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Universal Chemicals and Industries Pvt. Ltd. Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case Number M.C.C. No. 196 of 1983
Judge
Reported in[1986]62STC197(MP)
AppellantUniversal Chemicals and Industries Pvt. Ltd.
RespondentCommissioner of Sales Tax
Appellant Advocate S.C. Goyal, Adv.
Respondent Advocate Surjeet Singh, Adv.
Cases ReferredCommissioner of Sales Tax v. Harbilas Rai and Sons
Excerpt:
- indian penal code, 1890.section 306 :[dalveer bhandari & harjit singh bedi,jj] abetment of suicide deceased, a married woman, committed suicide - allegation of abetment of suicide against appellant husband and in-laws - ocular evidence was sketchy - dying declaration recorded by tahsildar completely exonerated all accused in-laws of any misconduct dispelling any suspicion as to their involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. .....as follows: the applicant, m/s. universal chemicals & industries pvt. ltd., nagda, purchases waste fibre and after cleaning it of the dirt, foreign material, etc., sells it to textile mills as staple fibre base. it was claimed by the dealer that there is no manufacturing process as such involved in the cleaning of the material. therefore, the cleaned material cannot be considered as a new product. as the goods are tax paid, no further tax can be levied. this contention of the applicant was rejected by the assessment officer. the applicant preferred an appeal before the appellate assistant commissioner of sales tax, ujjain, who also rejected the same. on a second appeal being filed, the tribunal relying on the definition of 'manufacture' in section 2(j) of the m.p. general sales tax act,.....
Judgment:

P.D. Mulye, J.

1. The Board of Revenue at the instance of the applicant-assessee has made this reference under Section 44 of the M.P. General Sales Tax Act, 1958, to answer the following question :

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that cleaning and washing with certain chemicals and cutting into pieces of waste of manufacture contained in Section 2(j) of the said Act.

This question, as framed, is not proper. Therefore, we have reframed the question as follows:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that cleaning and washing with certain chemicals and cutting into pieces of waste fibre amounts to manufacture as defined in Section 2(j) of the said Act.

2. Facts giving rise to this reference as mentioned in the statement of fact are as follows: The applicant, M/s. Universal Chemicals & Industries Pvt. Ltd., Nagda, purchases waste fibre and after cleaning it of the dirt, foreign material, etc., sells it to textile mills as staple fibre base. It was claimed by the dealer that there is no manufacturing process as such involved in the cleaning of the material. Therefore, the cleaned material cannot be considered as a new product. As the goods are tax paid, no further tax can be levied. This contention of the applicant was rejected by the assessment officer. The applicant preferred an appeal before the Appellate Assistant Commissioner of Sales Tax, Ujjain, who also rejected the same. On a second appeal being filed, the Tribunal relying on the definition of 'manufacture' in Section 2(j) of the M.P. General Sales Tax Act, 1958, came to the conclusion that it amounts to a new product by manufacturing process. Hence this reference.

3. Section 2(j) of the M.P. General Sales Tax Act, 1958, defines 'manufacture' as under:

'Manufacture' includes any process or manner of producing, collecting, extracting, preparing or making any goods, and in respect of trees which have been severed from the land or which have been felled, also the process of lopping the branches, cutting the trunks or converting them into logs, poles or bailies or any other articles of wood, but does not include such manufactures or manufacturing processes as may be notified.

This definition nowhere states that mere cleaning amounts to manufacture.

4. The learned counsel for the applicant submitted that admittedly the applicant purchases waste fibre and it is only after cleaning it of the dirt, foreign material, etc., sells it to the textile mills as staple fibre base. He, therefore, submitted that the product is the same, but by merely cleaning it, it does not amount to manufacturing a new product as such, as the definition of 'manufacture' though wide does not include mere cleaning as such and in support of his submission he placed reliance on the Supreme Court decision reported in [1968] 21 STC 17 (SC) (Commissioner of Sales Tax, U.P., Lucknow v. Harbilas Rai and Sons) wherein it has been held that:

The word 'manufacture' has various shades of meaning, and in the context of sales tax legislation, if the goods to which some labour is applied remain essentially the same commercial article, it cannot be said that the final product is the result of manufacture.

In that case the assessees, dealers in pig bristles, bought bristles plucked by Kanjars from pigs, boiled them, washed them with soap and other chemicals, sorted them out according to their sizes and colours, tied them in separate bundles of different sizes and despatched them to foreign countries for sale. It was, therefore, held that sales made in foreign countries were not taxable as the bristles were not manufactured goods.

5. Similarly the learned counsel also placed reliance on the decision reported in [1983] 62 STC 188 (MP) (Commissioner of Sales Tax v. Jayantilal Mannilal) wherein relying on the Supreme Court decision reported in [1980] 46 STC 63 (SC) {Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers] it has been held that even after removal of seeds from tamarind, the goods possessed the same identity and there is no change in the identity or form of the goods. In the said Supreme Court case the question was whether processing of pineapple fruits into pineapple slices for being sold in sealed cans, amounted to consumption of pineapple fruit for the purpose of manufacture. The Supreme Court has held that there was no essential difference between pineapple fruit and the canned pineapple slices, and that though sliced pineapple was a presentation of fruit in a more convenient form, the pineapple slices must be held to possess the same identity as the original pineapple fruit.

6. The learned counsel, therefore, submitted that merely because the waste fibre is cleaned and then sold as staple fibre base, it continues to possess its original identity and the cleaned material cannot be considered as a new product brought into existence by a manufacturing process as such. He, therefore, submitted that even though as a result of the cleaning the value of the staple fibre base may increase, that by itself would not amount to manufacture because value has nothing to do as such so far as manufacture is concerned.

7. On the other hand the learned counsel for the respondent, Shri Surjeet Singh, invited our attention to the decisions reported in 1980 VKN 1 (MP) (Commissioner of Sales Tax, Madhya Pradesh v. Purshottamdas Somabhai, Guna), 1980 VKN 312 (MP) (Commissioner of Sales Tax, Madhya Pradesh v. P.D. Gupta, Lashkar), Allahabad Milling Co. Private Ltd. v. Sales Tax Officer [1966] 17 STC 211 (All.), Ganesh Trading Co. v. State of Haryana [1973] 32 STC 623 (SC) and A. Hajee Abdul Shukoor & Co. v. State of Madras [1964] 15 STC 719 (SC) and submitted that as the definition of 'manufacture' is wide enough, the Tribunal has rightly held that even cleaning for purpose of removing the dirt or foreign material amounts to manufacture resulting in a new product.

8. After hearing the learned counsel and after going through the case law cited on behalf of the respondent we are of opinion that the authorities cited on behalf of the respondent are distinguishable and do not help the respondent in the present case. On the contrary the Supreme Court decision reported in Commissioner of Sales Tax v. Harbilas Rai and Sons [1968] 21 STC 17 (SC) fully supports and helps the case of the applicant.

9. In the result the question reframed by us is answered in favour of the assessee and against the department. Our answer is :

The Tribunal was not justified in holding that cleaning and washing with certain chemicals and cutting into pieces of waste fibre amounts to manufacture as defined in Section 2(j) of the said Act.

The reference is answered accordingly with no order as to costs.


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