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TMI Blog1976 (10) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... - C.A. No. 1689 of 1971, - - - Dated:- 11-10-1976 - KHANNA H.R. AND JASWANT SINGH JJ. S.T. Desai, Senior Advocate (A.G. Menese, Markos Vellapilly and K.J. John, Adocates, with him), for the appellant. K.T. Harendra Nath, Senior Advocate, and K.M.K. Nair, Advocate, with him, for the respondent. -------------------------------------------------- The judgment of the Court was delivered by KHANNA, J. -This is an appeal by special leave against the judgment of the Kerala High Court dismissing the revision petition of the petitioner against the order in appeal of the Appellate Tribunal whereby the Tribunal refused to include certain items in the sales tax registration certificate of the appellant. The appellant, Travancore Tea Estates Co. Ltd., is a company incorporated in England having its registered office in London. The appellant carries on the business of tea planting in India at Vandiperiyar in Peermade Taluk in Kerala State. Eight tea estates are owned by the appellant in Peermade Taluk. To manufacture tea grown in those estates, the appellant maintains separate tea factories in each of those estates. On an application made by the appellant for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing of tea constituted one integrated process and therefore the items of goods required for growing tea should be deemed to be goods intended for use in the manufacture of tea within the meaning of section 8(3)(b) of the Act. This contention had also been advanced by the appellant earlier before the Tribunal but the Tribunal rejected this contention as in its view "the legislature has not included production by agriculture as one of the operations for which goods can be purchased under section 8 of the Central Sales Tax Act". The Tribunal further held that merely because the agricultural process of the company is connected with the process of manufacture, production of tea did riot form part of the manufacture and processing of tea. The High Court disagreed with this reasoning of the Tribunal and observed that the expression "in the manufacture of goods" in section 8(3)(b) of the Act normally encompasses the entire process carried on by the dealer of converting the raw material into finished goods. In the opinion of the High Court, the growing of tea-leaves was so integrally connected with the manufacture of tea that it could reasonably be taken as a part of the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides that every dealer, who in the course of inter-State trade or commerce sells to a registered dealer other than the Government goods of the description referred to in sub-section (3) shall be liable to pay tax under this Act which shall be 3 per cent of his turnover. The percentage before July 1, 1966, was two. Sub-section (3)(b) reads as under: "(3) The goods referred to in clause (b) of sub-section (1)- (b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power." The Central Sales Tax (Registration and Turnover) Rules, 1957, have been framed by the Central Government. Rule 13 of the Rules reads as under: "13. The goods referred to in clause (b) of sub-section (3) of section 8, which a registered dealer may purchase, shall be goods intended for use by him, as raw materials, processing materials, machinery, plant, equipment, tools, stores, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the two processes being interdependent, it would be impossible to exclude vehicles which are used for removing from the place where the mining operations were concluded to the factory where the manufacturing process started, from the registration certificate. The expression "goods intended for use in the manufacturing or processing of goods for sale" was held to include such vehicles as were intended to be used for removal of the processed goods from the factory to the place of storage. The mere fact that there is a statutory obligation imposed upon the owner of the factory or the mine to maintain hospital facilities would not, in the opinion of this Court, supply a connection between the goods and the manufacturing or processing of goods or the mining operations so as to make them goods intended for use in those operations. The expression "intended to be used", it was further held, cannot be equated with "likely to facilitate" the conduct of the business of manufacturing or of processing goods or of mining. In J.K. Cotton Spinning Weaving Mills Co. Ltd. [1965] 16 S.T.C. 563 (S.C.)., the appellant manufactured for sale cotton textiles, tiles and other commodities. Certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oon after they are plucked is not being questioned. It does not, however, follow from that that the cultivation of tea-plants and the growth of tea-leaves is not something distinct from the manufacturing process to which tea-leaves are subjected in the factories. The fact that the time-lag between the plucking of tea-leaves and their being subjected to manufacturing process in the factories is very little would not detract from the conclusion that the cultivation and growth of tea-plants and leaves is something distinct and separate from the manufacturing process to which those leaves are subjected in the factories for turning them into tea meant for sale. Income which is realised by sale of tea by a tea company which grows tea on its land and thereafter subjects it to manufacturing process in its factory is an integrated income. Such income consists of two elements or components. One element or component consists of the agricultural income which is yielded in the form of green leaves purely by the land over which tea-plants are grown. The second element or component consists of non-agricultural income which is the result of subjecting green leaves which are plucked from the tea-pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making green tea, the fermentation process is arrested by steaming the leaf while it is green and by light rolling before drying." The cultivation and growth of tea-plants and leaves cannot, in our opinion, be comprehended in the expression "in the manufacture or processing of goods for sale". Cultivation and growth of tea-plants no doubt results in the production of raw material in the form of green tea-leaves which are ultimately processed into tea meant for sale. Such cultivation and growth are in the very nature of things prior to the manufacturing process and do not answer to the description of manufacture and processing of tea meant for sale. There is a vital difference between an agricultural operation and a manufacturing process, and the same should not be lost sight of. What is needed for being used purely in an agricultural operation cannot be held to be goods required for use in a manufacturing process. We are, therefore, of the opinion that the appellant was not entitled to get fertilisers and other goods mentioned in item No. (1) included in the registration certificate. The same reasoning would also hold good in respect of weighing machines used not in the factories ..... X X X X Extracts X X X X X X X X Extracts X X X X
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