COMMISSIONER OF SALES TAX, U.P. vs M/S. SARIN TEXTILES MILLS

The Supreme Court held that 'kati' does not qualify as 'yarn' under the U.P. Sales Tax Act, 1948, as it is unspun fibre and lacks the characteristics of spun thread. The Court found that kati is not used in weaving, thus not falling under the notifications for higher tax rates. Consequently, it was determined that kati is an unclassified item, liable to tax at the lower rate of 2 pies per rupee as per Section 3 of the Act.