TMI Blog1975 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... the said sale as a resale. By the said letter, after setting out in what manner French Coffee was prepared by them, they applied to the Commissioner of Sales Tax to determine under section 52(1) of the Bombay Sales Tax Act, 1959, whether the sale of French Coffee by them constituted resale of the goods purchased by them. The argument advanced on behalf of the respondents before the Deputy Commissioner was that when they sold French Coffee they resold goods without there being any manufacture or processing of any goods by them. Rejecting this contention the Deputy Commissioner held that the mixing of pure coffee powder with chicory powder amounted to a process and was covered by the definition of the term "manufacture" contained in clause (17) of section 2 of the Bombay Sales Tax Act, 1959. The respondents thereupon filed an appeal to the Sales Tax Tribunal. The Tribunal came to the conclusion that though the character of coffee was changed because 50 per cent chicory powder was added to it, there was no alteration so far as the goods were concerned. The Tribunal further observed: "No doubt, by mixing up coffee with chicory what has resulted is the new mixture, in which some of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." Under clause (21) of the said section 2 "prescribed" means "prescribed by rules". Rule 3 of the Bombay Sales Tax Rules, 1959, is headed "Processes not included in 'manufacture' " and the relevant provisions of this rule are as follows: "For the purposes of clause (17) of section 2 'manufacture' shall not include the following manufactures and manufacturing processes, namely...... (iv) the roasting or grinding of coffee seeds; (v) the blending of different varieties of tea." According to the said rule 3, therefore, since the blending of different varieties of tea has been expressly excluded from the definition of "manufacture", it would follow that blending of other commodities would constitute a manufacturing process. Rule 3, however, cannot govern the definition of the term "manufacture" given in the parent statute under which the said rule was made, a position conceded before us by Mr. Cooper, the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptions, are the goods sold by a dispensing chemist to his customers; the process of dispensing is to produce those goods for sale, without which process sales of mixtures or compounds cannot be effected by a chemist. Even if that process is not the manufacture of goods, as articles of furniture, mechanical appliances and paints are made from raw materials, nevertheless, since it is the production of goods for the purpose of selling to customers, the chemist who dispenses prescriptions thereby produces goods for sale." Das, J., however, held that the activity of dispensing constituted a manufacture. He observed: "'To manufacture goods' in common parlance means 'to bring goods into being'. To manufacture or produce goods for sale means to bring into being or to produce something in a form in which it will be capable of being sold or supplied in course of business. The essence of manufacturing, I apprehend, is that something is produced or brought into existence which is different from that out of which it is made, in the sense that the thing produced is by itself commercial commodity which is capable as such of being sold or supplied. It does not mean that the materials with which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to say that the assessee manufactures pig bristles out of pig bristles; cleaning and arranging into different groups of different sizes and different colours does not convert them into something essentially or commercially different." The Supreme Court in that case observed (at page 20): "In our view, the word 'manufacture' has various shades of meaning, and in the context of sales tax legislation, if the goods 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." Thus, the test accepted by the Supreme Court is also that in order to constitute manufacture, what must come into being is a commercially different article. Mr. Cooper, the learned counsel for the applicant, relied before us upon another decision of the Supreme Court in Anwarkhan Mehboob Co. v. State of Bombay (now Maharashtra)[1960] 11 S.T.C. 698 (S.C.). That case arose under the old article 286(1)(a) of the Constitution. Under that clause no State could levy tax on the sales of goods which had taken place outside the State. The explanation to the said clause provided that a sale or purchase should be deemed to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or altering of the tea leaves. The High Court observed (at page 507): "In our view, the quantities of tea purchased by the assessees cannot since the date of the purchases be regarded as processed within the meaning of the proviso to clause (a) of section 8 of the Act. There is not even application of mechanical force so as to subject the commodity to a process, manufacture, development, or preparation. The commodity has remained in the same condition. It is true that in the preparation of the tea mixture which is marketed, there may be some skill involved. But that, in our judgment, cannot be regarded as processing within the meaning of the proviso. "...It cannot however be said that in the preparation of the tea mixture there is any alteration in the goods. Undoubtedly by mixing up the different varieties of tea purchased by the assessees there resulted a mixture in which the individuality of the components was obscured, but that, in our judgment, is not alteration within the meaning of the Act. The alteration contemplated by the legislature is some alteration in the nature or character of the goods." It is pertinent to note that in that case what was bought was tea leaves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and yet retain their essential character and properties. The test in all cases, therefore, is to ascertain whether the result is commercially a different commodity and it is irrelevant whether this result is produced by a mechanical or chemical process or otherwise. Even under the very wide definition of "manufacture" to be found in clause (17) of section 2 of our Act the various activities set out therein must result in a different commercial commodity in order that such activities may amount to manufacture of goods. This definition must be interpreted bearing in mind the fact that it has been inserted in the setting and context of a sales tax legislation of which the pith and substance is a tax primarily on the sales of goods and subsidiarily on the purchases of goods. The various activities enumerated in the definition, namely, producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting, have been specifically mentioned, lest any contention might arise that one or the other of them would not, in ordinary parlance and according to the ordinary notions, constitute manufacture. Each of these activities, however, before it can amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
