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TMI Blog1982 (1) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... o were sales of a 'form of tobacco' within the meaning of item No. 4 of the First Schedule to the Central Excises and Salt Act, 1944, and that, therefore, they were sales of 'tobacco' within the meaning of entry 43 of Schedule I to the Gujarat Sales Tax Act, 1969, and that, therefore, they were free from all taxes?" A few facts need be stated, as found by the Tribunal, in order to appreciate the contentions urged on behalf of the State Government in support of this reference. The opponent-assessee is a registered dealer under the Gujarat Act and is carrying on business to sell pan, bidi, match-boxes, cigarettes, etc., in the city of Ahmedabad. The assessee also sells what is popularly known as "Pan-masala" which is a mixture of sopari (betel-nut), variyali, dhana-dal and sweet flavoured powder. The assessee also sells another type of pan-masala which is again a mixture of tobacco, chuna and sopari. In the course of the assessment for the period commencing from Kartik Sud 1 to Aso Vad 30 of S.Y. 2030, the Sales Tax Officer found that since there is mixing of these different articles, so far as the first type of Pan-masala is concerned or some treatment, so far as the second type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pleader, appearing on behalf of the State Government, contended that the assessee was not entitled to claim deduction on the turnover of sales of pan-masala of both the varieties as they would not be resales within the definition of the term "resale" under section 2(26) of the Gujarat Act, inasmuch as the goods were not sold without doing anything to them which did not amount to, or result in, a manufacture. In other words, the submission of the learned Assistant Government Pleader is that since there was some process, treatment or adaptation of the different articles constituting pan-masala of both the varieties, there was an element of manufacturing involved in it and, therefore, the assessee was not entitled to claim deduction of the turnover of sales of pan-masala of both the varieties as resales under section 7 of the Gujarat Act. The learned Assistant Government Pleader, however, conceded that the case of the State Government rests on the definition of the term "resale" read with the definition of the term "manufacture" in section 2(26) and section 2(16) respectively of the Gujarat Act. We will, therefore, read the said two sections for purposes of answering the questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve originally purchased them and the mere fact that they were put or brought together under one mixture and sold as pan-masala would not affect the original forms of the constituent ingredients at all." Similarly, in respect of the second variety of pan-masala which was predominantly a mixture of tobacco along with sopari and chuna, the Tribunal has, in paragraph 13 of the statement of case, found as under: "13 ........ On those facts, we had also stated that the purpose for which a customer purchases that pan-masala from a dealer is to eat tobacco in that form and as treated with chuna and accompanied with sopari just as he would eat tobacco without any other ingredient like chuna and sopari. Therefore we had stated that the purpose for which the customer would eat tobacco as such would continue to remain the purpose for which the customer would also eat pan-masala of the second variety because that was also a form of tobacco. Accordingly, we had observed that the form of tobacco in Pan-masala did not change in spite of the fact that it was treated with chuna or accompanied with sopari." The only question which remains to be considered is, whether either by the mixture of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was held as under: "........... Commonly, manufacture is the end-result of one or more processes, through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity." The Supreme Court, in that connection, referred to the decision of the American Supreme Court in Anheuser-Bush Brewing Association v. United States 52 L Ed 336 (338) where what is manufacturing as well as wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afraid we cannot agree with the learned Assistant Government Pleader for the obvious reason that though it may be popularly known as "Pan-masala", the constituent elements of mixture retain their substantial identity and neither as a result of the mixture in the first variety, nor as a result of some application of chuna in the second variety a transformation has taken place so that it can be said that a new and a different article has emerged having different name, characteristic or use. The collective compendious name given to the goods does not make them a distinct commercial commodity in view of what we have stated above. Instead of taking these different constituent elements separately if they are eaten together to have the ingredients more palatable, it cannot be urged that a transformation of articles has taken place and an end-product having different commercial character, use or name has come into being. In view of the above we answer the questions referred to us in the affirmative, that is, in favour of the assessee and against the State Government. The State Government shall pay the costs of this reference to the assessee. Reference answered in the affirmative. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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