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TMI Blog1975 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... he hire of their studio being headed "studio hire agreement" and the contract for the processing of a film being headed "processing and raw stock agreement ". We will refer to the relevant terms of these two types of contracts a little later. Under section 52 of the Bombay Sales Tax Act, 1959, the Commissioner of Sales Tax has the power to determine certain questions provided they have arisen for determination prior to the commencement of assessment or reassessment proceedings. Amongst the questions which the Commissioner is so entitled to determine is the question whether, for the purposes of the said Act, any person, society, club or association or any firm or any branch or department of any firm is a dealer, as also the question whether for the purposes of the said Act any particular thing done to any goods amounts to or results in the manufacture of goods within the meaning of that term. Availing themselves of the provisions of sub-section (1) of the said section 52 the applicants made an application dated 23rd May, 1963, to determine the question whether their purchases of goods, both in respect of maintenance of their studio and making sets and in respect of their activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and, if so, whether the applicants were a 'manufacturer' of goods? (3) Whether, in purchasing chemicals and other processing materials for processing films of their customers in the applicants' laboratory, the applicants were carrying on the business of buying goods and hence were a 'dealer' as defined by clause (11) of section 2 of the Bombay Sales Tax Act, 1959? (4) If the answer to question No. (3) be in the affirmative, whether the processing of films by the applicants with the chemicals and processing materials purchased by them constituted 'manufacture' as defined by clause (17) of section 2 of the Bombay Sales Tax Act, 1959, and, therefore, whether the applicants were a 'manufacturer' for the purposes of the said Act?" We will first turn to the purchases made by the applicants for the purposes of the maintenance of their film studio and for making sets. It is not disputed that the activities of the applicants in this behalf are correctly represented by the studio hire agreement dated 28th November, 1963, entered into between the applicants and one Messrs. R.S. Movies. It is also not disputed that this studio hire agreement is typical of all the agreements of this nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irers' own expenses. In either case, the set or sets made out of such materials shall be the property of the company. (c) Sets will be unfurnished; property articles, if any, available with the company will be supplied on request. (d) Sets will be dismantled immediately after the last shooting day. (e) Alterations and additions after the sketches and designs have been accepted will be at extra cost. (f) The company reserves the privilege of giving the same set or sets to anyone else provided the said set is not one of the main sets of the hirers' picture." It will be seen from the above clauses that the sets made by the applicants, which may either be ready-made or may be made or altered at the requirements of the particular producer hiring the studio, belonged and continue to belong to the applicants and at no stage become the property of the producer. If any extra setting material is required to be utilised in the making of sets, the materials have to be supplied by the producer or, if purchased by the applicants, it is purchased on the producers' behalf and the producers are responsible for the cost thereof. The labour charges incurred on any set made out of the raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ser. The same type of goods may form in a given case the goods in which a man deals by reselling or utilising them in the manufacture of goods for the purpose of carrying on his business activity, but in another case, they may constitute goods which are adjuncts to the carrying on of the business activity or goods which form part of the capital assets of the purchaser. A person who deals in selling paper, when he purchases his stocks of paper for retail sale carries on the business both of purchasing papers and of selling them, but a bank or an insurance company, which may purchase stationery or account books, is not carrying on the business of purchasing these goods because stationery and account books are merely adjuncts to the carrying on of the business of banking or insurance and do not constitute the essence of the business of banking or insurance. From the facts in the present case it is clear that in purchasing materials for the maintenance of their studio or in making sets which remain their own property which they hire out, what the applicants were doing was either making additions to their capital assets, which is their building or their studio, or providing themselves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said section 2. Under the said clause processing any goods is expressly stated to be "manufacture". Raw film is a commodity which after being processed becomes processed film, a commodity commercially different from raw film and, accordingly, processing raw films must constitute "manufacture" within the meaning of the said clause (17) of section 2. It was, however, submitted on behalf of the applicants that in order to constitute "manufacture" within the meaning of clause (17) of section 2 of the Bombay Sales Tax Act, 1959, manufacture must be of the goods belonging to the manufacturer. There is nothing in the definition of the term "manufacture" contained in clause (17) of the said section 2 or in any of the other sections of the Act which would warrant placing such a limitation upon the term "manufacture". The activities which are comprehended in the term "manufacture" may be carried out by a person either in respect of his own goods or in respect of goods belonging to another. For instance, a man may carry out the ornamenting, finishing or processing of his own goods or of goods belonging to the other. It is not necessary that the processor must process his own goods. We are, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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