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TMI Blog1978 (1) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of the section is not material and is omitted.) The assessee in this case purchased pine-apple, washed it, removed the inedible portions, namely, the end, the crown, the skin and the core, sliced it, filled the slices in cans with some sugar added as preservative, sealed under temperature and put into boiling water for sterilisation and thus prepared pine-apple slices. It prepared pine-apple juice by crushing the pine-apple and pressing it after removing the inedible portions. The juice thus obtained was sweetened, filled in cans, sealed under temperature and put in boiling water for sterilisation. It prepared jam and squash with pine-apple by well-known processes. In respect of these operations of the assessee, for the year 1973-74, purchases of pine-apple amounted to Rs. 3,84,138.89. It was conceded before the Appellate Tribunal that pine-apple jam and pine-apple squash would attract liability for tax under section 5A; so that, in respect of these two things the question of liability no longer survives. Out of the remaining two items, namely, pine-apple slices and pine-apple juice, the Tribunal found that juice was also covered by section 5A of the Act. The controversy no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production the bringing into existence of a commercial commodity different from what was received by the producers. This conversion of a commodity into a different commercial commodity by subjecting it to some processing, is consumption within the meaning of the explanation to article 286 no less than the final act of user when no distinct commodity is being brought into existence but what was brought into existence is being used up. At one stage of the argument what Mr. Pathak appeared to insist was that there must be destruction of the substance of the thing before the thing can be said to be consumed. That takes us nowhere, because we have still to find out what is meant by destruction of the substance. It may well be said that when a commodity is converted into a commercially different commodity its former identity is destroyed and so there is destruction of the substance to satisfy the test suggested by the learned counsel. We think it unnecessary however to enter into a discussion of what amounts to 'destruction', as even without deciding, whether there was destruction or not, we think it proper and reasonable to say that whenever a commodity is so dealt with as to change it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employing practically his art and skill is required to satisfy the word'." It is clear from the explanation of the term "manufacture" in the two treatises noticed, that philosophy and sophistry must have their due share in determining whether a process of manufacture has resulted in the production of other goods. This should explain the apparently conflicting conclusions from almost identical facts and circumstances noticeable in some of the judicial decisions to which we shall refer, and which have been stressed by counsel on either side in support of their respective contentions. 3.. We may start with the case strongly pressed by the Government Pleader, viz., the Supreme Court's pronouncement in Ganesh Trading Co. v. State of Haryana[1973] 32 S.T.C. 623 (S.C.)., where the question for consideration was whether paddy and rice can be regarded as identical goods for the purpose of imposition of sales tax. The question arose with respect to an exemption notification under which the exemption was available if the very paddy in respect of which purchase tax was levied was sold, and not if that paddy is converted into rice and sold. The argument was that paddy and rice being identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra[1976] 37 S.T.C. 319 (S.C.). In the Pulpally Devaswom's case(5), it was ruled that the sale of spontaneously grown trees by the assessee cannot be said to attract sales tax; the assessee cannot be said to have consumed the goods which he produced for the manufacture of other goods; and that from the mere fact that the trees were felled and shaped for convenient carriage, one cannot reach the conclusion that the assessee had "manufactured other goods". In T.R.C. Nos. 22 of 1968 and 26 of 1969, arecanuts dried and scented and packed were held to be a commercially different produce from raw arecanuts. So were "rubber soles " and "straps" treated separately from the combination of the two, assembled to form "chappals" and sold as such in the market (vide Achamma Sebastian v. State of Kerala[1967] 20 S.T.C. 483; 1967 K.L.T. 832. These decisions constitute an interesting commentary on the principle that is stated that in the exposition of the term "manufacture of other goods for sale" in section 5A(1)(a) of the Act, philosophy and sophistry are bound to have free play. 5.. We should refer to the instructive decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tannin and to increase elasticity, and by drying. Plainly, the corks were processed. But the court held they had not been manufactured within the drawback provision of the tariff laws. And see Hartranft v. Wiegmann121 U.S. 609, 615; 30 L.Ed. 1012, 1014; 7 S.Ct. 1240.; United States v. Dudley174 U.S. 670; 43 L.Ed. 1129; 19 S.Ct. 801. A chicken that has been killed and dressed is still a chicken. Removal of its feathers and entrails has made it ready for market. But we cannot conclude that this processing which merely makes the chicken marketable turns it into a 'manufactured' commodity. At some point processing and manufacturing will merge. But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been 'manufactured' within the meaning of article 203(b)(6). " Burton, J., joined by Frankfurter, J., Minton, J., and Harlan, J., dissented stating that the Commission's finding that dressed poultry was non-exempt was neither arbitrary not unreasonable, and was within the rule that administrative determinations of fact will not be set aside if there is evidence to support them. To the same category belongs the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz., rolled steel sections. During the process the scrap iron loses its identity and becomes a new marketable commodity. The process is certainly one of manufacture." In State of Tamil Nadu v. Pyare Lal Malhotra[1976] 37 S.T.C. 319 (S.C.)., it was ruled that manufactured goods consisting of steel rounds, flats, angles, plates, bars or similar goods in other forms and shapes could be taxed again, even if the material out of which they were made had already been subjected to sales tax once as iron and steel scrap. The mere fact, it was ruled, that the substance or raw material out of which it is made had been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object is to tax the sale of each commercial commodity and not the sale of the substance out of which it is made. Each commercial commodity becomes a separate object of taxation in a series of sales of that commercial commodity so long as it retains its identity as that commodity. Referring to the case in State of Madhya Bharat v. Hiralal[1966] 17 S.T.C. 313 (S.C.)., the Supreme Court explained the decision to be justified on the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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