THE ASSESSING OFFICER, TEXTILES COMMITTEE v. M/S. PREMIUM SUITING PVT. LTD. & ANOTHER

2026 INSC 1158 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 785 OF 2016

THE ASSESSING OFFICER, TEXTILES COMMITTEE …APPELLANT

VERSUS

M/S. PREMIUM SUITING PVT. LTD. & ANOTHER …RESPONDENTS

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

Allahabad1 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 Signature Not Verified

Digitally signed by SNEHA DAS Appellate Tribunal2 in T.C.A. No. 223 of 2002. The Appellate Date: 2026.10.26 17:42:29 IST Reason:

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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, 19633 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

3 Hereinafter ‘Act’

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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

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.

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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

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

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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

3.5 Respondent No.1 was required to deposit the

adjudicated amount of Rs.2,68,293/-. Another notice dated

06.01.2006 was also issued to respondent No.1 which was

a separate cause of action, wherein demand for payment of

Rs.1,43,176/- towards textile cess was raised in respect of

the period from April 2001 to December 2003. Against the

order of dismissal of the appeal by the Appellate Tribunal,

the respondent-company preferred writ before the High

Court. While allowing the writ petition of respondent No.1

herein, the High Court held that the activity of bleaching and

dyeing and other processing of power unit or handloom

textiles by job workers would not mean obliteration of the

status of textile as products of the powerloom industry and

since such powerloom textiles are exempted from payment

of textiles tax under Section 5A of the Act, the tax would not

be payable.

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3.5.1 It was further reasoned that the job workers

perform an extended activity for the manufacturers,

observing,

‘The hand-loom and power-loom textile manufacturers instead of getting work of bleaching etc. done by themselves, have engaged the petitioner on job work basis. The petitioner received the textile and after doing the needful return the textile to such manufacturers. Section 5A imposes cess for the purposes of the Act, 1963, a duty of excise on all textiles and on all textile machinery manufactured in India. The word 'manufacture' is not defined in the Act, 1963.’

3.5.2 The High Court further stated,

‘Since the textile manufactured out from hand- loom and power-loom industry has been exempted under section 5A, obviously no inspection in respect of textile manufactured by such industry is required and therefore, it is reasonable to conclude that the activity undertaken by an extended hand of these manufacturers will also be not liable to pay the impost of cess under the Act.’

4. Heard learned counsel Mr. Chirag M. Shroff for the

appellant and learned counsel Mr. Tanmaya Agarwal for

respondent No.1.

5. The Textile authority seeks to derive its power to levy

cess under Section 5A of the Act, inserted by Act 51 of 1973,

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with effect from 01.01.1975, Section 5A is extracted

hereunder,

5A. Imposition of cess on textiles and textile machinery manufactured in India.—(1) There shall be levied and collected as a cess for the purposes of this Act a duty of excise on all textiles and on all textile machinery manufactured in India at such rate, not exceeding one per cent. ad valorem as the Central Government may, by notification in the Official Gazette, fix:

Provided that no such cess shall be levied on textiles manufactured from out of handloom or powerloom industry.

(2) The duty of excise levied under sub-section (1) shall be in addition to any cess or duty leviable on textiles or textile machinery under any other law for the time being in force.

(3) The duty of excise levied under sub-section (1) shall be collected by the Committee, in accordance with the rules made in this behalf, from every manufacturer of textiles or textile machinery (hereinafter in this section and in sections 5C and 5D referred to as the manufacturer).

(4) The manufacturer shall pay to the Committee the amount of the duty of excise levied under sub-section (1) within one month from the date on which he receives a notice of demand therefore from the Committee.

(5) For the purpose of enabling the Committee to assess the amount of the duty of excise levied under sub- section (1),—

(a) the Committee shall, by notification in the Gazette of India, fix the period in respect of which assessments shall be made; and

(b) every manufacturer shall furnish to the Committee a return, not later than fifteen days after the expiry of the period to which the return

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relates, specifying the total quantity of textiles or textile machinery manufactured by him during the said period and such other particulars as may be prescribed.

(6) If asssny manufacturer fails to furnish the return referred to in sub-section (5) within the time specified therein, or furnishes a return which the Committee has reason to believe is incorrect or defective, the Committee may assess the amount of the duty of excise in such manner as may be prescribed.

(7) Any manufacturer aggrieved by an assessment made under this section may appeal to the Tribunal, constituted under section 5B for cancellation or modification of the assessment.

5.1 Section 5A contemplates levy and collection of cess on

all textiles and all textile machinery manufactured in India.

A manufacturer of textiles becomes liable to pay the cess by

virtue of Section 5A. The provision is applied in case of

respondent No.1 herein. The text of Section 5A has at its

several places the phrase ‘textile manufactured’, however,

the word ‘manufacture’ is not defined in the Act.

5.2 The word ‘textile’ is defined in the Act in Section 2(g).

The said definition is as under,

2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,—

(g) ‘textiles’ means any fabric or cloth or yarn or garment or any other article made wholly or in part of—

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(i) cotton; or (ii) wool; or (iii) silk; or (iv) artificial silk or other fiber, and includes fiber;

5.3 The word ‘powerloom’ is defined in Section 2(da) to

mean a loom which is worked by power as defined in clause

(g) of Section 2 of the Factories Act and which is used or

capable of being used for weaving cloth wholly or partly out

of the cotton yarn or wollen yarn, or fibre, or any kind of

mixed yarn. The definition of powerloom industry is defined

in Section 2(db) to mean an industry in which a

manufacturer of textiles has during the period not more

than 50 powerlooms in the factory.

5.4 Now, the High Court in the impugned order dealt with

the argument advanced on behalf of appellant-Textiles

Committee that although the word ‘manufacture’ has not

been defined in Act, the definition of the word ‘manufacture’

found in Section 2(f) of the Central Excise Act, 19444 should

be adopted and applied which inter alia contemplates that

the concept of ‘manufacture’ includes any process incidental

4 Hereinafter ‘Central Excise Act’

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or ancillary to the completion of a manufactured product.

On the basis of such argument, it was sought to be

suggested that the bleaching and dyeing was the process

incidental to the completion of manufactured product,

therefore, the same would have to be construed as

‘manufacture’ to apply Section 5A of the Act, consequently,

the levy of textile cess was legal and justified.

5.5 This Court endorses to the view taken by the High

Court in the above count namely that unless the particular

word of section is included to be read by virtue of reference

or incorporation from the other statute, such word cannot

be readily taken as applicable in the statute where it is not

defined. The High Court was correct in relying on the

decision of this Court in Union of India and Others vs. R.C.

Jain and Others5, in which it is held that if a particular

expression is not defined in an Act, its definition in another

Act cannot be imported into the former Act.

5.6 It is a settled principle of statutory interpretation that

a particular word or a phrase or a section in any enactment

5 (1981) 2 SCS 308

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has to be construed, interpreted and applied having regard

to the context of the scheme, purpose and operational ambit

of such statute. Every statute has in its subject matter as a

distinguished context. Therefore, the same word occurring

in the other statute cannot be bodily lifted and read as

defined in the other statute for the purpose of applying the

same, unless such word or definition or provision is provided

to be read by the legislature by applying doctrine of reference

or doctrine of incorporation.

5.7 The following observations by this Court in Jagatram

Ahuja vs. Commissioner of Gift Tax, Hyderabad6, are on

the same lines,

‘…the words and expressions defined in one statute as judicially interpreted do not afford a guide to construction of the same words or expressions in another statute unless both the statutes are pari materia legislations or it is specifically so provided in one statute to give the same meaning to the words as defined in the other statute. The aim and object of the two legislations, namely, the Gift Tax Act and the Estate Duty Act are not similar.’ (Para 23)

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5.8 In Maheshwari Fish Seed Farm vs. T.N. Electricity

Board and Another7, the argument before this Court on

behalf of the appellant was that the word ‘agriculture’ as

defined in the blank Act, should follow the same meaning as

defined in other Act such as Tamil Nadu Agricultural

Produce Marketing (Regulation) Act, 1987, Tamil Nadu

Agriculture University Act, 1971 or Agriculture and Rural

Debt Relief Scheme, 1990 in which the term ‘agriculture’

included ‘pisciculture’.

5.8.1 The Court said that it was not permissible to

assign similar meaning of the definition of a particular word

in one statute, to the definition of the very word in the other

statute,

‘…Suffice it to observe that the common-parlance meaning of the term ‘agriculture’, in the context in which it has been used and is arising for determination before us, cannot be determined by reference to definitions given in other statutes. This we say for more reasons than one. Firstly, none of the statutes referred to by Shri Iyer, the learned Senior Counsel, can be called statutes in pari materia. Secondly, it is common knowledge that the definition coined by the legislature for the purpose of a particular enactment is often an extended or artificial meaning so assigned as to fulfil the object of that enactment. Such definitions given in other enactments cannot be freely used for finding out

7 (2004) 4 SCC 705

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meaning to be assigned to a term of common parlance used in an altogether different setting.’ (Para 16)

5.8.2 The Court quoted with approval from ‘Principles

of Statutory Interpretation’ by Justice G.P. Singh [9th

Edition, 2004, Page 163] that ‘it is hazardous to interpret a

statute in accordance with a definition in another statute

and more so when such statute is not dealing with any

cognate subject or the statutes are not in pari materia.’

6. The whole stand on the part of the textile authorities

in subjecting that the activity of the respondent-company

was liable to be treated as ‘manufacture’, is that when the

fabrics come from the powerloom or handloom industry to

the unit of respondent No.1, a process is undertaken in the

nature of bleaching, dyeing, etc. It is the case that when the

process is undergone on the fabric, in view of the definition

of manufacture in the other Acts, especially under the

Excise Act such as the Central Excise Act, process of

bleaching etc. would fall within the purview of

‘manufacture’.

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6.1 As already stated above, the word ‘manufacture’ is not

defined in the Act, and it is neither safe nor permissible in

law to advert to and adopt the connotation ‘manufacture’

as defined in another statute, and on the basis of such alien

definition, treat the activity undertaken by respondent No.1

to be the manufacturing activity. Therefore, while

interpreting the word ‘manufactured’ which occurs in

Section 5A of the Act in the present case, it has to be

understood in its common parlance and not in any special

sense by borrowing a special ingredient of the concept from

other statute.

6.2 The Act provides for imposition of cess on textiles and

textile machinery ‘manufactured’. The question is whether

the dyeing, bleaching, and such processing on the fabric

becomes ‘textile manufactured’ to attract the liability of cess.

The entire process that takes place in the instant case is that

the processor units of the respondent-company are

independent units for the processing of textile. The textile is

received from the handloom and powerloom textile

manufacturers which manufacture the textile.

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6.3 These manufacturers of textiles do undertake work of

bleaching, dyeing etc. by themselves. They engage the

respondent-company for applying such kind of work on the

fabrics. Respondent No.1 is engaged by the powerloom and

handloom industries on job work basis. Job work is done by

respondent No.1 on behalf of the textile manufacturers. The

respondent-company gets the textile and, after applying

dyeing, bleaching and doing such processing as may be

needed, returns the textile to the powerloom manufacturers.

No ‘manufacturing’ takes place at the end of or by

respondent No.1. The product that comes out from the

assistant but independent unit of respondent No.1, is not

and the same could be termed or treated as ‘textile

manufactured’.

6.4 Section 5A of the Act imposes textile cess, however, the

Proviso says that no such cess shall be levied on textiles

manufactured out of handloom or powerloom industry. In

another words, the textiles manufactured by the handloom

or powerloom industrial units cannot be subjected to levy of

textile cess. An express exemption is granted under Section

5A of the Act.

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6.5 Respondent No.1 in its processing units does not

manufacture. It only processes the fabric or textile received

from the powerloom or handloom industry and, after dyeing

and bleaching, returns the same to the powerloom industry.

The activity undertaken by respondent No.1 is an extended

activity which refines the textile by applying dyeing and

bleaching. It could be viewed as an activity supplementary

and ancillary to the manufacturing of textiles which is

performed by the powerloom industry, which again is

exempted from textile tax under Section 5A of the Act.

6.6 Respondent No.1 through operation of its independent

processing units, operates only to the benefit of the textile

manufacturers in the powerloom industry. Its activity does

not fall within the concept of manufacture. Respondent No.1

only works as an extended arm for the manufacturers of the

textile of the powerloom industry. The fabric or textile which

becomes material bleached and dyed is not ‘textile

manufactured’.

6.7 At the best, it is the textile upgraded, not to become

‘manufacture’ in its sense as could be applied in the context

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of Section 5A in particular and for the purpose of context of

the Act in general. It has to be held that respondent No.1

cannot be subjected to and cannot be made liable to pay the

textile cess, as there is no ‘textile manufactured’ in its units.

7. For the reasons stated above, the challenge to the

impugned order of the High Court has to necessarily fail.

The appeal is meritless. The same is dismissed.

Any interlocutory application, if pending, shall cease to

survive in view of the disposal of the appeal.

.………………………...J. [S.V.N. BHATTI]

………………………….J. [N.V. ANJARIA] NEW DELHI; OCTOBER 26, 2026.

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