1976 (10) TMI 101 - SC - VAT and Sales Tax

Refusal to include certain items in the sales tax registration certificate of the appellant - Held that - Appeal dismissed. Cultivation and growth of tea-plants no doubt results in the production of raw material in the form of green tea-leaves which are ultimately processed into tea meant for sale. Such cultivation and growth are in the very nature of things prior to the manufacturing process and do not answer to the description of manufacture and processing of tea meant for sale. There is a vital difference between an agricultural operation and a manufacturing process, and the same should not be lost sight of. What is needed for being used purely in an agricultural operation cannot be held to be goods required for use in a manufacturing process. We are, therefore, of the opinion that the appellant was not entitled to get fertilisers and other goods mentioned in item No. (1) included in the registration certificate. The same reasoning would also hold good in respect of weighing machines used not in the factories but in the tea fields.

Issues Involved:
1. Inclusion of fertilisers, chemicals, weedicides, insecticides, fungicides, and pesticides in the sales tax registration certificate.
2. Inclusion of cement and other building materials for installing and housing tea machinery and equipment.
3. Inclusion of building materials, iron and hose-pipes, sanitary fittings for use in estates and estate factories.
4. Inclusion of weighing and measuring and packing equipment for use in tea estates.
5. Inclusion of all other articles and things for use in manufacture and processing for sale of tea.

Detailed Analysis:

1. Inclusion of Fertilisers, Chemicals, Weedicides, Insecticides, Fungicides, and Pesticides:
The appellant contended that the growing and manufacturing of tea constituted one integrated process, thus the items required for growing tea should be deemed as goods intended for use in the manufacture of tea under Section 8(3)(b) of the Central Sales Tax Act, 1956. The Tribunal rejected this contention, stating that "the legislature has not included production by agriculture as one of the operations for which goods can be purchased under section 8 of the Central Sales Tax Act." The High Court disagreed with the Tribunal's reasoning, observing that the expression "in the manufacture of goods" in Section 8(3)(b) encompasses the entire process of converting raw material into finished goods. However, the High Court concluded that merely being part of the manufacturing process does not suffice for inclusion; the goods must also be raw materials, processing materials, machinery, plant, equipment, tools, stores, spare parts, accessories, fuel, or lubricants. The Court held that fertilisers and chemicals do not fall within these categories as they are not directly connected with the manufacturing or processing of tea. The Supreme Court upheld this view, noting the distinction between agricultural operations and manufacturing processes, and ruled that the appellant was not entitled to include these items in the registration certificate.

2. Inclusion of Cement and Other Building Materials:
The appellant did not press for the inclusion of cement and other building materials in the appeal before the Supreme Court. The High Court had disallowed this inclusion based on the observations in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, which indicated that such materials are not required in the manufacture or processing of goods for sale.

3. Inclusion of Building Materials, Iron and Hose-Pipes, Sanitary Fittings:
Similar to the second issue, the appellant did not pursue the inclusion of building materials, iron and hose-pipes, sanitary fittings in the appeal before the Supreme Court. The High Court had also disallowed this inclusion based on the same precedent.

4. Inclusion of Weighing and Measuring and Packing Equipment:
The appellant argued that weighing equipment used in the tea fields should be included in the registration certificate, just as the equipment used in factories was allowed. The High Court and the Supreme Court found no merit in this argument, maintaining that the weighing equipment used in tea fields is not directly connected with the manufacturing process of tea.

5. Inclusion of All Other Articles and Things:
The appellant did not press for the inclusion of this vague and indefinite category in the appeal before the Supreme Court. The High Court had dismissed this inclusion due to its lack of specificity.

Conclusion:
The Supreme Court upheld the High Court's dismissal of the revision petition, affirming that the items requested by the appellant for inclusion in the sales tax registration certificate did not meet the criteria under Section 8(3)(b) of the Central Sales Tax Act and Rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957. The appeal was dismissed with costs.

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