1964 (4) TMI 98 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the items deleted from the certificate of registration are covered within the scope of Rule 13.
2. Whether the respondents acted without jurisdiction in seeking the impugned amendment of the certificate of registration.

Issue-wise Detailed Analysis:

1. Coverage of Deleted Items under Rule 13:
The petitioner contended that the deleted items (drawing instruments, photographic materials, building materials including iron, steel, cement, lime, and electricals) were necessary for the manufacture of goods and thus should be included under Rule 13. Rule 13 prescribes the goods that a registered dealer may purchase for use in the manufacture or processing of goods for sale, or in mining, or in the generation or distribution of electricity or any other form of power. The court examined whether the deleted items fell within the scope of Rule 13.

- Drawing Instruments, Colours, Chemicals, and Photographic Materials: The court held that these items are needed for preparing designs, which is a process separate and earlier than manufacture. Designing is distinct from manufacturing, and thus, these items cannot be comprehended in the expression "in the manufacture or processing of goods for sale."

- Electricals: The court acknowledged that while electric lights and fans are necessary for efficient factory operations, they are not directly used in the manufacture of goods. The expression "in the manufacture of goods" is limited to articles directly and actually needed for turning out or making the goods.

- Building Materials (Cement and Lime): The court found that these materials, although necessary for setting up the factory building, are not directly needed in the manufacture or creation of goods. Rule 13 does not include these articles as they are not directly involved in the manufacturing process.

- Machinery: The court concluded that machinery, while essential for manufacturing, is not used in the manufacturing or processing of goods in the sense of being an ingredient or commodity used in the creation of goods. Machinery facilitates the creation of goods but is not directly used in making or creating them.

The court found support for its view from the case of Bhartia Electric Steel Co. Ltd. v. Commercial Tax Officer and Others, which reinforced the interpretation that only goods directly used in manufacturing fall under Rule 13.

2. Jurisdiction to Amend the Certificate of Registration:
The petitioner argued that the respondents acted without jurisdiction in amending the certificate of registration as the items were included after due inquiry. The court examined Section 7(4) of the Central Sales Tax Act, which allows for the cancellation of a certificate of registration for sufficient reasons.

- Section 7(4): The court noted that the words "for any other sufficient reason" are wide in their amplitude, allowing for partial cancellation of the certificate if justified. The respondents deleted the items on the ground that they were not used for the manufacture of goods, which is a sufficient and relevant reason for refusing a registration certificate.

The court held that the respondents had the jurisdiction to modify, amend, or partly cancel the certificate of registration with regard to the disputed articles. The respondents' notification adding the items was deemed erroneous, and their subsequent action to amend the certificate was justified.

Conclusion:
The court dismissed the petition, ruling that the items deleted from the certificate of registration were not covered under Rule 13 and that the respondents had the jurisdiction to amend the certificate. The petitioner's submissions were overruled, and the court found no merits in the petition. The petition was dismissed without any order as to costs.

Petition dismissed.