TMI Blog1975 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... the business style of Thulasi Bros. In the A-1 return sent at the initial stage the description of their business was stated as under : "Electrical commutator rewinding Armature rewinding works "Labour charge". In the relevant annual return similar description was mentioned and a sum of Rs. 37,116.25 shown as receipt of pure labour charges and Rs. 3,268.25 as sale of materials. The AO pointed out certain accounting discrepancies. He viewed the appellants as manufacturers, and considered the absence of stock account, manufacturing account and order book as significant. He considered that the purchases of mica, copper etc. for Rs. 14,534.15 indicated that the appellants can only be manufacturers. He therefore treated the stated labour rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel was for the cancellation of the entire assessment. The State Representative elaborated the approaches of the lower authorities and sought for the dismissal of the appeal. 4. (i) We examined in closer detail the documents made available before us. Both at the stage of filing the initial return for provisional assessment and at the stage of filing the annual final return, the appellants described their business as Electrical Commutator rewinding and Armature rewinding works . Even the AO described the business as Auto Electrical and Commutator rewinding and armature rewinding works on page 23 of the assessment file. Page 25 of the assessment file shows that as the appellants did not produce any proof of their labour work , an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 1973 charging Rs. 75 for One Vanguard self-starter Armature re-winding and commutator rebuilding charges Rs. 75. Naturally in this process of rewinding, the copper wires already existent in the armature would have been removed, and fresh copper wires utilised from the stocks of the appellants. There is no separate charging or classification for materials in such instances, obviously because of the replenishment of the copper wire stocks from the old ones of the armature etc. This category of work however does not given scope for treatment as manufacture of any new article. Similar correspondences are available from major customers like Ennore Foundaries Ltd., Baby Electrical Works etc. which indicate that the articles sent were For ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues, there can be no scope to spell out production of finished articles, from the materials etc. available on record. (v) Another aspect which has to be considered is about the closing stock position of Rs. 10,650.29. The authorities felt that there could have been no closing stock and that the entire purchases would have been ploughed into production. Basically we do not find any material, date or investigation record to justify such a view. There had been no inspection of the trade location or any other material to discredit the position of closing stock shown by the final accounts. Page 251 of the ledger has details of these closing stock as under : Commutator 600 1,755.00 Oil tape . 775.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which some labour is applied remain essentially the same commercial article, it cannot be said that the final product is the result of manufacture. (iii) The Lordships of the Bombay High Court referring to the above decision of the Supreme Court in 35 STC 500 CST vs. Dunken Coffee Mfg. Co. as under : " The ratio of decided cases is that for an activity to amount to manufacture it must result in a different commercial article or commodity. It must not be a commodity which is commercially the same as it was before the activity was applied to it. In a given case, it may be that they undergo some change, alternation or transformation and yet retain their essential character and properties. The test in all cases, therefore, is to asce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authorities to show that there was a taxable sale. Such burden was not discharged by merely showing that the property in goods which belonged to the party performing the service or executing the contract stood transferred to other party. The authorities have not shown to us the existence of any specific taxable event in any of the disputed instances. 7. We desired to know the prices of new pieces of dynamo armatures, self-starter armatures or commutators. The prevailing prices were ascertained to be as under : Commutator and Dynamo armature 160 (App.) Self-starter armature 110 (App.) The charges for the relevant repair, reconditioning, rebuilding are for below the ruling price and from 20 per cen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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