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TMI Blog1987 (6) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... persons in the State, who are not registered dealers under the Act and after drying the bones, gets them crushed in a mill. This operation results in products like, crushed bones, bone grist, bone-meal and sinews. These products are sold by the assessee to various persons in the State and outside the State. The purchase of raw bones by the assessee from the unregistered dealers is the first sale in the State and this was taxable at 1 per cent under the APGST Act vide item 62 of the First Schedule. It is not disputed that the raw bones purchased by the petitioner from the unregistered dealers did not suffer any tax. At the relevant time section 5(1) of the Act provided for levy of tax at 4 per cent on the turnover of a dealer except in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase of raw bones made by him. A subsidiary controversy is raised in T.R.C. No. 6 of 1984, viz., that by virtue of section 8(2A) of the Central Sales Tax Act, the levy under that Act for the inter-State turnover should be restricted to the lower rate of tax under the APGST Act payable on bones, viz., 1 per cent and not 4 per cent under the Central Sales Tax Act. If, however, the first contention is held against the petitioner that they are not bones, the second controversy will not survive. It is urged by Sri Dasaratharama Reddi, learned counsel for the assessee, that no process of manufacture is involved in drying and crushing of the raw bones and sinews are the dried up fibre tissues which are attached to the bones. According to him, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of additional tax specified in section 5-A shall not exceed four per cent of the purchase price of such goods." The validity of this section has been upheld by a Division Bench of this Court in Hindustan Milkfood Manufacturers Ltd. v. State of A.P. [1982] 51 STC 1 which had followed various decisions of the Supreme Court. A reading of the aforesaid section 6-A in the background of the scheme of the Act shows that it is a remedial provision which seeks to make the purchaser of goods liable to tax if those goods had not suffered tax on the occasion of purchase by the said dealer. The principle being that goods liable to tax shall not escape the levy. Section 6-A(ii)(a) contemplates a situation where certain goods purchased (which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Subbaraj and Company [1981] 47 STC 30, a decision of the Madras High Court where section 7-A of the Tamil Nadu General Sales Tax Act, which is similar to our section 6-A, fell for consideration. In that case also raw bones purchased by the assessee after being crushed were converted into bone' grists, bone-meal, fluff, horns and hoof. It was held that the aforesaid products were also bones and the process of crushing of bones did not result in the production of other goods or consumption of raw bones. The Madras High Court has relied upon the decision of the Supreme Court reported in Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63. The next decision relied upon by the counsel for the assessee is also of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the business of construction of ownership flats and purchased granite, bricks, sand, etc., which were used in the construction of flats. It was held that the aforesaid process was neither a manufacture nor resulted in production of any new goods. The ratio of this case does not help the petitioner, as here the drying and crushing of raw bones results in production of goods which were sold by the assessee. The controversy is whether there is a manufacture and the raw bones are consumed in that process producing different commodity. The learned Government Pleader has referred to three decisions of the Supreme Court in Ganesh Prasad Dixit v. Commissioner of Sales Tax [1969] 24 STC 343, State of Tamil Nadu v. Kandaswami [1975] 36 STC 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ists and convert it into rice and sell the resultant rice in the market. The question was whether the paddy was consumed in the process and the resultant product rice was a new commodity as understood in commercial circles. The Supreme Court held the paddy purchased by the assessees had not suffered tax, the paddy was consumed in the process which yielded a new commodity-rice and the assessees are liable to pay tax on the purchase of paddy. The test is to see whether a new commodity (i.e., other than the one purchased) is produced by the process employed. "Manufacture" for this purpose has been given a wide connotation and is understood to include any process where a conversion of goods purchased by the assessee (i.e., consumption takes pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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