1980 (2) TMI 240 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "minerals of all kinds" in a sales tax notification.
Determining whether emery-powder, dolomite powder, silica sand, soap-stone powder, and alumina qualify as minerals after being powdered.
Assessing if the powdered items sold by the assessee constitute a new commercial commodity for taxability under the Sales Tax Act.

Analysis:
The judgment revolves around the interpretation of the term "minerals of all kinds" in a sales tax notification dated May 30, 1975. The primary issue is whether emery-powder, dolomite powder, silica sand, soap-stone powder, and alumina retain their classification as minerals even after being powdered for sale. The Commissioner had deemed the assessee as a manufacturer based on the sale of these powdered items, concluding that they were not minerals and were taxable as unclassified items. The crux of the matter lies in whether the process of powdering these minerals transforms them into a new commercial commodity, affecting their taxability status.

The judgment delves into the definition of minerals, emphasizing that minerals are solid homogenous crystalline elements or compounds resulting from natural inorganic processes. It highlights that the scope of the term "minerals of all kinds" in the notification is expansive, covering all varieties of minerals. The court distinguishes between the terms "of all kinds" and "in all its forms," elucidating that the former multiplies items of the same kind, while the latter multiplies the same commodity in different forms. Reference is made to legal precedents and dictionary definitions to support the broad interpretation of the term "kinds" to encompass all varieties of minerals, including powdered forms.

Furthermore, the judgment draws parallels with previous cases to determine the taxability of processed mineral products. It references a Supreme Court ruling regarding wolfram concentrate, emphasizing that the key consideration is whether a new commercial commodity emerges through processing. The judgment underscores that mere processing does not equate to manufacturing unless it results in the creation of a distinct product. The court also cites a case involving sulphur rolls, where despite processing, the product remained classified as a mineral due to the absence of a substantial alteration in its identity.

Ultimately, the court rules in favor of the assessee, overturning the Commissioner's decision. It concludes that the disputed items, even in their powdered form, retain their classification as minerals, as no new commercial commodity is produced through the powdering process. The judgment highlights that the essence of taxability under the Sales Tax Act lies in the emergence of a distinct product, not merely in the physical form of the item. As a result, the appeal is allowed, the Commissioner's order is set aside, and costs are awarded to the assessee.