TMI Blog1990 (11) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, granted. The petitioner, therefore, submitted its returns of turnover for the years 1982-83 and 1983-84 and paid the sales tax due on the sales of "tread rubber" made by it. In the year 1984, the petitioner also started manufacturing the other product, namely, mixed compound which, according to the petitioner, was not taxable under the Act. The petitioner, therefore, did not include the turnover of mixed compound in the returns for the years ending March 31, 1985 and March 31, 1986. The turnover of tread rubber was only shown and tax was paid thereon. The Superintendent of Taxes did not accept the contention of the petitioner in regard to taxability of mixed compound and by orders of assessment dated February 28, 1987, estimated his turnover for the two years, namely, 1984-85 and 1985-86 by including the turnover of the mixed compound also in the taxable turnover treating it as a rubber product within the meaning of item 41 of the Schedule to the Act and determined the tax payable accordingly. In pursuance of the said orders of assessment, demand notices were also issued demanding Rs. 75,091.48 and Rs. 82,329.89 for the assessment years 1984-85 and 1985-86, respectively. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter, filed revision petitions before the Commissioner. In the said revision petitions, the only ground on which the assessments were challenged was that "mixed compound" or "masticated rubber" manufactured by the petitioner did not fall under item 41 of the Schedule of taxable goods and, as such, levy of tax on sales thereof was not tenable. The revision petitions were disposed of by the Commissioner by a common order dated November 5/9, 1987. In the revisional order, the Commissioner held that masticated rubber manufactured by the petitioner was an item which clearly fell within item 41 of the Schedule to the Act and, accordingly, he upheld the order of the assessment and dismissed the revision petitions. Aggrieved thereby, the petitioner has filed this writ petition. In the writ petition, the petitioner has challenged the order of assessment on two grounds. Firstly, that it was entitled to exemption under sub-rule (2) of rule 5 of the Rules as it stood prior to the Seventh Amendment Rules. Secondly, that the product "masticated rubber" or "mixed compound" is not a rubber product and, as such, does not fall within item 41 of the Schedule. So far as the first contention is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of items in taxing statutes like the Sales Tax Act are well-settled by a catena of decisions of the Supreme Court and this Court. These various decisions and the principles laid down therein were analysed at length recently by this Court in Assam Cotton Mills v. Commissioner of Taxes [1990] 76 STC 6 (Gauhati); (1988) 2 GLR 398, Kali Kumar Sharma v. Sales Tax Tribunal [1991] 80 STC 330 (Gauhati); (1989) 1 GLR 91 and Shri Chitta Ranjan Saha v. State of Tripura [1990] 79 STC 51 (Gauhati); (1989) 2 GLR 101. These principles will govern the decision in the present case also. The question for consideration in this case will be whether "masticated rubber" is "processed rubber" or it is a "rubber product". In other words, whether by the process applied by the petitioner, the processed rubber, known as masticated rubber, ceases to be rubber and becomes a different commodity which can be termed as "product of rubber" or "rubber product". Before we proceed to resolve the controversy, it may be expedient to ascertain first the meaning of the expressions "rubber", "masticated rubber" and "rubber products". Rubber, has been defined in the Random House Dictionary of the English La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead is recognised as a new and distinct article that a manufacture can be said to take place. In that case, the manufactured article may be said to be a product of the original. Where there is no essential difference in identity between the original commodity and the processed article, the processed article cannot be treated as different and distinct. It must be regarded as still retaining its original identity. The fact that it is known by a different name after processing is not relevant for that determination. This test was applied by the Supreme Court in a number of cases. In Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827 (SC), it was held that hydrogenated groundnut oil, even after undergoing the process of hydrogenation, did not cease to be groundnut oil. It was observed (at page 834): "The next submission...............was that in the course of hydrogenation the oil absorbed two atoms of hydrogen and that there was an intermolecular change in the content of the substance. This however is not decisive of the matter. The question that has still to be answered is whether hydrogenated oil continues even after the change to be 'groundnut oil'. If i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere sugar in different forms and fell within the definition of "sugar". Reference may also be made to the decision of the Supreme Court in the State of Orissa v. Titaghur Paper Mills Co. Ltd. [19851 60 STC 213 at 266, where "logs" were held to be "timber" on the ground that they were nothing more than wood cut up or sawn. It was further held (at page 267) that "planks" and "rafters" would also be "timber". Applying the proposition laid down by the Supreme Court in the aforesaid decisions to the facts of the present case, we are of the opinion that masticated rubber is not a product of rubber. By undergoing the process of masticating, rubber did not lose its identity as rubber. The change was not such which could convert the processed rubber into a commodity different and distinct from rubber. The product that emerged as a result of the process, namely, masticated rubber, retained its original identity as rubber. Masticated rubber cannot be held to be a product of rubber. The fact that it is known as masticated rubber or mixed compound is not relevant for the aforesaid determination. In view of the foregoing discussion, we hold that masticated rubber is a form of rubber and no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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