1992 (1) TMI 296 - SC - VAT and Sales Tax

TURNOVER DEDUCTIONS RESALE OF GOODS PURCHASED FROM REGISTERED DEALER - BATTERIES MANUFACTURER REMOVING ELECTROLYTE BEFORE TRANSPORTING BATTERIES TO DEALER

Summary

Issues Involved:
1. Eligibility for relief under section 8 of the Bombay Sales Tax Act, 1959.
2. Definition and interpretation of "resale" under section 2(26) of the Act.
3. Definition and interpretation of "manufacture" under section 2(17) of the Act.
4. Application of the definitions to the process undertaken by the dealers.

Issue-wise Detailed Analysis:

1. Eligibility for Relief Under Section 8 of the Bombay Sales Tax Act, 1959:
The primary issue is whether the dealers, M/s. Shiv Datt & Sons and M/s. Vora Brothers, are eligible for relief under section 8 of the Bombay Sales Tax Act, 1959. The dealers claimed a concession under section 8, which allows for the deduction of turnover representing the resale of goods purchased from a registered dealer. The question was whether the batteries sold by the dealers could be considered as resold in the same form as purchased, making them eligible for the relief.

2. Definition and Interpretation of "Resale" Under Section 2(26) of the Act:
Section 2(26) defines "resale" as a sale of purchased goods in the same form in which they were purchased or without doing anything to them which amounts to or results in manufacture. The court had to determine whether the batteries sold by the dealers were in the same form as when purchased from the manufacturers. The Tribunal had previously determined that the goods sold by the respondents were the same as those purchased, and the Supreme Court agreed with this reasoning.

3. Definition and Interpretation of "Manufacture" Under Section 2(17) of the Act:
Section 2(17) defines "manufacture" as producing, making, extracting, altering, ornamenting, finishing, or otherwise processing, treating, or adapting any goods. The State of Maharashtra argued that the process of adding electrolyte and charging the batteries amounted to manufacture, thereby making the goods sold different from those purchased. However, the court found that the definition should not be interpreted so broadly as to include minor processes that do not fundamentally alter the nature of the goods.

4. Application of the Definitions to the Process Undertaken by the Dealers:
The court examined the process undertaken by the dealers, which involved adding electrolyte and charging the batteries before resale. The court noted that the batteries purchased by the dealers were already charged and only required the addition of electrolyte and recharging due to the removal of electrolyte for transportation safety. The court compared this process to polishing vessels or assembling furniture, which do not amount to manufacturing a new commodity. The court concluded that the goods sold by the dealers were substantially the same as those purchased, and the process undertaken did not amount to manufacture under the Act's definitions.

Conclusion:
The Supreme Court affirmed the Tribunal's decision, holding that the batteries sold by the dealers were the same goods as those purchased from the manufacturers. The court dismissed the appeals by the State of Maharashtra, stating that the interpretation of "manufacture" and "resale" should be practical and not overly broad to avoid absurd results. The dealers were entitled to the relief under section 8 of the Bombay Sales Tax Act, 1959. The appeals were dismissed with no order regarding costs.