- (1.) This is an appeal by special leave against the judgment of the Kerala High Court dismissing revision petition of the petitioner against the order in appeal of the Appellant Tribunal whereby the Tribunal refused to include certain items in the sales tax registration certificate of the appellant.
(2.) The appellant, Travancore Tea Estates Co., Ltd., is a company incorporated in England having its registered office in London. The appellant carries on the business of tea planting in India at Vandiperiyar in Peermade Taluk in Kerala State. Eight tea estates are owned by the appellant in Peermade Taluk. To manufacture tea grown in those estates, the appellant maintains separate tea factories in each of those estates. On an application may by the appellant for registration under the Central Sales Tax Act, 1956 (Act 74 of 1956) (hereinafter referred to as the Act), the sales tax authorities granted registration certificate to the appellant on January 9, 1963. Aggrieved by the non-inclusion of certain items of goods in the registration certificate, the appellant filed writ petition in the Kerala High Court. The High Court directed the Sales Tax Officer to decide the question regarding the inclusion of items in the light of the decisions of this Court in J. K. Cotton Spinning and Weaving Mills Co. Ltd. v. The Sales Tax Officer, 16 STC 563 = (AIR 1965 SC 1310) and Indian Copper Corporation Ltd. v. Commissioner of Commercial taxes, 16STC 259 = (AIR 1965 SC 891). The Sales Tax Officer thereafter allowed the inclusion of some of the items of goods asked for by the appellant in the registration certificate but refused to include certain other goods in that certificate. The appellant thereupon preferred appeal before the Appellate Assistant Commissioner of Sales Tax Kottayam, who partly allowed the appeal by directing further inclusion of certain items. The Appellate Assistant Commissioner, however, declined to include the following items in the certificate in respect of which prayer had been made by the appellant : "(1) Fertilisers, chemicals, weedicides, insecticides, fungicides and pesticides for use in tea cultivation; (2) Cement and other building materials for installing and housing tea machinery and equipments; (3) Building materials, iron and hosepipes, sanitary fittings for use in estates and estate factories; (4) Weighing and measuring and packing equipments for use in tea estates; and (5) All other articles and things for use in manufacture and processing of sale of tea." The appellant then took the matter in further appeal before the Appellate Tribunal and prayed for the inclusion in the certificate of the above mentioned items. The Appellate Tribunal did not accept the prayer of the appellant and dismissed the appeal. Revision petition was thereupon filed by the appellant before the Kerala High Court against the order of the Tribunal.
(3.) In appeal before the High Court it was stated on behalf of the appellant in respect of the first item relating to fertilisers, chemicals, weedicides and insecticides, that they were used for cultivation of tea leaves. The contention of the appellant was that the growing and manufacturing of tea constituted one integrated process and therefore the items of goods required for growing tea should be deemed to be goods intended for use in the manufacture of tea within the meaning of Section 8 (3) (b) of the Act. This contention had also been advanced by the appellant earlier before the Tribunal but the Tribunal rejected this contention as in its view "the legislature has not included production by agriculture as one of the operations for which goods can be purchased under Section 8 of the Central Sales Tax Act." The Tribunal further held that merely because the agricultural process of the company is connected with the process of manufacture, production of tea did not form part of the manufacture and processing of tea. The High Court disagreed with this reasoning of the Tribunal and observed that the expression "in the manufacture of goods" in Section 8 (3) (b) of the Act normally encompasses the entire process carried on by the dealer of converting the raw material into finished goods. In the opinion of the High Court, the growing of tea leaves was no integrally connected with the manufacture of tea that it could reasonably be taken as a part of the process of manufacturing tea. This circumstance, however, in the opinion of the High Court, by itself was not sufficient to make the goods eligible for inclusion in the registration certificate. The High Court accordingly observed : "Under Rule 13 read with Sec.8(3)(b) the use of the good in the manufacture or processing of goods for sale will not be a sufficient ground for inclusion in the certificate. The further requirement is that the goods must be for use as raw materials or processing materials or machinery, plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants. The first item, namely, fertilisers, chemicals, insecticides, etc. in our opinion cannot fall within the category of a raw material or processing material for machinery etc. The learned counsel for the company sought to contend that fertilisers, chemicals etc. would come within the category of stores mentioned in Section 8(3) (b) and that as such it is eligible for specification in the certificate. We are unable to agree with this submission. The word 'stores' in the context in which it appears in Rule 13 has to be necessarily goods intended for use in the manufacture or processing of goods for sale and it is not possible to hold that fertilisers, chemicals, weedicides, insecticides etc. can come within this category. They are not in any way directly connected with the manufacturing or processing of tea. As pointed out earlier, the expression 'in the manufacture', can take within its compass only process which are directly related to the actual production. As such the claim for inclusion of this item in the Sales Tax Registration Certificate cannot be supported." The prayer of the appellant regarding items (2),(3) and (4) was also disallowed in the light of the observations of this Court in the case of J. K. Cotton Spinning and Weaving Mills Co. Ltd., (AIR 1965 SC 1310) (supra). Item No. (5), in the opinion of the High Court, was too vague and indefinite to deserve inclusion in the certificate. In the result the revision petition was dismissed.;