Bhagwati, J. - (1.) These two appeals by special leave are directed against a judgment of the Judicial Commissioner, Goa, Daman and Diu, partly allowing a writ petition filed by Chowgule and Co. Pvt. Ltd. (hereinafter referred to as the assessee) for quashing an order of the Lieutenant Governor, Goa, Daman and Diu dated 22nd August, 1970. The question which arises for determination in these two appeals is a short one but in order to appreciate the arguments bearing upon it, it is necessary to state a few facts giving rise to the controversy between the parties.
(2.) The assessee is a private limited company carrying on business of mining iron ore and selling it in the export market after dressing, washing, screening and blending it. The assessee owns mines at Sirigao, Pale and various other places in the territory of Goa. The extraction of ore from the mines at Sirigao and Pale is carried on by mechanised process while the extraction of ore from the other mines is done by manual labour. When the ore is extracted from the mines it is carried to the dressing plant where it is washed, screened and dressed and then it is stacked at the mining site from where it is carried by conveyor belts to the river side for being carried by barges to the Marmagoa harbour. Before the ore is carried from the mining site to the river side, its chemical as well as physical composition is ascertained by taking samples and testing them in the laboratories at each major mine and this process is carried on every day round the clock in order to ascertain the chemical and physical composition of the ore which comes to Marmagoa harbour. Since the chemical and physical composition of the ore varies from mine to mine and even within the same mine itself, intramine blending of the ore is carried out at the mining site with a view to arriving at a certain specified chemical and physical composition. When the ore carried by barges arrives at the Marmagoa harbour, it is stacked in different stock-piles according to its chemical and physical composition. Since the assessee sells the ore only in the export market, it has to supply ore to the foreign buyers in accordance with the specifications required by them and therefore it is required to carry out blending of the ore mined by it in such a manner as to produce ore of the required chemical and physical composition. This operation of blending is carried out by the assessee, not before the loading of the ore into the ship, but in the process of loading itself through the mechanical ore handling plant. What is done is to draw different quantities of ore from different stock piles and put them together in the mechanical ore handling plant so that they get blended in the process of loading and the blended ore which is actually loaded into the ship is ore of the contractual chemical and physical composition. The mechanical ore handling plant thus performs a dual function, namely, blending of ore from different stock piles containing ore of different chemical and physical composition and loading of the blended ore into the ship for delivery to the foreign buyers. It will thus be seen that the entire activity of the assessee is broadly divisible into seven different operations, one following upon the other, namely, (i) extraction of ore from the mine; (ii) conveying the ore to the dressing plant; (iii) washing, screening and dressing the ore; (iv) conveying of the ore from the mine site to the river side; (v) transport of the ore from the river side to the harbour by means of barges; (vi) stacking of the ore at the harbour in different stock piles according to its physical and chemical composition; and (vii) blending of the ore from different stock piles with a view to producing ore of the required specifications and loading it into the ship by means of the mechanised ore handling plant. The question is whether goods purchased by the assessee for use in the above operations could be said to be goods purchased for use "in the manufacture or processing of goods for sale or in mining" so as to attract the lower rate of sales tax under S. 8 (1) (b) of the Central Sales Tax Act, 1956.
(3.) It would be convenient at this stage to set out the relevant provisions of the Central Sales Tax Act, 1956 (hereinafter referred to as the Act) which have a bearing on the question before us. Section 6 provides that, subject to the other provisions contained in the Act, every dealer shall be liable to pay tax under the Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year. Section 7 provides for registration of dealers and subsection (1) of this section states that every dealer liable to pay tax under the Act shall make an application for registration to such authority in the appropriate State as the Central Government may specify and every such application shall contain such particulars as may be prescribed. Sub-section (3) of Section 7 enacts that if the authority to whom an application under sub-section (1) is made is satisfied that the application is in conformity with the provisions of the Act and the Rules made thereunder, he shall register the applicant and grant to him a certificate of registration in the prescribed form which shall specify the class or classes of goods for the purposes of sub-section (1) of S. 8. Section 8 provides inter alia as under and we are setting out here the relevant part of the section as it stood at the material time: "S. 8. (1) Every dealer, who is in the course of inter-State trade or commerce- (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-sec. (3), shall be liable to pay tax under this Act, which shall be 3 per cent of his turnover. (3) The goods referred to in Cl. (b) of sub-section (1)- ********** (b) xx xx xx are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him 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." Section 13 confers rule-making authority on the Central Government and by Cl. (e) of sub-section (1) of that section, the Central Government is authorised to make rules providing for "the 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". Pursuant to the authority conferred by this provision, the Central Government has made Rule 13 which at the material time was in the following terms: "Rule 13:The goods referred to in Cl. (b) of sub-section (3) of S. 8, which a registered dealer may purchase, shall be goods intended for use by him as raw materials, processing materials, machinery plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants, 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." The assessee made an application to the Sales Tax Officer on 14th Sep., 1967 for inclusion of 36 items of goods in the certificate of registration on the ground that these items of goods were being purchased by it for use in mining ore and processing it for sale in the export market, and hence they were goods falling within S. 8 (3) (b) and R. 13. It is obvious that if this application were granted and the items of goods mentioned in the application were specified in the certificate of registration, the dealer selling these goods to the assessee in the course of inter-State trade or commerce would be liable to pay sales tax only at the rate of 3 per cent of the turnover of these sales and the assessee in its turn would have to reimburse the selling dealer only at the rate of 3 per cent of the sale price, Whereas otherwise the amount payable would be at a much higher rate. The assessee therefore pressed this application before the Sales Tax Officer with a certain amount of vehemence, but the Sales Tax Officer by his order dated 4th March, 1968 granted specification only in respect of 11 items and disallowed the remaining 25 items. The view taken by the Sales Tax Officer was that the blending of ore which was done in the course of loading through the Mechanical Ore Handling Plant did not amount to manufacture or processing of ore and, therefore, the only goods in respect of which specification could be claimed by the assessee in the certificate of registration were goods purchased for use in mining and since the process of mining came to an end when ore was extracted from the mines and washed, screened and dressed in the dressing plant and stacked at the mining site, the goods purchased by the assessee for use only in these operations were eligible for being specified in the Certificate of Registration and not the goods purchased for use in any of the subsequent operations including blending and loading through the Mechanical Ore Handling Plant. The Sales Tax Officer held that only 11 items of goods could be regarded as goods purchased for use in mining and the remaining 25 items of goods, did not fall within this description and hence were not includible in the Certificate of Registration. The assessee preferred a revision application, but the Assistant Commissioner of Sales Tax who heard the revision application, took the same view as the Sales Tax Officer in regard to the nature of the operations carried on by the assessee and holding that the assessee was entitled to inclusion in the Certificate of Registration of only those items of goods which were purchased for use in the process of mining (which ended with' the stacking of the ore at the mining site after extraction, washing, screening and dressing), he examined the 25 items disallowed by the Sales Tax Officer with reference to this criterion and came to the conclusion that 6 out of these 25 items were eligible for inclusion in the Certificate of Registration and he accordingly allowed the revision application in respect of these 6 items and rejected it in respect of the remaining 19 items. The assessee thereupon carried the matter further in revision to the Government of Goa, Daman and Diu, but the Lieutenant Governor on behalf of the Government agreed with the view taken by the Assistant Commissioner of Sales Tax and rejected the revision application by an order dated 22nd August, 1970. This led to the filing of a writ petition by the assessee in the Court of the Judicial Commissioner for quashing the order of the Government and directing inclusion of the remaining 19 items in the Certificate of Registration. The Judicial Commissioner took the same view as the Sales Tax Authorities in regard to the nature of the operations carried on by the assessee, but gave relief to the assessee in respect of 4 items of goods on the ground that they were goods purchased for use in the process of mining and were therefore liable to be included in the Certificate of Registration. The result was that 15 items of goods ultimately remained unincluded in the Certificate of Registration is not necessary to reproduce here these 15 items of goods in respect of which the application of the assessee was disallowed, but it is sufficient to state that they were items No . 1, 2, 3, 5, 6, 8, 9, 10, 12, 14, 15, 16, 17, 19 and 20 in the list Ex. No. 6. The assessee being aggrieved by the disallowance of these 15 items preferred Appeal No. 1632 of 1973 after obtaining certificate from the Court of the Judicial Commissioner. Item 9 which consisted of "Safety Boards and Posters" was not pressed at the hearing of the appeal and hence the controversy between the parties before us centred round the remaining 14 items of goods only and the question is whether these 14 items of goods were eligible for inclusion in the Certificate of Registration. The Union of India also felt aggrieved by the order of the Judicial Commissioner allowing 4 items of goods to be included in the Certificate of Registration and hence it preferred Appeal No. 107 of 1974 against the order of the Judicial Commissioner to the extent to which it was adverse against it.;