1956 (7) TMI 35 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Competency of the reference made by the Board of Revenue under section 25(1) of the Bihar Sales Tax Act.
2. Whether the process of mining mica constitutes production or manufacture of goods within the meaning of section 2(g) of the Bihar Sales Tax Act, 1947, as amended by Bihar Act VI of 1949.

Issue-wise Detailed Analysis:

1. Competency of the Reference Made by the Board of Revenue:

The preliminary objection raised by the assessee was that the reference made by the Board of Revenue under section 25(1) was not competent since the application was made by the State of Bihar and not by the Commissioner of Sales Tax. The assessee argued that the jurisdiction of the Board of Revenue to state a case under section 25(1) depended on a proper application made by the Commissioner of Sales Tax. The court, however, found this argument invalid. It was noted that the application to the Board of Revenue for making a reference under section 25(1) was signed by the Commissioner of Sales Tax himself. The mention of the State of Bihar as the petitioner at the top of the petition was deemed a superfluity and ignored. The court concluded that the provisions of section 25(1) were strictly complied with because the Commissioner of Sales Tax had actually signed the application. The principle from the case State of Bihar v. Messrs. Arthur Butler and Co. Ltd. was found inapplicable due to different material facts. Thus, the reference made by the Board of Revenue was held to be legally competent.

2. Whether the Process of Mining Mica Constitutes Production or Manufacture of Goods:

The court examined whether the process of mining mica involves the production or manufacture of goods within the meaning of section 2(g) of the Bihar Sales Tax Act. The Government Advocate contended that the process of making split mica was a process of manufacture. The court referred to the definition of "sale" in section 2(g) of the amended Bihar Sales Tax Act and the meaning of "manufacture" as per the Oxford Dictionary and in the context of the Act. It was emphasized that "to manufacture" means "to bring into being something in a form in which it will be capable of being sold or supplied in the course of business." The court explained that the essential point is that something different from the original material is produced, which is a commercial commodity capable of being sold.

The court cited the Calcutta High Court decision in North Bengal Stores Ltd. v. Member, Board of Revenue, Bengal, which supported the view that a new product brought into being suitable for sale constitutes manufacturing. The court also considered the detailed description of the mica processing stages provided by the Mica Enquiry Committee 1944-45 and the definitions in the Bihar Mica Act, 1947, which distinguished between "manufactured mica," "crude mica," and "block mica."

Based on these considerations, the court concluded that the process of mining mica, which involves sorting and processing crude mica into split mica, constitutes the manufacture of goods within the meaning of section 2(g) of the Bihar Sales Tax Act. The court disagreed with the Board of Revenue's view and answered the question of law against the assessee and in favor of the State of Bihar. The assessee was ordered to pay the costs of the reference.

Reference Answered Accordingly.