TMI Blog2004 (6) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner issued Central sales tax declaration in form "C" covering the purchases in question for import involving a total amount of Rs. 54,78,022 out of the total import worth Rs. 1,07,33,212 and thereby availed the benefit of purchase of goods at the concessional rate of rupees 4 per cent in respect of the import of the goods. 3.. The petitioner was issued with a notice under No. 12153 dated January 27, 2000 to show cause in writing as to why a penalty should not be imposed as per the provisions of section 10A of the Central Sales Tax Act, 1956 for committing the offences punishable under section 10(b), (d) of the aforesaid Act. In response to the notice the petitioner appeared before the Superintendent of Taxes on February 16, 2000 and submitted show cause reply. While admitting the fact of import of Visicoolers and issue of Central sales tax declaration in form "C" against the purchase of the same to the tune of Rs. 54,78,022 out of the total purchase to the tune of Rs. 1,07,33,212, the petitioner, inter alia, contended that the Visicoolers were installed at the distributors point on payment of token amount of security ranging from Rs. 500 to 1000 with the condition that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner was imposed with the penalty of Rs. 8,80,396 under section 10-A of the Central Sales Tax Act. 5.. Being aggrieved the petitioner preferred a revision before the Commissioner of Taxes, Assam urging various grounds such as, there was no mis-representation at the time of purchasing the Visicoolers as the supplier had collected the copy of the registration certificate under the Central sales tax in absence of "C" form before dispatch of goods; bona fide belief towards making use of "C" forms; the goods purchased were used "in manufacturing/processing of goods for sale", because the commercial production would have been inexpedient in absence of use of such goods; the petitioner being entitled to purchase goods specified in rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957 and the goods so purchased, even if not included, should be deemed to have been included in the registration certificate, no mala fide intention in obtaining and issue of "C" forms, etc. 6.. The Commissioner of Taxes, Assam, by his order dated September 4, 2000 rejected the revision petition of the petitioner and upheld the order passed by the Superintendent of Taxes. In the order it no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Commercial Taxes), [1965] 16 STC 563 (SC) (J.K. Cotton Spinning Weaving Mills Co. Ltd. v. Sales Tax Officer), [1990] 77 STC 203 (SC) (Collector of Central Excise v. Eastend Paper Industries Ltd.), [1971] 27 STC 199 (MP) (Pannalal Umesh Kumar of Ghoghar v. Commissioner of Sales Tax), [1990] 78 STC 283 (Gauhati) (Braja Lal Banik v. State of Tripura), [1970] 25 STC 211 (SC) (Hindustan Steel Ltd. v. State of Orissa) and [1997] 104 STC 89 (SC) (Commercial Taxes Officer v. Rajasthan Electrictiy Board). 8.. The respondents by filing an affidavit have justified the impugned orders and Mr. H.K. Mahanta, learned State Counsel made his submissions on that basis. He submitted that the use of Visicoolers and stabilizers were/are no way connected with the kind of manufacturing process, the petitioner undertakes towards final product of soft drink called "Pepsi". 9.. The facts leading to the passing of the impugned orders are not in dispute. The questions that emerge for decision are (a) whether the Visicoolers and stabilizers imported by the petitioner were for use of it in the manufacture or processing of "Pepsi" for sale within the meaning of section 8(3) of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for removing goods to the factory after the mining operations are concluded. Likewise, the cane baskets used by the sanitary department for collecting refuse to protect the health and cleanliness of the colony and the workmen employed in the manufacture of goods, cannot, on the test be specified in the certificate of registration and that the baskets used for such purpose cannot be said to be not intended for use in the process of manufacturing or mining operations. 11.. I fail to see any reason as to how this case can help the case of the petitioner. In that case the petitioner was engaged in both mining operations and manufacturing process. Both the processes being interdependent, the vehicles that were used for removing the goods from the factory after the mining operations were over to the factory where manufacturing process started could not have been excluded from the purview of manufacturing process. Same is the case in respect of cane baskets which were used for collecting refuse and carrying ore and other materials used in mining or in the manufacture of goods. 12.. In the case of J.K. Cotton Spinning Weaving Mills Co. Ltd. [1965] 16 STC 563 the apex Court interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, etc., soaps, paints, raincoats and battery cells, to the extent mentioned by the High Court, were integrally related to the distribution of electricity and their non-use would make distribution of electricity commercially inexpedient. In that case the High Court held that the Rajasthan Electricity Board, which was engaged in the business of generation and distribution of electricity, could purchase, in the course of inter-State trade, at concessional rate of tax under section 8(1) of the Central Sales Tax Act, 1956, and that the Board was entitled to have its certificate of registration altered to include "tools and plants, including vehicles and other transportable goods, including their spare parts, tubes and tyres". The items indicated by the High Court were integrally connected with the generation and distribution of power and the view of the High Court was affirmed by the apex Court having regard to such kind of a situation. 15.. Likewise in the case of Eastend Paper Industries Ltd. [1990] 77 STC 203, the apex Court was seized with the question as to whether wrapping paper was in the process of manufacturing, where the company was involved in manufacturing of paper, packe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka as reported in [1986] 63 STC 239 (SC); (1986) 3 SCC 469 dealing with the question as to whether the assessee was entitled to exemption from tax under section 5(3) of the Central Sales Tax Act in respect of purchase turnover of shrimps, prawns and lobsters the apex Court held that the purchases being of the same commodities, the assessee was entitled to exemption. In that case, in the context of the provisions of the Karnataka Sales Tax Act, 1957 the question that arose for determination was as to whether shrimps, prawns and lobsters, when subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing, retain their original character and identity or become another distinct commodity. The court observed that the test is as to whether the processed commodity is regarded in the trade by those who deal in it as distinct in identity from the original commodity or it is regarded, commercially and in the trade, the same as the original commodity. It was pointed out that it is not every processing that brings about change in the character and identity of a commodity. The nature and extent of processing may vary from one case to another and indee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse to the dictionary meaning of the word "manufacture" and relying upon its earlier decision as reported in [1989] 74 STC 401 (SC); (1989) 3 SCC 488 (Ujagar Prints v. Union of India), the court concluded that the green husk which is soaked into saltish sea water for days together and after decomposition, on being subjected to beating either by manual or mechanical process, fibre is produced in the process, which is a distinct commodity known in the commercial parlance. It observed that no one in the market would sell or supply husk when fibre is asked for. 21.. In the case of State of Maharashtra v. Shiv Datt Sons as reported in [1992] 84 STC 497 (SC); (1993) Supp 1 SCC 222, it was held that sale of recharged batteries by dealer who purchased them as dry batteries from the manufacturer, no "manufacture" is involved in re-introducing electrolyte (thrown away by manufacturer to facilitate transportation). To accept the proposition of involvement of manufacture in such a situation, the court observed that in that case if a dealer purchases certain goods and merely adds some decorative materials thereto, there will be a "manufacture". For instance, if a car is purchased and some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It observed that when a change takes place and new and distinct article comes into existence known to the consumers and the commercial community as a commercial product, which can be no longer regarded as the original commodity, such a change constitutes a process of manufacture. In that case the apex Court relied on its earlier decision in Delhi Cloth and General Mills AIR 1963 SC 791. Same view has been expressed in the case of State of Maharashtra v. Mahalaxmi Stores as reported in [2003] 129 STC 79 (SC); (2003) 1 SCC 70. Crushing of boulders into gitty, held, does not result in a new commercial commodity and hence does not amount to "manufacture". 24.. In the case of Empire Industries Ltd. v. Union of India as reported in [1987] 64 STC 42; (1985) 3 SCC 314, the apex Court observed as follows: "Whatever may be the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes such a process which will be part of "manufacture". Any process or processes creating something else having a distinctive name, character and use would be manufacture." 25.. Applying the above test of "manufacture", ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent commodity. Even if, the soft drink "Pepsi" is required to be sold cold, apart from the fact that the distributors themselves do not go for such sale making use of the conditioning made by the Visicoolers, the retailers can adopt their own methodology to make it cold for the purpose of sale. This process does not involve any kind of participation on the part of the manufacturer and even if there is any, same cannot be said to be a process of "manufacture" as has been interpreted and explained by the apex Court in the aforesaid decisions. 27.. The reliance placed by the petitioner in rule 13 of the aforesaid rules of 1957 is also misplaced. The goods referred to in clause (b) of sub-section (3) of section 8 of the Central Sales Tax Act, 1956 which a registered dealer may purchase shall be the goods intended for use by him as raw materials, processing materials, machinery, plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants in the manufacture or processing of goods for sale as enumerated in rule 13 cannot encompass the use of Visicoolers by the distributors as supplied by the petitioner. Such use cannot be said to be in the "manufacture or processi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re eligible for purchases and that the goods purchased for any of the purposes specified in clause (b) of sub-section (3) of section 8 of the Central Sales Tax Act shall be utilised for those purposes only. As noticed above, rule 13 of the 1957 Rules is also clear in this respect. The petitioner being registered under the Act was, thus, found to have falsely represented while purchasing the goods that the certificate of registration covers such goods and that such goods would be utilised for any of the purposes as specified in sub-section (3) of section 8 of the Central Sales Tax Act, 1956. Admittedly and as enumerated above, the petitioner did not make use of the goods for any such purposes. On the basis of such finding of fact the Superintendent of Taxes held the entire episode to be pre-conceived and with a motive to derive wrongful gain which naturally would cause wrongful loss of revenue. 30.. As has been held above, the "manufacture" of goods and "marketing of finished products" are two different issues having independent bearing so far as the production and sales are concerned. The Superintendent of Taxes found that the petitioner itself admitted that the Visicoolers are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same by the High Court by way of reversing such finding was not justified. It observed that there was no justification for the High Court to go into the questions of fact and reverse the findings of the fact-finding authority. 32.. There cannot be any second opinion that the writ court in exercise of its power of judicial review under article 226 of the Constitution of India is not to determine the question of fact in the kind of proceeding as in the instant case. The finding of facts arrived at by both the authorities cannot be said to be perverse or based on no evidence/materials. The concurrent findings of fact cannot be lightly interfered with in absence of any materials warranting the same. The object of section 10(b) of the Central Sales Tax Act, 1956, is to protect the revenue by preventing misuse of registration certificate and construing the same in the manner as the petitioner had urged would defeat the object. The very fact that the Visicoolers and stabilisers purchased under "C" form was not entered in the registration certificate gives rise to an irresistible inference that the false representation by furnishing the declaration in form "C" was knowingly or inten ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
