Varun Fabs Ltd. Vs Union of India And Ors. (Punjab and Haryana High Court)
The Punjab and Haryana High Court decided a batch of writ petitions involving a common issue on the levy of Textile Committee cess on independent dyeing and processing units. The lead petition concerned a private limited company engaged solely in dyeing grey fabric received on a job-work basis. The petitioner did not manufacture grey cloth; after dyeing, the fabric was returned to the owner, who might or might not be the manufacturer. The cess had been demanded under Section 5A of the Textile Committee Act, 1963, pursuant to notices issued in 2000 for the periods 1995–96 to 1997–98.
The Court traced the legislative framework, noting that Section 5A of the 1963 Act authorises levy of cess on textiles and textile machinery manufactured in India, with collection from “manufacturers.” The Act defines “textiles” but does not define “manufacture.” The respondents attempted to apply the expansive definition of “manufacture” from the Central Excise Act, 1944, read with the Central Excise Tariff Act, 1985, under which processes such as dyeing, bleaching, and printing are deemed manufacture. The Court rejected this approach, holding that definitions from another taxing statute cannot be borrowed in the absence of a specific legislative mandate. It emphasised that the excise regime contains mechanisms like MODVAT/CENVAT credit, which do not exist under the 1963 Act, indicating a different legislative scheme.
