Definition From Another Statute Applies Only If Laws Are Pari Materia Or Legislature Adopts It By Reference Or Incorporation: Supreme Court

Applying this principle, the Court refused to import the Central Excise Act, 1944 definition of “manufacture” into the Textiles Committee Act, 1963, and dismissed an appeal against the quashing of a ₹2.68 lakh textile-cess demand.

The Court was hearing an appeal by the Assessing Officer of the Textiles Committee against an Allahabad High Court judgment which had quashed the cess imposed on a company engaged in bleaching, dyeing and processing fabrics supplied by powerloom and handloom units.

A Bench of Justice S.V.N. Bhatti and Justice N.V. Anjaria observed: “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 Others, 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.”

The Bench added: “... a particular word or a phrase or a section in any enactment 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.”

Advocate Chirag M. Shroff appeared for the Assessing Officer. Advocate Tanmaya Agarwal appeared for the respondent company.

Background

The respondent processed man-made fabrics supplied by powerloom and handloom units. It undertook bleaching, dyeing and other processing on a job-work basis before returning the fabrics to their manufacturers.

The Assessing Officer demanded ₹2,68,293 as textile cess, maintaining that the exemption under Section 5A of the Textiles Committee Act applied only at the loom stage. The Textiles Committee Cess Appellate Tribunal upheld the demand after treating further processing as “manufacture”.

The Allahabad High Court quashed the demand, holding that the processing did not remove the fabrics’ character as products of powerloom or handloom industries. Before the Supreme Court, the Textiles Committee sought to rely on Section 2(f) of the Central Excise Act, under which “manufacture” includes processes incidental or ancillary to completing a manufactured product.

Court’s Observations

Definitions Must Be Construed In Their Statutory Context

The Court held that each enactment must be interpreted according to its scheme, purpose, subject matter and operational ambit. A specialised or extended definition framed for one statute could not automatically govern another statute.

The Bench relied on Union of India v. R.C. Jain (1981) and Jagatram Ahuja v. Commissioner of Gift Tax, Hyderabad (2000). It noted that Jagatram Ahuja permitted reliance on a definition in another enactment where the statutes were pari materia or the legislature specifically provided that the expression would carry the same meaning.

Referring also to Maheshwari Fish Seed Farm v. T.N. Electricity Board (2004), the Court held: “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.”

Job-Work Processing Did Not Constitute Manufacture

The Court observed that the fabrics had already been manufactured by powerloom and handloom units before reaching the respondent. The respondent only processed and returned them and did not manufacture a new textile.

The Bench stated: “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.”

No Cess Without Textile Being Manufactured

The Court noted that Section 5A imposed cess on textiles manufactured in India, while its proviso expressly exempted textiles manufactured by handloom or powerloom industries.

It held that bleaching and dyeing merely upgraded the fabric and did not produce “textile manufactured” within the provision.

The Court concluded: “At the best, it is the textile upgraded, not to become ‘manufacture’ in its sense as could be applied in the context 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.”

Conclusion

The Supreme Court held that the respondent’s job-work processing did not constitute textile manufacture under Section 5A of the Textiles Committee Act. It dismissed the Assessing Officer’s appeal, leaving undisturbed the High Court’s decision quashing the ₹2,68,293 cess demand. Any pending interlocutory application ceased to survive.

Cause Title: The Assessing Officer, Textiles Committee v. M/s Premium Suiting Private Limited and Another (Neutral Citation: 2026 INSC 1158)

Appearances

Appellant: Advocate Chirag M. Shroff (AOR)

Respondents: Advocate Tanmaya Agarwal (AOR); Advocates Aditi Agarwal, Astha Goyal, Jayesh Sharma, Muhammad Nomaan Khan and Neel Kamal Mishra

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