TMI Blog1984 (1) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax on the said sum of Rs. 30,578.99 on the ground that the purchases of empty bottles will come under section 7-A(1)(a) of the Act and the purchase of dealwood boxes will fall under section 7-A(1)(b) of the Act. Therefore the assessment made on the said turnover under section 7-A by the assessing authority was justified. Before us, the assessee challenges the view taken by the Tribunal. 3.. According to the assessee, the Tribunal is in error in treating the user of the empty bottles purchased for packing medicines as amounting to consumption so as to come within the provision of section 7-A(1)(a). He also contends that the Tribunal is in error in treating the purchase of dealwood cases which are used for packing the bottles and despatching them to the purchasers will amount to disposal of the goods in any manner otherwise than by way of sale coming within the provision in section 7-A(1)(b). According to the learned counsel for the assessee the user of the bottles as container for the medicine manufactured by the assessee can never be treated as consumption as the bottles are used as containers only after the manufacture of the drugs or syrups and that such user cannot amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or final utilisation of consumers' goods by consumers and that a manufacturer also consumes commodities which are ordinarily called raw materials when he produces semi-finished goods which have to undergo further processes of production before they. can be transformed into consumers' goods. Even if consumption is taken to mean any use of goods in the production of the consumers, we do not see how the container which is used for packing the materials produced could be taken as goods consumed in the production of manufacture of an article. In that case the Supreme Court had to consider the expression "consumed" occurring in section 6(1) of the Karnataka Sales Tax Act, 1957, similar to section 7-A of the Tamil Nadu General Sales Tax Act. It may be however wide the expression "consumed" is understood, it will not take in the use of an article for transportation after manufacture as in this case. In the said case, the Supreme Court has referred to its observation in Anwarkhan Mehboob Co. v. State of Bombay [1960] 11 STC 698 (SC) which is as follows: "The act of consumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak of people consuming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued to be the same properties. The fact that the drug or the syrup is filled in bottles does not mean that the bottles were used in manufacture of syrup or drugs. 4.. In State of Tamil Nadu v. Subbaraj and Co. [1981] 47 STC 30, a Division Bench of this Court had to consider the scope of the expression "consumed" occurring in section 7-A(1)(a) and the court observed that the very use of the word "consumed" in section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959, contemplates that the goods purchased should have been devoured or exhausted in the process of manufacture with the result that the identity of the goods has been completely lost and that so long as the identity of the goods remained, the goods purchased and used in the manufacture of some other goods cannot be said to have been consumed in the process of manufacture of other goods. In that case, the assessee bought raw bones and converted them into crushed bones by a process of breaking the bones in a disintegrator into pieces of 3/8' and 5/8' bones and that in the process of breaking the bones into pieces the assessee obtained bone grist, bone-meal, fluff horns and hoof which were sold locally. The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... syrup manufactured by the assessee and even after the consumption of the drug or the syrup the bottles continue to have their own identity. "On the facts of this case, the bottles can never be said to have been used or consumed in the manufacture of medicines, drugs or syrups, as the bottles do not play any part in the manufacturing process either as raw material or otherwise." We have to, therefore, disagree with the Tribunal and hold that in this case the bottles purchased by the assessee cannot be said to have been consumed in the manufacture of drugs or syrups. Therefore, the purchase turnover of empty bottles cannot be brought to charge under section 7-A(1)(a) of the Tamil Nadu Act. 5.. Coming to the purchase turnover of dealwood boxes, it is seen that the Tribunal has taken the view that though the dealwood boxes had not been sold for a separate price, they have been treated as packing materials by the assessee for despatch of medicines or syrup manufactured by them and, therefore, they should be taken to have been disposed of in dealwood boxes in a manner other than by way of sale in the State. Therefore, the purchase turnover has come within the scope of section 7-A(1)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of property in the packing materials, the property passed along with the goods sold and therefore there was a sale of packing materials attracting the exception in section 5A(1)(c) of the Kerala Act and the assessee would not be liable to pay tax on the packing materials used for despatch of eggs in inter-State trade or commerce, and therefore, the purchase value of the packing materials should not be brought under section 5A of the Kerala Act. Though that case dealt with the scope of section 5A(1)(c) of the Kerala Act which corresponded to section 7-A(1)(c) of the Tamil Nadu Act, the reasoning given in that case squarely applies to this case. Apart from saying that the charge of packing materials made in the bills indicated the intention of the parties that the goods should be despatched properly packed it did not spell out the transfer of property therein. The learned judge in that decision has further observed that packing material by themselves may not be of value to the purchaser and so long as parties do not contemplate return of the packing material it is implied in the terms of sale that the purchaser of the eggs obtains the property in packing material and it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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