1991 (8) TMI 318 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether tin sheets purchased by the assessee can be taxed under section 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The respondent, a manufacturer of tin containers, was taxed on the turnover of tin sheets under section 7-A of the Act. The Appellate Assistant Commissioner upheld the assessment, stating that the tin sheets were consumed in the manufacturing process of tin containers. The key issue was whether the tin sheets were indeed consumed in the manufacture of tin containers to attract tax under section 7-A.

One crucial condition for section 7-A to apply is that the purchased goods must be consumed in the manufacture of other goods for sale. The Appellate Assistant Commissioner found that tin sheets, charcoal, and lead purchased by the assessee were consumed in the manufacturing process of tin containers. The test to determine consumption in manufacture is whether the produced article is distinct from the commodity used in its manufacture. The tin containers, being different from tin sheets, indicated consumption in the manufacturing process.

The High Court emphasized that the tin containers and tin sheets are distinct commodities in commercial terms. The process of manufacturing tin containers involves consuming tin sheets, charcoal, and lead, resulting in new and commercially identifiable products. The Court cited precedents where distinct commodities were recognized based on commercial identity. The decision highlighted that the tin sheets were consumed in the manufacturing process of tin containers, meeting the conditions of section 7-A.

The Court concluded that the Tribunal erred in holding that section 7-A did not apply to the tin sheets. It was determined that the tin sheets were indeed consumed in the manufacturing process of tin containers, making them distinct commodities. Consequently, the Court allowed the tax revision case, setting aside the Tribunal's order and reinstating the Appellate Assistant Commissioner's decision. No costs were awarded in the case.

In summary, the judgment clarified that the tin sheets purchased by the assessee were consumed in the manufacturing process of tin containers, meeting the conditions for taxation under section 7-A of the Act. The decision highlighted the distinction between the commodities involved and upheld the assessment made by the Appellate Assistant Commissioner.