1978 (1) TMI 151 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of Section 5A of the General Sales Tax Act, 1963.
2. Determination of whether the processes applied to pine-apple constitute "manufacture" and "consumption" under the Act.
3. Commercial identity test for determining tax liability.

Summary:

1. Interpretation of Section 5A of the General Sales Tax Act, 1963:
Section 5A(1) of the General Sales Tax Act, 1963, imposes a purchase tax on dealers who purchase goods in circumstances where no tax is payable u/s 5 and either consume such goods in the manufacture of other goods for sale, dispose of them in any manner other than by way of sale in the State, or dispatch them outside the State except as a direct result of inter-State trade or commerce.

2. Determination of whether the processes applied to pine-apple constitute "manufacture" and "consumption" under the Act:
The assessee purchased pine-apple, processed it into slices and juice, and prepared jam and squash. The Tribunal found that pine-apple jam and squash attracted tax liability u/s 5A, and the assessee conceded this point. The Tribunal also found that pine-apple juice was covered by Section 5A, but the assessee did not contest this further. The remaining issue was whether pine-apple slices fell within the ambit of Section 5A. The Court emphasized the need to establish that the goods purchased were "consumed" in the "manufacture" of "other goods" for sale, with the resultant product being distinct and different from the goods consumed.

3. Commercial identity test for determining tax liability:
The Court referred to various judicial decisions to elucidate the terms "consumption" and "manufacture." It noted that "manufacture" involves a transformation where a new and different article emerges. The Court cited the Supreme Court's decision in Ganesh Trading Co. v. State of Haryana, which stressed the importance of commercial identity in determining whether paddy and rice are identical goods for tax purposes. The Court also referred to other cases, such as State of Tamil Nadu v. Pyare Lal Malhotra, which ruled that manufactured goods could be taxed again even if the raw material had already been taxed.

Conclusion:
On the facts of this case, the Court concluded that sliced pine-apple, despite the processes involved, remains the same as pine-apple. There is no "consumption" of the commodity nor any process of "manufacture" of "other goods." Therefore, the turnover in respect of pine-apple slices is not taxable u/s 5A. The revision petition was dismissed with no order as to costs.

Final Judgment:
Petition dismissed.