We study the spectral state evolution of the Terzan 5 transient neutron star low-mass X-ray binary IGR J17480-2446, and how the best-fit spectral parameters and burst properties evolved with these states, using the Rossi X-ray Timing Explorer data. As reported by other authors, this is the second source which showed transitions between atoll state and `Z state. We find large scale hysteresis in the almost `C-like hardness-intensity track of the source in the atoll state. This discovery is likely to provide a missing piece of the jigsaw puzzle involving various types of hardness-intensity tracks from `q-shaped for Aquila X-1, 4U 1608-52, and many black holes to `C-shaped for many atoll sources. Furthermore, the regular pulsations, a diagonal transition between soft and hard states, and the large scale hysteresis observed from IGR J17480-2446 argue against some of the previous suggestions involving magnetic field about atolls and millisecond pulsars. Our results also suggest that the nature of spectral evolution throughout an outburst does not, at least entirely, depend on the peak luminosity of the outburst. Besides, the source took at least a month to trace the softer banana state, as opposed to a few hours to a day, which is typical for an atoll source. In addition, while the soft colour usually increases with intensity in the softer portion of an atoll source, IGR J17480-2446 showed an opposite behaviour. From the detailed spectral fitting we conclude that a blackbody+powerlaw model is the simplest one, which describes the source continuum spectra well throughout the outburst. We find that these two spectral components were plausibly connected with each other, and they worked together to cause the source state evolution. (Truncated).
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