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TMI Blog2023 (12) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... cate according to provisions of Section 8(3)(b) of the Central Sales Tax Act, 1956. The articles which the petitioner mentioned in his application are Cement, Sand, Boulder, Murum, Gitti, Steel, Aggregates, Bitumen, Compressors, Plant & Machinery, Mining Machinery, Mixture Concrete, Pumping Set, Pay Loader, Lab Equipment, Moulds, Hot Mix Plant, Bitumen Tank, Fuel Tank, Roller Machine, Dumpers, Stone Crusher, Exploder, Generator, Drilling Machine, Weigh Bridge, Pavour (Mach & Hydraulic), Vibrator Roller, Crane, Loader, Grader Cum Excavators, Shunting Plates, Paint, Pipe and Fittings, Bitumen Sprayer, Oil & Lubricants, Tools, Mach Spares, Locomotives & Motor Vehicle tyre, Tubes of locomotives & Motor Vehicle, Cane Baskets & parts of accessories etc. on the ground that these articles and machinery are being used in processing goods for sale and construction of the road. The Commercial Tax Officer vide order dated 19.04.2011 partly allowed the application and added Soil (Murum) in the registration certificate but for the rest of the articles, the application was rejected. The petitioner preferred a revision before the Deputy Commissioner, Commercial Tax, Durg and vide order dated 07.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter of J.K. Cotton Spinning & Weaving Mills Co. Ltd. Versus Sales Tax Officer, Kanpur & Anr. reported in AIR 1965 SC 1310, the judgment passed by High Court of Patna in the matter of M/s Larson & Toubro Ltd. Versus Commissioner of Commercial Taxes, Bihar, Patna reported in 1994 SCC Online Pat 302 and the judgment passed by High Court of Calcutta in the matter of Nagarjuna Constructions Co. Ltd. Versus Assistant Commissioner of Commercial Taxes, Salt Lake Charge & Ors reported in MANU WB 1396 2014. He would further contend that in the matter of J.K. Cotton (supra), the Hon'ble Supreme Court was dealing with similar issues where the authority declined to specify certain articles in the registration certificate. The Hon'ble Supreme Court in paras 10 and 11 categorically held that under Rule 13 of the Act, 1957 read with Section 8(3)(b) of the Act, 1956 mere intention to use the goods in the manufacture or processing of goods for sale will not be a sufficient ground for a specification; the intention must be to use the goods as raw materials, as processing materials, as machinery, as plant, as equipment, as tools, as stores, as spare parts, as accessories, as fuel, as lubricant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacture" of cloth. It would be difficult to regard goods used only in the process of weaving cloth and not goods used in the anterior processes as goods used in the manufacture of cloth. 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 acces- sories 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 S. 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." 11. In our judgment if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture. It has been also held that articles which are integral to the process of manufacture would be liable for concessional tax, even though such articles may not be incorporated in the manufactured endproduct. Paras 80, 81 and 82 of the aforementioned judgment are reproduced herein below:- 80. A works contract is one and indivisible and involves incorporation of different goods to bring into existence a new endproduct. For example, a building contract, inter alia, Involves the mixing and treatment of cement, sand, stone chips, etc., to produce concrete, the blending of cement, sand and water for plastering, the plastering of bricks, casting, fabrication of steel rods and girders, the erection of the structure and the installation fittings and fixtures, some of which may be embedded in the construction. The goods Incorporated in the construction, in which property passes, lose their original character What is produced is something totally different. There is no reason why activities involved in a works contract should not constitute manufacture. 81. If after the amendment of the Constitution it has become possible for the State to levy sales tax on the value of goods incor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner in his application. In support thereof, he has placed reliance on the judgment passed by the Hon'ble Supreme Court in the matter of J.K. Cotton (supra) and would submit that articles detailed in the application are not used in the manufacture of goods. He would further contend that Truck, Tripper, Dumper, JCB, Crane, Dozer, etc. are not directly involved in the construction of the road and thus the commodities are not used in the process and therefore, cannot be added to the registration certificate. He has placed reliance on paras 8, 9 and 10 of the aforementioned judgment. Relevant paras are reproduced herein below:- "8. Section 13 conferred power upon the Central Government, to make rules on several matters including enumeration of goods or class of goods used in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power. In exercise of this power, Rule 13 was framed by the Central Government, which as amended read at the material time, as follows : "The goods referred to in clause (b) of sub- section (3) of section 8 which a registered dealer may purchase, shall be goods intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient ground for specification: the intention must be to use the goods as raw materials as processing materials, as machinery, as plant, as equipment, as tools, as stores, as spare parts, as accessories, as fuel or as lubricants. A bare survey of the diverse uses to which the goods may be intended to be put in the manufacture or processing of goods, clearly shows that the restricted interpretation placed by the High Court is not warranted. The expression "in the manufacture of goods" would normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally 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, in our judgment, fall within the expression "in the manufacture of goods". For instance, in the case of a cotton textile manufacturing concern, raw cotton undergoes various processes before cloth is finally turned out. Cotton is cleaned, carded, spun into yam, then cloth is woven, put on rolls, dyed, calendared and pressed. All these processes would be regarded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing of goods for sale. Section 8(3)(b) of the Act, 1956 says that a dealer would be entitled to get a rebate in the tax for goods of the class or classes specified in the certificate of registration according to rules made by the Central Government to be used by him in manufacture or processing of goods for sale or mining or in general or distribution of electricity. 7. The Hon'ble Supreme Court while dealing with Section 8(3)(b) of Act 1956 and Rule 13 of the Act, 1957 has clearly held that the intention must be to use the goods as raw materials, as processing materials, as machinery, as plant, as equipment, as tools, as spare parts, as stores, as accessories, as lubricants, as fuels etc. and the restricted interpretation is not warranted. The Hon'ble Supreme Court further held in no uncertain terms that articles used in the process of manufacture would be liable for concessional tax, even though such articles may not be incorporated in the manufactured end-product. The High Court of Patna in the matter of M/s Larson & Toubro (supra) and the High Court of Calcutta in the matter of Nagarjuna Constructions (supra) while dealing with similar issues included machinery, plant, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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