TMI Blog1975 (7) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the objection filed, finalised the assessment on best judgment estimating the appellants taxable turnover for the year at Rs. 1,05,661.34 and total turnover at Rs. 2,31,612.82. Of this taxable turnover of Rs. 1,05,661.34 represented the purchase turnover liable to tax under s. 5A of the Act. 2. From this order of assessment, the appellant preferred a first appeal as STA No. 239/72 before the AAC of AIT ST., Kozhikode who disposed of this appeal by an order dt. 29th March, 1973, confirming the findings of the AO that the appellants were liable to be assessed under s. 5A of the Act for purchases from unregistered dealers, but, remanding the files to the AO for further investigation on certain transaction. 3. It is from this order of remand that the appellants have preferred this second appeal before this Tribunal. 4. The AO had assessed the appellants on a purchase turnover of Rs. 93,248.66 as he had purchased timber logs from unregistered dealers and converted them into sizes or scantlings and planks and sold them in circumstances under which purchase tax under s. 5A of the Act was payable. In the first appeal, the AAC found that purchases on a turnover of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there should be transformation. A new and different article having a distinctive name or character must emerge. As when timber logs are converted into planks or scantlings, Shri Radhakrishnan is submitting that there is no manufacturing process giving birth to a different article having a different character or name and hence he is contending that the appellant is not liable to be taxed for consuming the timber logs for manufacturing of some other goods. 7. But the Addl. State representative, Shri Abdul Salam is submitting that the word manufacture has to be given a generous or liberal interpretation. According to him, the word has to be given the meaning in which it is commonly understood by the people at large and not any technical or restricted meaning. He is referring to a ruling of the Kerala High Court in CIT, Kerala vs. Casino (Private) Ltd. reported in 91 ITR 286 wherein it has been held. 6. Sec. 5A of the Kerala General Sales Tax Act reads as follows: 5A. Leavy of purchase tax (1) Every dealer who, in the course of his business purchases from a registered dealer, or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the raw material has resulted due to the manufacture". Elaboraing this point he has invited our attention to another ruling of the Supreme Court of India in Shri Siddhi Vinayaka Coconut Compnay and others vs. State of Andhra Pradesh and others reported in (34 STC 103) has held: "We also accept the contention put forward on behalf of the State of Andhra Pradesh that "Watery coconuts" and dried coconuts "are two distinct commodities commercially speaking. Watery coconuts are put to a variety of uses, e.g. for cooking purposes, for religious and social functions, whereas dried coconuts are used mainly for extracting oil. This Court has in a number of cases held that the same commodity at different stages could be treated and taxed as commercially different articles. In a Hajee Abdul Shukoor and Compnay vs. State of Madras, (15 STC 719) this Court held that "hides and skins in the untanned condition are undoubtedly different as articles of merchandise than tanned hides and skins and pointed out that "the fact that certain articles are mentioned under the same heading in a Statute or the Constitution does not mean that they al constitute one commodity". We may also refer to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed timbers are brought out only from timber logs by a particular process. Therefore, when a registered dealer purchased round timber logs by giving a declaration that he would resell that commodity within the State of Orissa, but got it processed to sized timber and sold the seized timber there has been a violation of the undertaking in the declaration and he would be liable to be assessed under the proviso to s. 5(2)(A)(a)(ii) of the Orissa Sales tax Act, 1946". 10. Analysing all these views, it has to be noted that as pointed out by the Kerala High Court in 91 ITR 286, the word manufacture has to be given its natural meaning used in the accepted usages of English Speech in preference to its scientific or technical meaning and in the ordinary meaning manufacture is a process which results in the alternation or change in the goods which are subjected to such manufacture and a commercially new article is produced. As held by the Calcutta High Court in 14 STC 876, when planks are sawn out of timber logs what is produced is a different thing from logs capable of being put to different uses then logs and there is a change of character also just as watery and dry coconuts are found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the extracts of the decision in TA 375/74 contained in it. But I regret that I have to differ from the reasonings in support of the conclusion that sizes, scantlings and planks are commodities different from the timber logs from which they are sawn. The decision of the Supreme Court in Gandesh Trading Co. vs. State of Haryana (32 STC 623 : 1974 CTR (SC) 6), is seen cited in support of the decision. But on a careful reading of the Supreme Court decision I am inclinded to hold that the decision can have only remote application in this case. 15. Of Course, in that case the Supreme Court has decided that rice obtained as a result of de-husking paddy is a commodity different from paddy. But that decision seem to have been taken on an entirely different circumstances. The question passed for decision in that case has been stated as follows: "The only question that arises for decision in those appeals is whether paddy and rice can be considered as identical goods for the purpose of imposition of sales-tax. Under the concerned Sales tax Act exemption from payment of sales tax is provided if the very paddy in respect of which purchase tax was levied was sold and not if that paddy i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plying the test the High court of Karnataka has held that in getting the rice imbedded in paddy no transformation takes place and no manufactured article is got. Incidentally it may be pointed out that in taking that decision the High Court has considered the judgment of the Supreme Court in Ganesh Trading Compnay s case and found that the decision was not applicable to the case before them in view of the difference in the provisions of law in force in the State of Karnataka. Further in that decision the High Courts and Supreme Court agreed on that point and I respectfully agree with the reasoning of the High Court of Karnataka. 17. Two other decisions of the Supreme Court in Thungabadra Industries Ltd. vs. Commercial Tax Officer, Kurneal (1960 11 STC 127) wherein it has been held that hydrogenated groundnut oil continued to be groundnut oil and State of Gujarat vs. Sakarvalah Brothers (1967 19 STC 24) wherein it was held that sugar processed into Patasa, Harda and Alchidana did not change their essential characteristics and hence their identity continued to be the same also can be cited in support of the view that a transformation in the identity of article is necessary to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th auctioned by the Forest Department cannot be treated as a commodity different from standing timber and hence tax at a second point could not be levied. The Court has held. "The arguments of the Government Pleader in support of the assessment is that what was purchased at the auction was tree-growth, a commodity, and what was extracted out of the tree-growth was a quantity of timber, another commodity and another quantity of firewood, a third commodity, and that in extracting timber and firewood from the tree-growth industry was involved, so that the firewood and the timber have to be separately taxed. In short, the argument is that these three commodities, namely tree-growth, timber and firewood, are commercially three different commodities and, therefore, they may be taxed separately. The contention we find difficult to accept. In our opinion, there is no commodity like "tree growth", what was being purchased at the auction as tree-growth was something like purchasing standing crops. In purchasing tree growth what is purchased is really the timbre and the firewood available from the tree-growth, is in the case of a purchase of standing crops the purchase is of the grain and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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