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TMI Blog1999 (3) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... ew substance is manufactured except the bigger boulders are crushed and sized into smaller crushed stones. It is also stated for the Petitioner that even according to the third Respondent for the assessment year 1993-94, the Petitioner did not even have taxable quantum of turnover but for the assessment year 1994-95 the Petitioner was held to have the taxable quantum of ₹ 40,000/- on 30.11.1994 and as a consequence thereof liable to pay tax under the Act with effect from 1.12.1994 and consequently, determined the tax payable by the Petitioner for the assessment year 1994-95 at ₹ 3,564/- with penalty at ₹ 900/-, in all amounting to ₹ 4,463/-. For the assessment year 1995-96 the tax liability was fixed at ₹ 19,440/- with penalty at ₹ 4,860/-, determining the total liability to ₹ 24,300/-. Similarly for the assessment year 1996-97, the tax liability was fixed at ₹ 21,606/- with a penalty of ₹ 5,419/- and thereby the total liability at ₹ 27,025/-. The dealer was directed to pay the tax by 27th August, 1997 with a default clause that on failure to do so, the interest at the rate of 18% will be charged thereafter from the due da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Petitioner could be said to have been violated or any grievance of infringement of principles of natural justice could be effectively projected, it is stated that there is no justification for the Petitioner to approach this Court directly. It is also contended that the Petitioner has not adduced any evidence regarding the alleged payment of tax for the extraction of boulder stones before the assessing authority in the manner stipulated under Section 6(2) read with Rule 31(xi) of the Rules, during the course of inquiry, which resulted in passing of the impugned order. Adverting to Annexure P-2, which is the Form 'M' it is stated that there is no indication therein as to the name and quality of the mineral, name of the person/party to whom the mineral is being despatched, vehicles number, volume of the mineral, page number of the production register or Export Pass and the time and date of despatch or even the value of the boulder stones or the amount said to have been charged by way of royalty or the tax said to have been paid thereon and therefore, Annexure P-2 does not serve any purpose to decide the issues raised in the writ petition. It is stated that even this F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by the Petitioner, called in common parlance as 'bajri', will be only when he sells the aforesaid commodity for the first time after such manufacture. While adverting to Section 8 of the Act and the incidental provisions such as Section 6(2) and Section 4 of the Act and the relevant rules, it has been stated for the Respondents that the first proviso to Section 8(1) will apply to those dealers who after purchasing the goods resell the same, as it is, without subjecting them to further processing or to any manufacturing process unlike the Petitioner, who by subjecting the boulders to manual mechanical processing converts boulders into a different commercial commodity for different price, purpose, use and business, and that, therefore, the levy made against him and the consequential penalty for the default committed in not getting himself registered, submitting returns and paying the tax in time, are quite in accordance with law and are unassailable. 6. Adverting to the alleged payment of tax at the time of paying royalty, it is contended for the Respondents that apart from the fact that the said payment, even if, any, will not enure to exonerate the Petitioner to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Counsel appearing on either side and some of the decisions really touching the question now raised for our consideration. 9. (1978) 41 STC 364 (supra) is that of a Division Bench of the Kerala High Court, the decision in which, according to us, turned mainly upon the peculiar wording of Section 5A(1)(a), which envisaged the levy of purchase tax only when the goods purchased had been consumed in the manufacture of other goods for sale or otherwise. The Division Bench of the Kerala High Court appears to have laid stress on the words, manufacture of 'other goods' for sale and in that process considered that the pineapples, which were purchased, when sliced after cutting and rejecting the inedible portions and thereafter slices were processed and packed in tin containers for being available in the market, there was no consumption of the commodity as such, nor any process of manufacture was carried out for producing other goods. It may be pointed at this stage that the relevant portion of the provision 'or otherwise' and its significance or impact does not appear to have been properly adverted to and considered therein, on account of the peculiar fact sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds for sale is one thing and consumption of such goods otherwise is an another thing and that either manner of such consumption was sufficient to attract the purchase tax envisaged under the relevant provisions of those Legislations. 11. In (1981) 47 STC 30 (supra), a Division Bench of the Madras High Court had an occasion to deal with a dealer who purchased the raw bones for conversion into crushed bones by a process of breaking in disintegrator and sale locally of such bone grists, bone-meal, fluff horns and hoof obtained in that process. The said Division Bench considered the matter by placing strong reliance upon the decision of the apex Court reported in, 46 STC 63 (supra) that as long as the goods purchased have not been consumed or used in the manufacture of some other goods, the levy is not attracted under Section 7-A(1)(a) of the Tamil Nadu Act and the resultant goods in that case also cannot be said to be of 'other goods'. 12. It may be incidently noticed here at this stage that an identical provision in the Andhra Pradesh Act, namely, Section 6-A (ii) (a) came up for consideration before a Division Bench of the Andhra Pradesh High Court in the decision re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this stage that the Division Bench of Bombay High Court specifically adverted to and dissented from the decision rendered by a Full Bench of Madhya Pradesh High Court reported in (1990) 79 STC 149 (Kher Stone Crusher v. General Manager, District Industries Centre, Jabalpur and Anr.) and that of Rajasthan High Court reported in (1994) 94 STC 118 C.T.O. v. Bhonri Lal Jain. In (1990) 79 STC 149 (supra) a Full Bench of the Madhya Pradesh High Court while approving an earlier decision of the same Court reported in (1957) 8 STC 294 Kulkarni v. State, applied the very principles laid down by the apex Court in (1980) 46 STC 63 (supra) and held that when bigger stones and boulders are cut and shaped into specified shapes and sizes in crushers for manufacture of ballast, metal or 'gitti', there is transformation of the stone and a new different commercial article fit for use in construction of roads and houses, is produced as a result of treatment, labour and manipulation in the crusher and the process so applied conforms to the definition of 'manufacture' in the Madhya Pradesh Act. In (1994) 94 STC 118 (supra), a learned single Judge of the Rajasthan High Court had an occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and sellers of laminated sheets out of various raw materials including paper and other chemicals, namely, phenol, formaldehyde, hexamine, etc. purchased from the open market after paying duty and in the manufacturing process 'phenol formaldehyde' was said to have been produced out of melamine, formaldeyhde, phenol, methanol, caustic soda, hexamine and hydrochloric acid. In adjudging the exigibility to excise duty on phenol formaldeyhde so produced, which was, on facts, found to be resin at 'A' stage, which was captively consumed by the Appellants before the Court, the plea of the Appellants therein was that they were not liable as the reacting mixtures were not only unstable having short life but they were not marketable in the form they were obtained in intermediate stage in a continuous process. In the teeth of absence of any dispute on facts that the resins at 'A' stage/phenol formaldehyde produced by the Appellants was nothing else than what are chemically known as 'resols', which according to the Revenue is an item mentioned under Item 15-A of the Tariff Schedule, and therefore was exigible to tax, such a plea on behalf of the Revenue was reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave different user and purpose and either cannot be an effective substitute in the matter of their own area or purpose of uses than 'bajri or 'gitti'. Not only the manufactured product 'bajri' or 'gitti' is a well-known commercial product by itself and has a distinct and different purpose and use substantially and redically different from the blocks of stone/big boulders but in commercial parlance, both engaged in the trade as well as consumers who purchase are well aware of such different and distinct uses of those commodities by their well recognised and commercial names also. Merely from the fact that 'bajri' or 'gitti' is produced out of the stone blocks/big boulders, and such produce retain the basic metallic attributes or properties of stone, it cannot be stated that the resultant product of 'bajri' or 'gitti' would be one and the same as the block of stones/big boulders unearthened or excavated from earth/mines. When bigger stones and boulders are cut and shaped into specified shapes and sizes in crushers or manufactured into ballast, metal or 'gitti' or 'bajri', in our view, there certainly takes pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be that gram or gulab gram which it was before such processing, and that any new and distinct commodity has really emerged thereby. The answer was in the affirmative that they are distinct and separate goods. In JT 1999 (2) SC 130 Commissioner of Income Tax, Trivandrum v. Relish Goods, though dealing with a question under the Income Tax Act, 1961, their Lorships considered an issue pertaining to a dealer in movables or goods, of the kind dealt with by the apex Court in (1986) 63 S.T.C. 239 (Sterling Foods Case) and observed as follows: Apart thereform, there is the judgment of this Court in Sterling Foods v. The State of Karnataka and Anr., (1986) 63 STC 239, where it has been held that processed or frozen shrimps and prawns are commercially regarded as the same commodity as raw shrimps and prawns. When raw shrimps and prawns are subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing they do not cease to be shrimps and prawns and become other distinct commodities. There is no essential difference between raw shrimps and prawns and processed or forzon shrimps and prawns. In common parlance they remain known as shrimps and prowns. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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