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TMI Blog1990 (7) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... 1941 and the Central Sales Tax Act, 1956. It carries on the business of a reseller, importer and manufacturer of electrical, signalling and telecommunication equipment, appliances, etc. It ordinarily receives orders from Government departments including Post and Telegraph and Railways for supply of headgear sets for operators and other telecommunication equipment. The purchasing departments generally obtain actual users' licence from the Import Control Authority and make the same available to the company. Thereafter the licensing authority issues letter of authority to the applicant-company for import of the goods for which order is placed by such Government department. 3.. While making assessment order for the period of four quarters ending December 31, 1971, the Commercial Tax Officer determined the taxable balance at Rs. 11,34,850.16. In doing so, he rejected the applicant's claim that a sum of Rs. 7,50,749.86 representing sales in the course of import within the meaning of section 5 of the Central Sales Tax Act, 1956, should be excluded from the gross turnover under section 5(2)(a)(v) of the said 1941 Act. The Commercial Tax Officer held that the components of headgear sets h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, namely, one by the foreign seller to the applicant and the other by the applicant to DGPT. The original contract between the applicant and DGPT is stated to be of not much importance in this context. The alternative contention of the applicant is that if the transactions are sales, then these are sales in the course of import and therefore should be deducted from the gross turnover under section 5(2)(a)(v) of the 1941 Act, within the meaning of section 5 of the Central Sales Tax Act, 1956. The movement of the imported goods from Sweden is claimed to be a necessary incidence of the contract and therefore is a sale occasioning the import or in the course of import. 5.. The further case of the applicant is that import licence for lightning discharger tubes, being item No. 6, was issued in the applicant's name. The contract between applicant and railways necessitated import of these goods. Thus, allegedly the movement of these goods from Sweden was incidental to or in pursuance of the contract of sale. It was not permissible for the applicant to divert the goods for any other purpose. The applicant claims (see paragraph 19 of the writ petition) that these tubes were delivered in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from dispute that the Commercial Tax Officer disallowed the claim in respect of eight items of sales vide annexure "A" to the writ petition. The applicant withdrew the claim with regard to items 4 and 8, namely, sales of terminating plugs and relay plugs [see paragraph 10(a) of the writ petition]. The Tribunal below allowed the claim relating to items 2, 3, 5 and 7. Therefore, the present grievance is confined to the claim with respect to items 1 and 6, namely, telecommunication equipment, being headgear sets and lightning discharger tubes, representing sales amounting to Rs. 6,31,225. 9.. The dispute with regard to item No. 6, namely, lightning discharger tubes may be disposed of at first. The undisputed facts are that the sale amounted to Rs. 28,800. The order was placed by the railways. The import licence was issued in the applicant's name with the condition that the imported goods should be utilised or disposed of in the stipulated manner, namely, by delivering to the railways and should not be utilised or disposed of in any other manner without the prior written approval of the licensing authority. The Tribunal below, upon a reference to clauses 12, 13 and 14 of the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly contended that apart from the base, certain activity of manufacture was involved in the hands of the applicant for making the finished goods in conformity with the purchase order. The expression "manufacture" has been very widely defined in clause (dd) of section 2 of the 1941 Act. It is settled that manufacture implies a change, though every change is not manufacture. A new and different article must emerge having a distinct name, character or use, see [1988] 70 STC 314 (SC) [Collector of Central Excise v. Kutty Flush Doors Furniture Co. (P.) Ltd.]. On the authority of the decision in Narne Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise [1989] 73 STC 81 (SC) we are inclined to hold that making of lightning dischargers complete with base and tube according to the specifications and drawing amounted to manufacture of the goods with the help of the imported components, namely, lightning discharger tubes. In the aforesaid case the Supreme Court held that by assembling weigh-bridges, a new product, namely, weigh-bridge came into being. Although that was a case under the Central Excises and Salt Act, the ratio is fully applicable to the present case, because man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y held as follows: "Be that as it may, in the case under consideration we are concerned with the sales made by the petitioner as principal to the DGS D. No doubt, for effecting these sales, the petitioner had to purchase goods from foreign sellers and it was these purchases from the foreign sellers which occasioned the movement of goods in the course of import. In other words, the movement of goods was occasioned by the contracts for purchase which the petitioner entered into with the foreign sellers. No movement of goods in the course of import took place in pursuance to the contracts of sale made by the petitioner with the DGS D. The petitioner's sales to the DGS D were distinct and separate from his purchases from the foreign sellers. To put it differently, the sales by the petitioner to the DGS D did not occasion the import. It was the purchases made by the petitioner from the foreign sellers which occasioned the import of the goods. The purchases of the goods and import of the goods in pursuance to the contracts of purchases were, no doubt, for sale to the DGS D. But it would not follow that the sales or contracts of sales to the DGS D occasioned the movement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n things. It is admitted that different components are assembled at the factory for making them headgear sets of operators. The facts of this case are thus basically different from those of the case in [1977] 39 STC 340 (SC); [1977] 1 SCC 643 (State of Maharashtra v. Central Provinces Manganese Ore Co. Ltd.). We have already referred to [1989] 73 STC 81 (SC) (Narne Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise). In that case, the facts, as found, were that the company brought three components, namely, platform, load cells and indicating system, together at site, fitted and assembled them together so that they can work as one machine. On such facts the Supreme Court held that by such assembling, a new product, namely, weighbridge was produced and manufactured. The court really held that components or parts of a machine and the whole machine being the end-product are not the same goods. The end-product, that is the weighbridge was held to be a separate product as a result of an endeavour and activity of the company and therefore it was held that the company had manufactured the item. 12.. There is no reason why the ratio of the decision in [1989] 73 STC 81 (SC) (Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is assumed, though actually the facts do not indicate this, the sale did not occasion the import and the movement of the goods in the course of import did not take place in pursuance to the contract of sale, because there was no privity of contract between DGPT and the foreign seller and the import was made on the strength of the import licence of the STC, and not on the strength of any actual user's licence. Movement of the goods from the foreign country took place on account of purchase by STC and not on account of sale to DGPT. We have already seen that even the identity of the goods sold or supplied to DGPT is different from that of the goods imported. Mr. D. Majumdar, learned State Representative, referred to [1953] 4 STC 205 (SC) (State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory) and [1964] 15 STC 753 (SC) (Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer). The first case, commonly known as the Second Travancore case does not appear to be applicable to the facts of the instant case. Similarly, the second case was one relating to export. The decision in the case of Binani Bros. [1974] 33 STC 254 (SC), which was a case of import, rules out any further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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