essential nature of being hand-spun yarn.

The learned counsel for the department tried strenuously to support the view taken by the Sales Tax Officer and the appellate authority but there is a clear fallacy in the view taken by those two officers. They have laid emphasis upon the process of twisting which in their view was a process of manufacture. In the first instance we do not agree that the process of twisting involves any process of manufacture. At best it can be called processing. Moreover, even if the process can be termed as process of manufacture the same would be immaterial so long as the basic nature of the commodity is not changed so as to become commercially a different commodity altogether. The learned counsel for the pa