1. This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the said Act'). The question referred to us for our determination are as follows :
'(1) Whether there was any evidence before the Tribunal to justify the conclusion that the goods purchased by the applicants were not marketable
(2) Whether there was any evidence before the Tribunal to justify the conclusion that the semi-finished utensils purchased by the applicants on behalf of their principals were manufactured by the applicants
(3) Whether, on the facts and the circumstances of the case and in view of the provisions of section 14, the Tribunal erred in holding that there was contravention on the part of the applicants under section 14 read with section 11 of the said Act in the matter of their purchases worth Rs. 1,75,138 ?'
2. The facts giving rise to this reference are as follows :
The applicants are a partnership firm registered under the said Act as a dealer as well as a purchasing commission agent. During the period from 18th October, 1963, to 4th November, 1964, they purchased unpolished stainless steel utensils, which have been described by the Tribunal in its statement of facts as semi-finished stainless steel utensils against declarations in form 17 on the strength of the permit held by them. These purchases were effected by the applicants on behalf of their principles who were dealers at Ahmedabad and were registered there under the very same Act, viz., the said Act, as enforced in the Gujarat State, as well as under the Central Sales Tax Act, 1956. The total purchases effected by the applicants on behalf of their aforesaid principles were to the tune of Rs. 8,07,903. Out of these purchases, unpolished utensils worth Rs. 6,05,624 were consigned by the applicants to their said principals at Ahmedabad in the same form in which they were purchased. As regards utensils worth Rs. 27,141, which were consigned to the principals in the same form in which they were purchased, there was some difficulty regarding the proof of consignment, but, in this reference, we are not concerned with the same. The remaining utensils worth Rs. 1,75,138 were consigned by the applicants to their said principals after getting them polished at Bombay at the instance of their principles. It is in connection with these utensils that the dispute has arisen before the Tribunal from which this reference arises. When the said utensils were purchased by the applicants the price thereof was debited by them to the account of their Ahmedabad principals. The applicants also sent their statement of accounts by way of intimation to their said principals. The said unpolished utensils worth Rs. 1,75,138 were got polished by the applicants in Bombay and consigned to their principals at Ahmedabad as aforesaid within three months of their purchase as unpolished utensils.
3. In assessing the applicants for the aforesaid period the Sales Tax Officer concerned held that the applicants had contravened the recitals of declarations in form 17 issued by them at the time of their purchases of the goods worth Rs. 2,02,279 which included the said utensils worth Rs. 1,75,138. The appeal preferred by the applicants before the Assistant Commissioner of Sales Tax was dismissed. The applicants then went by way of second appeal before the Sales Tax Tribunal. The Tribunal rejected the appeal of the applicants in respect of the said goods worth Rs. 1,75,138. The Tribunal held that the goods purchased by the applicants against declarations in form 17 could not be said to be the same goods as were consigned to their principals for the purpose of section 11(2) of the said Act. The Tribunal held that unpolished utensils, which were referred to by the Tribunal as 'semi-finished' utensils, purchased by the applicants on behalf of their principals had no marketability. The Tribunal further held that the goods in question were manufactured by the applicants because they had got them polished before despatch. It is from this decision of the Tribunal that the aforesaid questions have been referred to us for determination.
4. As the main question which arises for our consideration is question No. (3), we propose first to consider the same. As the arguments on this question turn, to some extent, on certain provisions of the said Act and the said form 17, it would be useful to take not of the same at this stage. Section 11 of the said Act provides for payment of tax at a reduced rate on certain sales. At the material time the relevant portion of section 11 reads thus :
'Where any dealer liable to pay tax under this Act, sells any taxable goods -
(1) to an authorised dealer, who certificates in the prescribed form, -
(a) that the goods will be despatched in the same form in which they were purchased and without doing anything to them which might amount to or result in a manufacture thereof, within three months from the date of purchase, to his own place of business outside the State for sale or for use in the manufacture of goods for sale outside the State, and .....
(2) to a commission agent holding a permit who certifies in the prescribed form -
(a) that he is registered under the Central Sales Tax Act, 1956, and
(b) that the goods are purchased by him as commission agent for his principal who is,
(i) the Central Government, and that the goods will be despatched on behalf of such Government outside the State, or
(ii) a dealer whose place of business is outside the State and who is registered under the Central Sales Tax Act, 1956, and that the goods will be sold or will be used in the manufacture of goods for sale outside the State by the principal, or
(iii) a registered dealer having a place of business also outside the State and that such principal or his manager or agent is a registered dealer under the Central Sales Tax Act, 1956, and that the goods will be sold or will be used in the manufacture of goods for sale outside the State by such principal, and
(c) that the goods will be despatched outside the State within three months from the date of their purchase by the commission agent .....
then, notwithstanding anything in section 7, 8, 9 or 10, on such sale of goods, the dealer shall be liable to pay a sales tax - (i) if such sale falls under clause (1) or (2), at the rate of two paise in the rupee, and (ii) if it falls under clause (1A) or (3), at the rate of one paisa in the rupee.'
5. Clause (17) of section 2 of the said Act gives a very wide and extended definition to the term 'manufacture'. Form 17 of the Bombay Sales Tax Rules, 1959, is the form of a certificate to be given by a commission agent holding a permit to purchase goods for a purpose referred to in clause (2) or (3) of section 11 and clause (d) of section 12 of the said Act. The only material recital in form 17, with which we are concerned is to the effect that the goods purchased by him (the commission agent) are purchased as a commission agent for despatch within three months from the date of his purchase to or to the order of the principal.
6. The main question which arises for consideration before us is whether the applicants have committed a breach of the declaration in form 17 by reason of their getting the said utensils polished before despatching them to their principals at Ahmedabad. The contention of Mr. Jetly, the learned Advocate for the respondent, is that in order to obtain the benefit of the reduced rate of tax provided by ' sub-section (2) of section 11 of the said Act and to conform with the declaration in form 17 the applicants were bound to send to their Ahmedabad principals the utensils purchased by them on behalf of the said principals in exactly the same form or condition. It was submitted by him that as the applicants had got the said goods polished before despatching them to their Ahmedabad principals, the said goods could no longer be said to be the same goods as the goods purchased by the applicants. It was urged by him that, as held by the Tribunal, the unpolished stainless steel utensils purchased by the applicants could not be said to be a marketable commodity at all whereas after polishing, the said utensils became marketable and hence they became a new commercial commodity. We find it difficult to accept these submissions. In our view, what is required under the relevant provisions of section 11, sub-section (2), of the said Act and the declaration in form 17 is that the very goods purchased must be despatched to the outside State principals. Merely because some process like polishing is carried out on the utensils, they do not cease to be the same utensils. What was purchased by the applicants were stainless steel utensils. What has been despatched by them to their principals are also these very stainless steel utensils. We fail to understand how by merely undergoing polishing the said stainless steel utensils have become different utensils. In this connection it is significant that clause (a) of sub-section (1) of section 11 of the said Act specifically provides that to obtain the benefit thereunder the goods must be despatched in the same form in which they were purchased and without doing anything to them which might amount to or result in a manufacture thereof. No such condition is laid down in sub-section (2) of section 11 of the said Act with which we are concerned, with the result that all that is required is that the goods despatched by the commission agent holding a permit to his outside State principal must be the same goods as were purchased by the commission agent. Even if some process is carried out on the said goods, which might apparently amount to manufacture within the wide meaning given to that term in clause (17) of section 2 of the said Act, this by itself would not deprive the party concerned of the benefit of the reduced rate provided in section 11 unless the process is such that the goods could no longer be said to be the same goods as were purchased. We are somewhat fortified in this conclusion by the decision of the Supreme Court in Kailash Nath v. State of U.P. : AIR1957SC790 . In that case what happened was that the Uttar Pradesh Government issued a notification which provided that with effect from 1st December, 1949, the provisions of section 3 of the U.P. Sales Tax Act, 1948 (relating to the levy of sales tax), would not apply to the sales of cotton cloth or yarn manufactured in Uttar Pradesh, made on or after 1st December, 1949, with a view to export such cloth or yarn outside the territories of India on the condition that the cloth or yarn was actually exported and proof of such actual export was furnished. The petitioner sold cotton cloth manufactured by them to their constituents who thereafter dyed and printed such cloth with hand-made apparatus and exported it overseas as hand-printed cloth. It was, inter alia, held by the Supreme Court that by using the word 'such' in the notification what the legislature had laid down was not that the identical thing should be exported in bulk and quantity or that any change in appearance would be crucial to alter it. The words 'such cloth or yarn' would mean the cloth or yarn manufactured in U.P. and sold and they have nothing to do with the transformation by printing and designs on the cloth. It was held that although the colour of the cloth had changed by printing and processing, the cloth exported was the same as the cloth sold by the petitioners and they were therefore entitled to the exemption under the notification. We may also refer here to a general observation made by the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra : 1983(13)ELT1582(SC) , which runs as follows :
'..... Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type.'
7. As far as the construction of sub-section (2) of section 11 of the said Act is concerned, reference can usefully be made to our decision in Empire Dyeing & . v. State of Maharashtra  40 S.T.C. 1. A question arose there regarded the lower rate of tax provided in section 8 of the Central Sales Tax Act, 1956, in respect of certain sales in the course of inter-State trade or commerce. In that case, we have pointed out that the omission of the words 'by him' after the words 'manufacture or processing of goods for sale' in clause (b) of sub-section (3) of section 8 of the said Central Sales Tax Act is significant, and all the more so, when the words 'by him' are used after the words 'for resale' earlier in the same clause. In our view, the omission of the words 'in the same form in which they were purchased and without doing anything to them which might amount to or result in a manufacture thereof' in sub-section (2) of section 11 of the said Act, which words have been used in clause (a) of sub-section (1) of section 11, clearly suggests that the intention of the legislature was that for the purpose of sub-section (2) of section 11 of the said Act all that is required is that the goods despatched by the commission agent must be the same goods as were purchased by him and there was no intention to provide that no process which might apparently amount to manufacture within the meaning of clause (17) of section 2 of the said Act should be applied to the same. It is, of course, true that for getting the benefit of the reduced rate under sub-section (2) of section 11 of the said Act it is essential that the identity of the goods must in no way be altered and the goods despatched must retain the same goods as were purchased.
8. We come next to the contention of Mr. Jetly that the goods despatched by the applicants to their Ahmedabad principals cannot be said to be the same goods as were purchased by them, as the Tribunal has held that the process of polishing the said goods has brought about a new commercial commodity. This contention also has bearing on the determination of question No. (1), viz., whether there was any evidence before the Tribunal to come to this conclusion. It appears to us that the Tribunal has come to this conclusion merely on the presumption that no one would buy unpolished stainless steel utensils. We are afraid that there is no evidence for coming to this conclusion. The very fact that the applicants have bought unpolished stainless steel utensils in such large quantities would show that there is a market for such utensils. Merely the fact that a householder desiring to purchase one or two pieces of stainless steel utensils for domestic purposes would not purchase unpolished stainless steel utensils cannot justify a conclusion that there is no market at all for unpolished stainless steel utensils and that they are not marketable goods at all. As this is the only basis for the Tribunal coming to the conclusion that the goods purchased by the applicants were not marketable, we are of the view that there was no evidence before the Tribunal to justify the said conclusion. On the other hand, it may be pointed out that on the record of the case we find that the applicants have referred to their bill of purchase, their statement of account sent to their Ahmedabad principals and to certain delivery challans and receipts which describe the goods purchased by the applicants and the goods despatched by them to their Ahmedabad principals in the same manner, showing that there was no change in the identity of the goods or that the goods purchased had not become goods of any different type by reason of the polishing carried out of them.
9. Coming to question No. (2) we are of the view that in the light of what we have observed earlier, it is not necessary to determine this question at all, because what we are really concerned with is whether the goods purchased by the applicants were the same goods as were despatched by them to their Ahmedabad principals. The question whether there was any process amounting to manufacture applied to the said goods is of no significance unless the identity of the goods was thereby altered. Apart form this, it must be noted that the learned chartered accounted who appeared before the Tribunal for the applicants has on several occasions in the course of the arguments before the Tribunal conceded that his clients, viz., the applicants, did manufacture the said articles within the meaning of the term 'manufacture' in section 2(17) of the said Act and thereafter despatched the same to their principals at Ahmedabad. In view of this, it cannot be disputed that the process applied by the applicants to the said goods, viz., the polishing carried out on the said stainless steel utensils, was by a process, which would be apparently covered within the wide definition given to the term 'manufacture' in clause (17) of section 2 of the said Act. This concession, however, cannot be read as a concession by the applicants that the goods had changed their identity or had become a new commercial commodity by reason of the said process being applied. It must be remembered that this concession was made sometime prior to 23rd January, 1970, when the Tribunal disposed of the appeal preferred by the applicants, whereas it was only on 28th January, 1975, that this Court delivered its judgment in Commissioner of Sales Tax v. Dunken Coffee Mfg. Co.  35 S.T.C. 493, holding that for an activity to amount to manufacture within the meaning of the said word in section 2(17) of the said Act it must result in a different commercial article or commodity. In view of this it is quite clear that what the learned chartered accountant of the applicants intended to concede was that the process of polishing applied by the applicants on the said utensils was apparently a process of the type described in clause (17) of section 2 of the said Act, but he could never have intended to concede that as a result of the said process being applied to the said utensils a new commercial commodity came into being. In fact, had such a concession been made, there would have been hardly anything worth arguing left in the appeal before the Tribunal at all.
10. It was finally contended by Mr. Jetly that acceptance of the view that a commission agent can get the goods purchased by him for an outside State principal processed by him in any manner before despatching the same to his said principal and yet obtain the benefit of the reduced rate under section 11(2) would result in discrimination against a commission agent whose principal might be resident in the State and also against an authorised dealer purchasing goods for a branch outside the State. We are afraid, we cannot appreciate the relevance of the argument at all. In the first place, it must be remembered that the outside State principal also pays sales tax in his own State and hence the question of discrimination as such hardly arises. Secondly, what we are concerned with is the true and proper construction of the provisions of sub-section (2) of section 11 of the said Act and not with the question of economic policy or the policy of taxation.
11. In the result, we answer the question referred to us as follows :
Question No. (1) - in the negative.
Question No. (2) - does not arise.
Question No. (3) - in the affirmative.
12. The respondent to pay to the applicants the costs of this reference fixed at Rs. 300.
13. Reference answered accordingly.