1981 (3) TMI 223 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of section 41(2) of the Bombay Sales Tax Act, 1959 in relation to quantification of tax and enforceability.

Summary:
The judgment of the High Court of Bombay addressed five references under section 61(1) of the Bombay Sales Tax Act, 1959, focusing on the interpretation of section 41(2) of the Act regarding the quantification of tax and its enforceability. The respondents, registered dealers engaged in dyeing and printing cloth, purchased machinery and materials at a lower tax rate under a specific entry. The Assistant Commissioner of Sales Tax assessed them to pay the balance of tax, contending that their activities did not constitute "manufacture" as defined in the Act. The Tribunal deemed section 41(2) unenforceable, prompting the references to the High Court.

The Court examined the definition of "manufacture" under the Act, which includes processes like dyeing and printing cloth. It was argued that this definition might not apply to the specific entry under consideration. However, the Court rejected this argument based on the provisions of section 20 of the Bombay General Clauses Act, which mandates that expressions in notifications align with definitions in the Act conferring the power to issue them. Therefore, the respondents did not breach the declaration forms they submitted.

Additionally, a previous judgment by the Court established that manufacturing for sale could involve goods produced by the purchasing dealer themselves or on behalf of others. As the Tribunal's decision did not align with the actual issue at hand, the Court declined to answer the question posed in the references and directed them back to the Tribunal. The respondents were awarded costs for the references.

In conclusion, the High Court of Bombay clarified the interpretation of section 41(2) of the Bombay Sales Tax Act, 1959 in the context of the respondents' activities, emphasizing the alignment of definitions within the Act and related notifications.