MAL LODHA, J. -
(1.)THESE are five connected references under section 15(1) of the Rajasthan Sales Tax Act, 1954 (No. 29 of 1954) (for short "the Act"), and the Board of Revenue, Ajmer ("the Board" herein), has referred the following questions of law for our decision : "(1) Whether, on the facts and circumstances of the case, the cutting and stitching of umbrella cloth so as to make umbrella covers is a process which converts the said cloth into different commodity and it ceases to come within the definition of textile fabrics and to be eligible for exemption from tax ? (2) Whether, on the facts and circumstances of cases Nos. 16, 17 and 19, the orders of the assessing authority taxing the turnover as escaped turnover are in conformity with the provisions of section 12 of the Rajasthan Sales Tax Act ?"
(2.)IT is not necessary to state the facts for the reasons that the learned counsel for the parties are in agreement that in the three cases proceedings for reassessment under section 12 of the Act were initiated and orders were passed. So far as the other two cases are concerned the assessment was made under section 10 of the Act. The assessee-respondent (dealer) deals in cloth, umbrella parts and umbrellas and prepares umbrella covers from umbrella cloth after cutting and stitching the same. The assessee (dealer) ran an umbrella processing or umbrella industry. The contention of the assessee (dealer) is that even after the process of cutting and stitching the umbrella cloth, the umbrella cover so made is not a different commodity and it falls within the article "textile fabrics" and therefore it is eligible for exemption from tax; whereas the argument of the department is that after cutting and stitching of umbrella cloth, when it is converted into an umbrella cover; a different commodity comes into existence and the exemption available to the textile fabrics is not available. The Commercial Taxes Officer was of the opinion that the assessee (dealer) ran an umbrella processing or umbrella industry and as such in accordance with rule 42(3) of the Rajasthan Sales Tax Rules, he ought to have maintained stock book regarding raw materials of finished goods, which was not done. He also found that the sales of umbrella covers were taxable in the assessee's hands and he, therefore, allowed deductions for the sale of cloth only. On appeal the Deputy Commissioner (Appeals), Commercial Taxes, Udaipur, found that umbrella covers are articles meant for a definite use, if attached with the ribs and handle of the umbrella and that they cannot be used for any other purpose as they are made of different pieces of cloth and are stitched for no other use except umbrella cover. Thus according to the Deputy Commissioner (Appeals) the characteristics of being an umbrella cloth were lost. He, therefore, maintained the order of the assessing authority. Revisions were filed and the Board opined that umbrella covers come within the definition of textile fabrics and are exempt from sales tax. The Board, therefore accepted the revision petitions, and set aside the orders of the Deputy Commissioner (Appeals) in so far as they relate to the taxing of umbrella covers. In these circumstances, the aforesaid questions have been referred to us for decision. "Umbrella cover" being an expression of every day use it must be construed in its popular sense meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it". IT is to be understood in common parlance. Reference may usefully be made to Ramavatar Budhaiprasad v. Assistant Sales Tax Officer  12 STC 286 (SC). Before we decide the questions referred we shall refer to the authorities cited by the learned Additional Advocate-General as well as the learned counsel for the dealer-assessee.
In State of Madhya Pradesh v. Wasudeo  6 STC 30, the dealer made the cut trees into logs or rafters and sold them as such and the question was whether he was dealer, who manufactured or produced goods within the meaning of section 2(1) (a) of the C.P. and Berar Sales Tax Act, 1947 (No. 21 of 1947). After considering the definition of the word "manufacture" it was held by the learned Judge of the Nagpur High Court as under : "It appears that logs or rafters into which the trees were shaped by the non-applicant had a definite commercial value. Without any work of art the trees were liable to be sold only as raw material, whether as fuel or timber, and would have naturally fetched a low price. As logs or rafters they were liable to be used as beams or further shaped into finer furniture. They had, therefore, assumed a different shape or form which made them fit for use either directly or, if necessary, by applying some more labour and skill. I am not, therefore, inclined to agree that the logs or rafters were not any distinct advance from their original form and did not constitute taxable goods."
The question of law in Kulkarni v. The State  8 STC 294 was whether breaking boulders into metal (gitti) is "manufacture" within the meaning of section 2(1)(a) of the Madhya Pradesh Sales Tax Act, 1947. The Division Bench consisting of Hidayatullah, C.J. (as he then was), and Chaturvedi, J., observed as under : ".............. After that stage is reached and the person who has won the stones attempts to break them, may be by manual labour, into sizeable stones for sale as gitti, he is shaping the stone into an object of a different size. Now, the word 'manufacture' has got various shades of meaning. There may be manufacture of a complicated object like the super-constellation, or there might be manufacture of a simple object like a toy kite ......................... The essence of manufacture is the changing of one object into another for the purchases of making it marketable. The stones which are won in the process of quarrying may be sold without fashioning them into something else. It they are so sold they would manufacture but merely delivered from the quarry-head. When they are broken into metal or gitti there is some process, manual though it may be, for the purpose of shaping the stones into another marketable commodity." Before a learned single Judge of the Calcutta High Court in Shaw Bros. and Co. v. State of West Bengal  14 STC 878 the question arose whether sawing of planks from timber of sizing the same amounts of manufacture. It was held : "When planks are sawed out of logs, what is produced is a different thing from logs capable of being put to different uses. Therefore, when planks are made from logs or damaged wood, a new kind of commodity is manufactured because planks made out of timber is not timer in its nascent state." Before the same learned single Judge in Bachha Tewari v. Divisional Forest Officer  14 STC 1067, the question which came up for examination was whether the imposition of a tax on timber and a tax on firewood manufactured from that timber amounts to double taxation. The learned Judge opined that manufacturing process means to bring into being a commercial article for sale in the business in which the dealer is engaged, i.e., article which by itself has a commercial value and which can be the subject-matter of sale for a price in curse of the business of selling or supplying in which the dealer is engaged, and that there is no reason to exclude the chopping of timber into firewood from the ambit of manufacturing process. On the other hand, Mr. M. L. Kala, the learned counsel for the dealer has cited Lakshmiratan Cotton Mills Co. Ltd. v. Sales Tax Officer  13 STC 1031 and Jaipur Hosiery Mills (P.) Ltd. v. State of Rajasthan  19 STC 416 in support of his contention that even after cutting and stitching, the umbrella cover retains the character of umbrella cloth, and so it is a textile fabric exempted from payment of sales tax. Before a learned single Judge of the Allahabad High Court in Lakshmiratan Cotton Mills Co. Ltd.'s case  13 STC 1031 the difference between "cloth" and "clothes" was considered. In other words, the question arose whether dhotis, saris, chadars, towels, canvas, rags and fents are "cloth manufactured by mills". The learned Judge opined that where after cloth has been manufactured, something more is done to it by some other agency which makes it into different kind of produce or makes it adaptable for a particular kind of use, it ceases to be a cloth simpliciter and will have to be described by a different name. It was held that dhotis, saris, chadars, towels, canvas, rags and fents sold by the assessee fell under the description of "cloth manufactured by mills" and were therefore taxable by six pies per rupee. The learned Judge distinguished Firm Jaswant Rai Jai Narain v. Sales Tax Officer  6 STC 386. In Jaipur Hosiery Mills (P.) Ltd.'s case  19 STC 416 the question was whether "banians" and "chaddies" are included in the expresion "hosiery products" within the meaning of the notification under challenge. The learned Judge held that "banians" and "chaddies" are included in the "hosiery products". The cases cited by Mr. M. L. Kala, in our opinion, are of no assistance for deciding the question with which we are concerned and they are distinguishable.
The question is whether after cutting and stitching of the umbrella cloth, it still remains "textile fabrics" and so no sales tax is payable on it. We may here state that for an activity to amount to manufacture, it must result in a different commercial article or commodity. In other words, it must not be commodity which is commercially the same as it was before the activity was applied to it. This was so held in Commissioner of Sales Tax v. Indian Oil Corporation Ltd.  41 STC 471.
The word "manufacture" refers to products made by hands or machinery. It means "the making of articles of material by physical labour or mechanical power or to work up material into forms suitable for use". In the Oxford English Dictionary "manufacture" has been defined as the action or process of making by hand or by mechanical device. In Webster's Law of International Dictionary "manufacture has been defined as a process or operation of making wares or other material products by hand or by machinery specially when carried on systematically with division of labour. Here it may be mentioned that umbrella cloth for that matter is cloth that can be used for various purposes inclusive of the use of wearing. But the precise question is that after the process of cutting and stitching, can it be put to any use except to the use for which it is specifically meant for and if the answer of this question is in the negative then the umbrella cover will be a different article from umbrella cloth. The umbrella cloth is cut and stitched and thereafter given a particular shape for the purpose of attaching it with the ribs and handle of the umbrella. In other works, when umbrella cloth is cut into various sizes and stitched, the finished product is only used to be fastened over umbrella frame. The umbrella covers can only be used for the umbrellas and they cannot be used for any other purpose except for the purpose for which they are manufactured. After cutting and stitching umbrella cloth and giving it particular shape, a different commercial commodity comes into existence and it cannot be put to any other use except that for being used as an umbrella cover. The umbrella covers are marketable commodities and have commercial value. The Board appears to have been considerably influenced that by process of manufacture if the essential nature of the material has not changed, then the exemption which is originally available should be allowed to continue after that process. In that connection the Board has, inter alia, noticed the instances of re-rolling of scrap, reverting of iron into steel, etc., the waxing of cloth, the cutting of cloth in different sizes for choli, bits and sarees, the printing of designs on cloth, sugar, patasa and alchidana (small lumps of sugar) and the moulding of coal dust into cylinders. In our opinion this is not the correct test for the simple reason as what one has to see is whether after the process of cutting and stitching of the umbrella cloth and giving it a shape, for attaching it to the ribs and handle, can it be used like a cloth which it could be prior to the aforesaid process which it had undergone. In other words it is pertinent to consider whether by this process an altogether different commercial commodity for specific utility has come into existence. Applying these test we definitely of the opinion that the umbrella covers being made for being utilised as such are specific commodity and the exemption which is available to the textile fabrics is not available.
(3.)IT is held that after cutting and stitching of umbrella cloth so as to make umbrella covers a different commodity (umbrella cover) comes into existence and it ceases to be textile fabrics so as to be eligible for exemption from tax. Our answer to the first question is in affirmative, in favour of the department and against the assessee (dealer). As we have answered the first question in favour of the department and against the assessee (dealer) it necessarily follows that the assessing authority was right and justified in taxing the escaped turnover and therefore the provisions of section 12 of the act were rightly invoked. The answer to the second question is also in affirmative and in favour of the department and against the assessee.
In the circumstances of the case we make no order as to costs of these references. Let further action be taken in accordance with section 15(5) of the Act.