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TMI Blog1980 (7) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... nataka Sales Tax Act? 2.. The facts of the case are these: The assessee is a registered firm carrying on business in latrite and granite stones. During the relevant assessment years, the assessee purchased boulders from unregistered dealers, who are not liable to tax under section 5 of the Act. He produced jelly out of these boulders. For the assessment years 1970-71, 1972-73 and 1973-74, the turnovers of the assessee were as follows: 1970-71 ... Rs. 34,368.00 1972-73 ... Rs. 71,725.00 1973-74 ... Rs. 1,00,000.00 In the first instance, the assessing authority did not levy tax on the said turnover under section 6 of the Act. Later in exercise of his power under section 12-A of the Act, the assessing authority rectified the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no tax could be levied under section 5(1) of the Act are consumed in the manufacture of other commodities. it was argued for the assessee that as no manufacturing process was involved as the boulders were merely converted into jelly just by the process of breaking, the purchase could not be brought to tax under section 6 of the Act. 6.. The Commissioner, however, did not agree with the contention urged for the assessee. He relied on the judgment of the Madhya Pradesh High Court in G.R. Kulkarni v. State [1957] 8 STC 294 in which a Division Bench of the said High Court had held that the breaking of boulders into jelly was a process of manufacture within the meaning of section 2(i)(a) of the Madhya Pradesh Sales Tax Act, 1947. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue, however, argued that even if the process of converting boulders into jelly did not amount to a manufacturing process, even then the assessee is liable to pay purchase tax as he has consumed boulders for producing jelly, which is a different commercial article for purposes of sale. He invited our attention to the wording of section 6 of the Act which reads: "6. Levy of purchase tax under certain circumstances.-Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and, (i) either consumes such goods in the manufacture of other goods for sale or otherwise or dispo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a conjunctive introducing a specific alternative to the words 'for sale' immediately preceding. The clause in which it occurs means, says Mr. Chagla, that by section 7 the price paid for buying goods consumed in the manufacture of other goods, intended to be sold or otherwise disposed of, alone is taxable. We do not think that that is a reasonable interpretation of the expression 'either consumes such goods in the manufacture of other goods for sale or otherwise'. It is intended by the legislature that consumption of goods renders the price paid for their purchase taxable, if the goods are used in the manufacture of other goods for sale or if the goods are consumed otherwise." 9.. He also relied on the decision of this Court in K. Cheyyab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether liability to pay tax under section 5A(1)(a) arose. The Supreme Court held that the process by which pineapple was converted into pineapple slices did not amount to a manufacturing process. Further, it was held that the liability to pay tax under section 5A(1)(a) of the Kerala Act arises only if the goods are consumed in the manufacture of other goods either for purposes of sale or for purposes other than sale. The relevant portion of the judgment reads: "The learned counsel for the revenue contends that even if no manufacturing process is involved, the case still falls within section 5A(1)(a) of the Kerala General Sales Tax Act, because the statutory provision speaks not only of goods consumed in the manufacture of other goods for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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