TMI Blog1971 (9) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... on under the Act under section 7 and for the issuance of a certificate under section 7(4) to enable him to purchase, in the course of inter-State trade, certain materials or goods, which according to the petitioner, were required in the process or in the manufacture of the goods, manufactured by him for sale. It is not in dispute that such a certificate was granted from time to time. On 27th January, 1967, a registration certificate was issued to the petitioner whereunder certain goods were listed as goods which the petitioner could include in the certificate of registration within the meaning of section 8(3) of the Act and rule 13 of the Rules framed thereunder. Soon thereafter the registering authority was of the view that the certificate so issued was comprehensive and therefore a show cause notice was issued to the petitioner calling upon him as to why certain articles or goods should not be deleted from the certificate issued and stating that the certificate should be limited to such of those goods which are essential for the manufacture of tea by the petitioner. Ultimately, in 1968 after hearing the petitioner, it was found that the articles which were necessary for the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act which obligates a dealer under the Act to obtain a certificate of registration which only would enable him to purchase goods at the concessional rate of Central sales tax from out-of-State sellers. But in order to enable such a dealer to get such a certificate of registration, he must be in a position to satisfy the authorities that the goods which he intends purchasing in the course of inter-State trade are goods which come within the purview of section 8(3) of the Central Sales Tax Act. Section 8(3) explains such goods as "goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale......." We are not concerned with the first portion of this explanation contained in section 8(3). It is therefore necessary to see what are the rules framed by the Central Government in this behalf. The main rule, which lays down the prescription of goods for the purpose as above, is rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957. The rule ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted as if it were income derived for business, and forty per cent. of such income shall be deemed to be income liable to tax." A similar rule is adopted even under the Madras Agricultural Incometax Act, 1955, and the Rules framed thereunder. Rule 7 of the Madras Agricultural Income-tax Rules, 1955, is practically a replica of the content of rule 8 of the Income-tax Rules, 1962. I have referred to these provisions only to gain the impression that one other taxing enactment has treated the manufacture of tea as an integrated activity which has a conceivable nexus with the growth of tea or shrubs. The argument. however is that the rearing of the tea shrubs is an independent activity totally dissociated from the ultimate manufacture of the finished product, namely, tea, and therefore such of those goods as are required for the former activity, even though essential for the ultimate manufacture of tea, cannot be considered for being included in the certificate of registration as above. It would be useful at this stage to refer to the manner in which tea is manufactured. The Encyclopaedia Britannica, Volume 21, page 737, deals with the subject of tea. The Encyclopaedia says tea is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would fall within the expression 'in the manufacture of goods'." In the instant case it cannot be denied that the agricultural process is so integrally connected with the ultimate production of tea that, but for that agricultural process, manufacture or processing of tea would be commercially inexpedient and therefore the goods which are required in that agricultural process should automatically fall within the expression "in the manufacture of goods ". The Supreme Court in that case had to consider whether drawing and photographic materials for the process of designing were so intimately connected with the process of manufacture of cloth. While confirming that such goods used in the process of designing ought to be included in the certificate of registration, the court said: "If the process of designing is so intimately connected with the process of manufacture of cloth, we see no reason to regard the process of designing as not being a part of the process of manufacture within the meaning of rule 13 read with section 8(3)(b). The process of designing ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re by itself is not tea. It has to be further processed through to make tea-leaves as is popularly understood. Therefore to obtain tea-leaves there must be green leaves. To grow green leaves certain goods are required in the course of such agricultural activity. Thus logically the goods required to grow tea shrubs for purposes of obtaining tea-leaves, are integrated with the ultimate process of manufacturing of tea at the factory by a dealer in tea. It is in this view that the special rules prescribed in the Income-tax Rules, 1962, as well as the rules framed under the Madras Agricultural Income-tax Act use the consolidated expression growing and manufacture. There is no growing without being furthered by manufacture and there cannot be manufacture without growing. This link between the two processes being inseparable and indivisible, the activity of the petitioner must be deemed one and consolidated. The agricultural and the commercial businesses are not mutually exclusive. The learned counsel fairly placed before me the decision of the Kerala High Court in Travancore Tea Estates Co. Ltd. v. The State of KeralaT.R.C. No. 46 of 1969., wherein the learned judges were of the view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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