1976 (2) TMI 48 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether "old world postage stamps" constitute goods required by the dealer for use in the manufacture of taxable goods for sale or in the packing of goods so manufactured within the meaning of Section 25 of the Bombay Sales Tax Act, 1959.
2. Whether the judgment in Revision Applications Nos. 34, 35, 36 & 37 of 1974, decided on 17th Jan., 1975 in the matter of Calcutta Confectionery Works, is good law.

Detailed Analysis:

Issue 1: Use of "Old World Postage Stamps" in Manufacture or Packing

The appellant, a manufacturer of sweets and confectionery, included "old world postage stamps" in the recognition certificate as raw materials. The Sales Tax Officer deleted this item from the recognition certificate, effective from 4th Dec., 1963, on the grounds that the stamps were not used as raw materials or packing materials. The appellant contended that the stamps were used in the manufacture of goods-specifically "Frutex with Stamps." However, the Assistant Commissioner and the Tribunal upheld the deletion, concluding that the stamps were neither used in the manufacture nor in the packing of the sweets.

The Tribunal examined the appellant's process, which involved wrapping the sweets and including a postage stamp in the final product sold as "Frutex with Stamps." The appellant argued that the stamps boosted sales and were integral to the final product sold. The Tribunal, however, found that the stamps were not used in the manufacturing process but were merely enclosed in the packaging to boost sales. The stamps did not constitute raw materials necessary for the manufacture of the sweets.

Issue 2: Validity of the Previous Tribunal Judgment

The Tribunal referred to its earlier decision in Revision Applications Nos. 34, 35, 36 & 37 of 1974, where it had upheld the deletion of "old world postage stamps" from the recognition certificate. The appellant's contention that the stamps were used in the manufacture of "Frutex with Stamps" was rejected. The Tribunal found that the stamps were not used in the manufacturing process but were merely an addition to the packaging to attract buyers.

Conclusion:

The Tribunal concluded that "old world postage stamps" do not constitute goods required by the dealer for use in the manufacture of taxable goods for sale within the meaning of Section 25 of the Bombay Sales Tax Act, 1959. The judgment in Revision Applications Nos. 34, 35, 36 & 37 of 1974 was upheld as good law. The matter was sent back to the 1st Bench for disposal in light of these findings.