Full Judgment Text
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CASE NO.:
Appeal (civil) 5654 of 1998
PETITIONER:
COMMISSIONER OF SALES TAX, U.P.
RESPONDENT:
LAL KUNWA STONE CRUSHER (P) LTD. ETC.
DATE OF JUDGMENT: 14/03/2000
BENCH:
S. RAJENDRA BABU & S.N. PHUKAN
JUDGMENT:
JUDGMENT
2000 (2) SCR 276
The Judgment of the Court was delivered by
RAJENDRA BABU, J. We are concerned in this case with the notification dated
7.9.81 bringing to sales tax the following items at the point of sale to
the consumer :
"Ramraj, geru, surkhi, sand, lime, bajri, marble-chips, moram, gitti,
kankar, stone-ballast,- stone and articles of stone except of glazed
stone." The respondent is a dealer engaged in purchasing of stone boulders
and crushing them into stone chips, gitti and dust for the purpose of
further sale. The contention put forth by the dealer is that at the time of
purchase of boulders, sales tax has been paid and hence goods emerging out
of the same as small stones, dust, etc. are not liable to be taxed again.
The process adopted by him in conversion of boulders to the aforesaid goods
may be manufacture, still tax cannot be imposed as what has been produced
by him is physically and chemically not different from the original goods.
The assessing authority rejected the contention of the dealer. On appeal,
the Assistant Commissioner of Sales Tax noticed that the trader had neither
manufactured gitti nor has sold it having crushed boulders into small
stones and dust. He is of the view that tax was not attracted on both
transactions. On second appeal, the Tribunal, by majority, upheld the view
of the Assistant Commissioner of Sales Tax. The Department carried the
matter further in revision to the High Court and the High Court in a very
cryptic order dismissed the petition. The Department is in appeal before
us.
The question raised before us is whether gitti, stone chips and dust
continue to be stone or on crushing stone boulders into gitti, stone chips
and dust, different commercial goods emerge so as to attract tax on their
sale. On behalf of the Department, it was contended that the process
adopted by the dealer would amount to manufacture as per the definition of
’manufac-ture’ under Section 2(e-l) of the U.P. Sales Tax Act, 1948. Under
the said provision, ’manufacture’ has been defined to mean producing,
making, mining, collecting, extracting, altering, ornamenting, finishing or
otherwise processing, treating or adopting any goods. Thus it was submitted
that the definition used for the purpose of manufacture in the Act makes it
very clear that every activity in relation to goods not only altering the
same but also processing of the same has also been included.
Here in the present case, the goods that are brought into taxation are
enumerated in Entry 40 of the notification dated September 7, 1981 to which
we have adverted to earlier. Each one of the items enumerates various
goods, which could be brought to tax. The purpose of sales tax is to levy
tax on sale of goods of each variety and not the sale of the substance out
of which they may have been made. As soon as separate commercial
commodities emerge or come into existence, they become separately, taxable
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goods for purposes of sales tax. Where commercial goods, without change of
their identity as such goods, are merely subjected to some processing or
finishing, they may remain commercially the same goods which cannot be
taxed again, in a series of sales, so long as they retain their identity as
goods of a particular type. We are fortified in this view by the decision
in State of Tamil Nadu v. Pyare Lal Malhotra, [1978] 2 SCC 552. What is to
be seen in the present case is whether stone gitti, chips, etc. continue to
be identifiable with the stone boulders, which have been bought by the
dealer.
The view taken by the Tribunal as affirmed by the High Court is that the
goods continue to be stone and they are not commercially different goods to
be identified differently for the purposes of sales tax. The decision
relied on by minority view in the Tribunal in Reliance Rocks Builders &
Suppliers v. State of Karnataka, (1983) 49 STC 110, turned on the concept
of consumption of goods for the purpose of bringing into existence new
goods. In that case the Court was not concerned with an entry of the nature
with which we are concerned in the present case. Where the dealer had
brought into existence new commercial goods by consuming the builders to
bring out small pieces of stone, it was held that such activity attracted
purchase tax. In the present case, however, stone, as such, and gitti and
articles of stones are all of similar nature though by size they may be
different. Even if gitti, kankar, stone-ballast, etc. may all be looked
upon as separate in commercial character from stone boulders offered for
sale in the market, yet it cannot be presumed that Entry 40 of the
notification is intended to describe the same as not stone at all. In fact
the term ’stone’ is wide enough to include the various forms such as gitti,
kankar, stone ballast. In that view of the matter, we think that the view
taken by the majority of the Tribunal and affirmed by the High Court stands
to reason. We are, therefore, not inclined to interfere with the same.
In the result, the appeal and the special leave petition are dismissed, in
the circumstances of the case, there shall be no orders as to costs.