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TMI Blog1962 (2) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 10(a) of the Act. In an appeal from this assessment, that order of assessment was confirmed by the Deputy Commissioner and in revision by the Commissioner of Commercial Taxes in Mysore. But, in the further revision petition presented by the assessee to the Sales Tax Appellate Tribunal, the assessment made by the Sales Tax Officer was set aside and the matter was remanded to the concerned assessing authority with a direction to reopen the matter, examine the accounts of the assessee and determine the exact taxable turnover. After this order was made, the Commissioner of Commercial Taxes in the new State of Mysore, who was named as the authority corresponding to the Collector, specified in section 34 of the Act, made an application under that section requiring the Tribunal to refer to this Court, the following question of law for its decision "Whether purchase tax is leviable under section 10 of the Bombay Sales Tax Act, 1953, where the butter purchased from an unregistered dealer is sold after converting it into ghee?" The Tribunal has, accordingly, referred this question to this Court for its decision. The answer to this question rests on the construction to be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay purchase tax on the purchase of butter made by him. But, it was contended by the assessee that since part of the butter purchased by him was sold by him, in his turn, he was not liable to pay any purchase tax on the purchase of that butter made by him from unregistered dealers. But the assessee did not sell in his turn all the butter which he purchased from unregistered dealers: the value of the butter so sold by him was only Rs. 38,308 out of the butter of the value of Rs. 83,718-1-0 purchased from unregistered dealers. The Sales Tax Officer who came to the conclusion that the purchase turnover relatable to the butter of the value of Rs. 38,308 which had been sold by the assessee in his turn, was not taxable since the proviso to section 10 exempted that part of the turnover from the payment of purchase tax, determined the taxable turnover in respect of the purchase of butter to be Rs. 42,969, which was the value of the butter converted into ghee and sold in that form. According to the Sales Tax officer, the proviso to section 10 was inapplicable to the purchase of butter which was converted into ghee and sold. He, therefore, reached the conclusion that the assessee was liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he difficulty which presented itself before the Sales Tax Officer was that the other part of the turnover of the assessee to the extent of Rs 42,969 was not attributable to butter sold by the assessee, since he did not sell the butter purchased by him but only sold the ghee produced from it. He was of opinion that since what was sold by the assessee was not butter which he had purchased from unregistered dealers but was a different substance, namely, ghee, although that ghee was produced by melting the butter which he purchased, the proviso to section 10 was inapplicable. The Tribunal was, however, of the view that since what was purchased by the assessee from the unregistered dealers was a milk product, namely, butter, and what was sold by him after he purchased it was also a milk product, namely, ghee, which was produced by melting the first milk product so as to bring into existence the second milk product, the proviso was attracted since what was done by the assessee was to sell a milk product which was produced from the milk product which he had purchased from an unregistered dealer. It is the correctness of this conclusion reached by the Tribunal which requires investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase tax under it, in a case where he does no more than to act as a conduit pipe for the transference of goods from the unregistered dealer to the second purchaser, by making an intermediate purchase for that purpose. That being so, the benefit of the proviso is available only in cases in which a dealer sells the very goods which he purchased. If, on the contrary, the goods sold by him are different from those purchased by him, it becomes plain that the proviso can have no application. Mr. Krishnaswamy Rao, nevertheless, contended that we should come to the conclusion that although the assessee in this case converted the butter which he purchased into ghee, and, what was sold by him was ghee and not butter, since what was sold by the assessee was a milk product and since the ghee which was sold in that way was produced from the butter previously purchased, which was also a milk product, the proviso was attracted. He further submitted that when the assessee converted butter purchased by him into ghee, it did not result in any such radical alteration in the chemical composition of the butter as to justify the conclusion that it became transmuted into a different substance since all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the 17th entry of Schedule B refers to milk products generally cannot support the argument that a dealer purchasing one kind of milk product but selling another variety of milk product is as much entitled to the benefit of the proviso as one who sells the very milk product which he had previously purchased. The expression "milk products" contained in the 17th entry is a compendious description of those species of goods to the purchase of each of which the proviso to section 10 becomes applicable, provided the sale is of the identical goods which were purchased. In my opinion, it would be going altogether too far to suggest that the dealer who purchases one kind of milk product but sells another kind of milk product can be heard to contend that the goods sold by him are the goods purchased by him since both what he sold and what he purchased were one kind of milk product or another. I shall now refer to the decisions on which Mr. Krishnaswamy Rao placed reliance in support of his contention to the contrary. The first of these is Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer, Kurnool[1960] 11 S.T.C. 827: A.I.R. 1961 S.C. 412. ' in which their Lordships of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. But, Mr. Krishnaswamy Rao contends that we should decline to answer the question referred to us in this case in that way, since according to him, there is no valid reference before us. He has pointed out to us that although the order of the Tribunal was made on 8th August, 1958, no application for a reference to this Court was made until 27th April, 1959, and that since that application was not made within the period of limitation prescribed under section 34 of the Act, the reference made to us is an incompetent and invalid reference. But, Mr. Chandrasekhar, the learned Government Pleader, has pointed out to us that although a formal application for a reference was made on 27th April, 1959, that application had been preceded by a letter addressed on behalf of the Commissioner of Commercial Taxes to the Tribunal on 27th October, 1958, in which a request was made to the Tribunal to make a reference. It is no doubt true that when that letter was received by the Tribunal, the Tribunal proceeded to consider the maintainability of the application for reference made by the Commissioner, since no formal application for that purpose had been made by him. On 19th May, 1959, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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