TMI Blog1990 (8) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... t, fire-clay, drums, cables, hardware, paint, casting iron scrap, etc., were brought to tax under section 5A of the Kerala General Sales Tax Act holding that they were consumed in the process of manufacture of wet grinders. Admittedly, the said items were not taxed under section 5 of the Act. The assessments were upheld in first appeals. But, in the second appeals filed by the assessee, the Sales Tax Appellate Tribunal, by a common order dated July 25, 1989, held that the purchase turnover relating to the said items cannot be taxed under section 5A of the Kerala General Sales Tax Act. The Appellate Tribunal held that the said items which are consumable stores cannot be said to be "consumed" in the manufacture of other goods since the lang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the end-product-wet grinders. Is it possible to say that there is no consumption of the said goods in the manufacture of other goods for sale? In our opinion, the answer should be in the negative. 4.. Section 5A(1)(a) of the Kerala General Sales Tax Act runs as follows: "5A. Levy 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 circumstances in which no tax is payable under section 5, and either- (a) consumes such goods in the manufacture of other goods for sale or otherwise; or .................... shall, whatever be the quantum of the turnover relating to such purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomic sense does not mean only use of goods in the production of consumers' goods or final utilisation of consumers' goods by consumers involving activities like eating of food, drinking of beverages, wearing of clothes or using of an automobile by its owner for domestic purposes. 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. At every such intermediate stage of production, some utility or value is added to goods which are used as raw materials and at every such stage the raw materials are consumed. Take the case of bread. It passes through the first stage of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax under section 5A(1)(a) or (b) of the Kerala General Sales Tax Act. In considering the content of section 5A(1)(a) of the Kerala General Sales Tax Act, Sabyasachi Mukharji, J., delivering the judgment of the Bench, observed, at page 323, as follows: "................. Consumption must be in the manufacture as raw material or of other components which go into the making of the end-product to come within the mischief of the section. " 5.. The Sales Tax Appellate Tribunal held that "the items in the instant case cannot be said to be consumed in the manufacture of other goods for sale and further that since tax is suffered under section 5 of the Act, when the ultimate goods are sold the provisions contained in section 5A of the Act cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent vehemently contended that the various items were only "used" in the manufacture of wet grinders and so it cannot be said that they were "consumed" in the manufacture of the endproduct. Strong reliance was placed on two Bench decisions of the Madras High Court reported in State of Tamil Nadu v. Associated Sales of India [1980] 46 STC 401 and State of Tamil Nadu v. Subbaraj Co. [1981] 47 STC 30. In [1980] 46 STC 401 (State of Tamil Nadu v. Associated Sales of India) the Madras High Court held that when folded clips were purchased from unregistered persons and used in the manufacture of office files, it cannot be said that the folded clips were consumed in the manufacture of office files. It was held that the purchase turnover of f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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