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TMI Blog1979 (3) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act so as to render the dealer liable to levy of tax. Section 5A, clause (1) and sub-clause (a) thereof, which is the relevant provision, reads: "5A. Levy of purchase tax.-(1) Every dealer who, in the course of his business, purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section 5, and either- (a) consumes such goods in the manufacture of other goods for sale or otherwise;". The section has recently come in for examination before this Court in at least two decisions. In Deputy Commissioner of Sales Tax v. Pio Food Packers(1), the question arose whether sale of pine-apple, the inedible portions of which had been removed (namely, the crown, the skin and the core) and which, thereafter, was sliced, filled in cans adding sugar as a preservative, sealed under temperature, and put into boiling water for sterilisation, could be said to involve "consumption" of the raw pine-apple for the purpose of "manufacture" of "other goods". This Court discussed the meaning of the three expressions emphasised supra. With respect to the treatises and ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se first impressions of ours should furnish the answer against the assessee. 3.. But we are up against a wall of judicial decisions not easy to scale or batter down. We shall attempt to grapple with them as best as possible. The counsel for the assessee relied on the decision of the Mysore High Court in State v. Raghurama Shetty[1975] 35 S.T.C. 360. The question there directly arose under section 6(i) of the Karnataka Sales Tax Act of 1957, as to whether the turnover of rice, sold after purchasing paddy and milling the same, was liable to be assessed to sales tax under the provisions of the Act. The question was practically the same as arises for consideration here, and arose with reference to a section almost similarly worded. It was ruled that the mere dehusking of paddy and getting rice out of the same would not amount to "manufacture", and that, on the facts and circumstances, there was no "consumption" of paddy resulting in the "manufacture" of other goods in the terms of the section. The position was discussed with respect to the treatises, which are referred to also by the Division Bench of our High Court in the Pine-apple case[1978] 41 S.T.C. 364; 1978 K.L.T. 279., no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold rice to the Government and other registered dealers, were entitled to exclude the turnover relating to the paddy purchased. Under the concerned Sales Tax Act, exemption was provided from payment of sales tax, if the identical paddy in respect of which purchase tax was levied, was sold again, and not if the paddy sold constituted a different or other distinct commodity. The contention was that paddy and rice are commercially identical and, therefore, the exemption granted in respect of paddy would enure for the rice as well. The Supreme Court observed: "Now, the question for our decision is whether it could be said that when paddy was dehusked and rice produced, its identity remained. It was true that rice was produced out of paddy but it is not true to say that paddy continued to be paddy even after dehusking. It had changed its identity. Rice is not known as paddy. It is a misnomer to call rice as paddy. They are two different things in ordinary parlance. Hence quite clearly when paddy is dehusked and rice produced, there has been a change in the identity of the goods. In this view it is not necessary for us to refer to the decisions of some of the High Courts read to us a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider either the decision in Ganesh Trading Co. v. State of Haryana[1973] 32 S.T.C. 623 (S.C.). (sic) or the one in Sri Siddhi Vinayaka Coconut Co. v. State of A.P.[1974] 34 S.T.C. 103 (S.C.)., both of which were pronouncements of the Supreme Court. Attention was drawn to the decision in State of Tamil Nadu v. Pyare Lal Malhotra[1976] 37 S.T.C. 319 (S.C.)., where the Supreme Court emphasised the principle that each commercial commodity becomes a separate object of taxation in a series of sales of that commodity so long as the commodity retained its identity. The learned Government Pleader also drew our attention to the decision in K.C. Pazhanimala v. StateA.I.R. 1969 Ker. 154 (F.B.).That decision was rendered, no doubt, under a different background, and with respect to the provisions of the Essential Commodities Act. The observations made by the Full Bench are interesting and enlightening on the aspect that arises for consideration here. Observed the learned Judges: "19. The preamble of the impugned order only shows that it was for maintaining and increasing the supplies of rice and paddy and for securing their equitable distribution and availability at fair prices. The first qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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