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TMI Blog1954 (10) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts such as silicate of soda, soda-bicarb, etc., some of which are liable for assessment while some are exempt. Some of the soda ash produced by them is also utilised by the opponents in the further manufacture of soda ash. The opponents are registered with the Sales Tax Officer, Jhalawad District, Surendranagar, under No. ZDH/6. Their registra- tion certificate mentions soda ash but not any by-products in the manu- facture of which soda ash is utilized by them. The Sales Tax Officer had assessed the opponents to tax for a total sum of Rs. 4,565-14-0 on the taxable turnover of Rs. 1,46,109-4-0 for two quarters between 1st June, 1950, and 30th September, 1950. This taxable turnover, which included the price of soda ash utilised for purposes other than those mentioned in the registration certificate, was taken into account by the officer and assessed accordingly. The opponents preferred an appeal to the Deputy Commissioner of Sales Tax against the above order of assessment. The Deputy Commissioner of Sales Tax partially allowed their appeal and held that they should be taxed only on the quantity of soda ash which was utilised in the manufacture of by-products, other than soda ash, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Sales Tax being aggrieved by this decision requested the Tribunal to make a reference to this Court, which it has accordingly done. 3.Before we proceed to consider the actual points for determina- tion, it will be necessary to set out material portions of the relevant sections of the Ordinance relating to the incidence and levy of the tax as frequent references will have to be made to them in discussing the points. Section 5 which deals with the incidence of the tax is as follows: "5. (1) Subject to the provisions of section 6 and with effect from such date as the Government may, by notification in the Official Gazette appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year imme- diately preceding the commencement of this Ordinance, in respect of sales or supplies of goods exceeds-(a) in the case of a dealer who brings any goods into the United States of Saurashtra from any territory other than that notified by the Government in the Official Gazette, whether by land, water or air, Rs. 10,000 provided the value of such goods is not less than Rs. 1,000; (b) in the case of a manufacturer or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised for purposes other than those specified in the registration certificate of a dealer, then according to the proviso to rule 1 of section 6(3) the price should be so added to the taxable turnover and the department was not concerned whether any of the by-products, which was not liable to sales tax and in the manufacture of which soda ash was used, was sold or supplied to other persons by the opponents and the order of the Tribunal ordering fresh assessment on that basis was bad in law. He also contended that the said proviso could not make it incumbent on the Sales Tax Officer to examine how much quantity of by-product containing soda ash was sold or supplied by the opponents. The opponents on their part argued that the use by them of soda ash manufactured in the works in the manufacture of other by-products did not amount to a sale or supply as contemplated by sections 5 and 6 and consequently soda ash so utilised by them should be exempted altogether from the tax. The applicant's reply to this argument was that the use by the opponents of soda ash in the manufacture of their by-products amounted to a supply within the meaning of the Ordinance and should be charged to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy tax on a dealer whose business it is to sell or supply goods to another for consi- deration. The contention of the Sales Tax Commissioner that the utilisation by a manufacturer of goods produced by himself in further processing or converting them into a by-product amounts to a supply of the goods must be rejected. We therefore hold that the price of the soda ash utilised by the opponents in the manufacture of any by- products, whether taxable or otherwise, and whether such by-products are sold or supplied by them to others, is exempt from sales tax. 5. It was pointed out to us that the proviso to rule 1 of sub-sec- tion (3) of section 6 uses the word "utilisation". The use of this word, it was suggested, was deliberately made in order to meet cases like the one before us and to forestall the argument that ultilisation of goods by the manufacturer himself in the manufacture of other goods was not liable to be taxed. We do not agree with this contention for mere use of the word "utilisation" in the proviso cannot be construed to mean that the legislature intended by the proviso to depart from the basic principle underlying the Ordinance that only bilateral transactions of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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