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TMI Blog1978 (11) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and sold thereafter. The Sales Tax Officer levied purchase tax on purchase of the said article in question under section 16 of the Act and he was of the opinion that those goods could not have been purchased on certificate since they were not raw materials, processing materials or consumable stores required for use in the manufacture of the goods in question. He also levied penalty at the rate of 10 per cent of the purchase tax under section 45(1)(a) of the aforesaid Act. The assessee carried the matter in appeal before the Assistant Commissioner and the Sales Tax Tribunal with no avail. The contention of the assessee was rejected since, in the opinion of the Appellate Commissioner as well as the Tribunal, the articles in question were neither raw materials nor processing materials nor consumable stores which could be purchased under section 13(1)(B) of the said Act on a certificate in form No. 19. The assessee, therefore, sought the reference to this Court which was granted accordingly. At the time of hearing of this reference, the learned Advocate appearing for the assessee urged that the Tribunal committed an error of law in ascribing a very limited meaning to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Central Sales Tax Act, 1956, as to what should be the meaning ascribed to the expression "in the manufacture of goods" in section 8(3)(b) of the said Act. The assessee-company before the Supreme Court was a mill company manufacturing cotton textiles, tiles and other commodities. The assessee-company applied before the Sales Tax Officer to specify in the certificate goods which the assessee-company purchased in the course of inter-State trade. The certificate included amongst other goods the articles such as "drawing instruments, photographic materials, building materials including iron, steel, cement and lime and certain goods covered under the term electricals". It appears that the Sales Tax Officer called upon the assessee-company to show cause why the certificate of registration be not amended so as to exclude the aforesaid articles. The company in reply contended inter alia that the said articles were required in the manufacture and processing of goods for sale. The Sales Tax Officer, however, did not accept the contention of the assessee-company and deleted those articles and called upon the assessee-company to surrender the certificate for making necessary amendments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would fall within the expression "in the manufacture of goods". Shah, J., speaking for the court, held as under: "To read the expression 'in the manufacture' of cloth in that restricted sense, would raise many anomalies. Raw cotton and machinery for weaving cotton and even vehicles for transporting raw and finished goods would qualify under rule 13, but not spinning machinery, without which the business cannot be carried on. In our judgment, rule 13 does not justify the importation of restrictions which are not clearly expressed, nor imperatively intended. Goods used as equipment, as tools, as stores, as spare parts or as accessories in the manufacture or processing of goods, in mining, and in the generation and distribution of power need not, to qualify for special treatment under section 8(1), be ingredients or commodities used in the processes, nor must they be directly and actually needed for 'turning out or the creation of goods'. In our judgment, if a process or activity is so integrally r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in J.K. Cotton S. W. Mills Co. Ltd.'s case[1965] 16 S.T.C. 563 (S.C.). that a process or an activity may not be necessary theoretically for production of finished goods, but if it is such an integral part of the ultimate manufacture of goods that in its absence the manufacture may not be commercially expedient, that activity or process must be considered to be manufacturing activity itself and the goods intended for use in that process or activity should be considered to be goods required in the manufacture of taxable goods for sale. It is no doubt true that the articles which can be purchased tax-free on furnishing a prescribed certificate by a manufacturer must be either raw materials or processing materials or consumable stores. But it is not possible to say much less urged successfully that the consumable stores must necessarily partake the nature of raw materials or processing materials or must more or less stand on the same footing. We do not think that the learned Assistant Government Pleader was right in his contention that consumable stores must be given a very restricted meaning since they are used along with the words "raw or processing materials" in section 13(1)(B) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wanted to distinguish between raw materials, processing materials and consumable stores required for manufacturing goods and the packing materials for manufactured goods and to treat them separately. We have not been able to appreciate how the provisions contained in section 21 would have any bearing even indirectly on the question in issue in this reference. What section 21 does is to prescribe a special rate of tax for packing materials by providing a fiction that the materials in which the goods are packed shall be deemed to have been sold or purchased along with the goods. We do not think that the provision of special rate for packing materials on this deeming fiction can have any relevance for the purposes of the question in issue in this reference. The learned Assistant Government Pleader has invited our attention to the various notifications issued by the Government from time to time granting exemption from the liability of paying sales tax or purchase tax in respect of different materials purchased by a manufacturer. He has specially invited our attention to item No. 8 of such notification issued by the State Government in Ministry of Finance on 29th April, 1970, where s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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