1992 (10) TMI 249 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the empty tins used as packing material in the manufacture of oil for sale can be considered as resold, thereby exempting the assessees from paying purchase tax under section 15 of the Gujarat Sales Tax Act, 1969.

Issue-wise Detailed Analysis:

1. Definition and Interpretation of "Resale" and "Manufacture":

The key question revolves around whether empty tins used for packing oil can be considered as resold. Section 15 of the Gujarat Sales Tax Act stipulates that purchase tax is levied unless the purchased goods are resold. The term "resale" is defined under section 2(26) of the Act, which includes selling purchased goods in the same form or without any manufacturing process. The term "manufacture" is defined broadly in section 2(16) to include various processes such as producing, making, altering, and processing goods. However, Rule 3 of the Gujarat Sales Tax Rules, 1970, provides an exhaustive list of processes that are not considered manufacturing.

2. Tribunal's Error in Interpretation:

The Tribunal concluded that empty tins purchased from unregistered dealers cannot be resold because they were used as consumable stores. This approach was deemed erroneous as the Tribunal needed to assess whether the tins were resold in the same form or without any manufacturing process. The Tribunal relied on the decision in Vasuki Carborundum Works v. State of Gujarat, which did not consider the relevant sections 15, 2(16), and 2(26) of the Act.

3. Legal Precedents and Clarifications:

Several judgments were referenced to clarify the definitions of "manufacture" and "resale":
- In State of Gujarat v. Sukhram Jagannath, it was held that not all processes amount to manufacture unless they result in a new and distinct article.
- The Supreme Court in Chowgule & Co. Pvt. Ltd. v. Union of India emphasized that processing must bring about a commercially distinct commodity.
- In Collector of Central Excise v. Rajasthan State Chemical Works, the court noted that each case must be determined on its facts, and processing implies a change in the commodity.

4. Case-specific Determination:

The Tribunal must determine whether the empty tins are resold in the same form or without any manufacturing process. This involves assessing whether the process applied to the tins results in a new article or alters the nature or character of the goods.

5. Practical Implications and Concessions:

The Tribunal must consider the nature of the business and transactions. For instance, oil can be sold in various forms (loose, bulk, small packing), and the tins used for packing may or may not be sold separately. The Supreme Court's decision in Raj Sheel v. State of Andhra Pradesh highlighted that the nature of the transaction must be ascertained based on all facts and circumstances.

6. Criteria for Determining Separate Sale of Packing Material:

The Supreme Court provided criteria to determine if a packing material sale is independent:
1. The packing material has its own identity.
2. There is no change in the packing material during packing or use.
3. The packing material can be reused.
4. The packing material is used for transport convenience.
5. Separate consideration for packing material does not necessarily mean separate sale.

7. Specific Case Analysis:

For the present case, the Tribunal must investigate whether the tins and oil are sold separately or as part of an integrated sale. The value of the tin relative to the oil and the intention of the assessee to sell the tin separately must be considered.

8. Tribunal's Responsibility:

The Tribunal must reassess the cases based on the discussed criteria and determine if the empty tins were resold in the same form or without any manufacturing process.

Re: Sales Tax Reference No. 3 of 1988:

The Tribunal's decision that empty tins cannot be resold because they are consumable stores is incorrect. The Tribunal must reassess based on the discussed definitions and criteria. The question is answered in the negative.

Re: Sales Tax Reference No. 19 of 1988:

Similarly, the Tribunal's decision that empty tins cannot be resold as they are consumable stores is incorrect. The Tribunal must reassess based on the discussed definitions and criteria. The question is answered in the negative.

Re: Sales Tax Reference No. 21 of 1988:

Question No. 1 regarding the exercise of suo motu revisional jurisdiction is not pressed. Question No. 2, regarding the resale of empty tins, is answered in the negative. The Tribunal must reassess based on the discussed definitions and criteria.

Conclusion:

The Tribunal must reassess all references considering the definitions and criteria discussed to determine if the empty tins were resold in the same form or without any manufacturing process. The references are answered accordingly with no order as to costs.