PRAKASH KRISHNA, J. - (1.) RAISING a short controversy the above revi­sion has been filed under Section 11 of the U.P. Trade Tax Act against the order dated 30th of May, 1996 passed by the Trade Tax Tribunal, Ghaziabad in second appeal No. 261 of 1994 relevant to the assessment year 1989-90 (U.P.) whereby and where under the tribunal has held that the sale of packing material (paper) at the hand of the dealer is not exempt under the Notification No. 7037 dated 31st of January, 1985.
(2.) THE facts of the case lie in a narrow compass and are almost undisputed. The dealer sold packing paper to M/s. Kundan Gramodyog Sansthan Lucknow for a sum of Rs. 2, 72, 326/-. The said purchaser claimed exemption in view of the Notification No. 7037 dated 31st of January, 1985 as it was holding certificate for the same. The said certificate was filed before the Assessing Authority in support of the claim set out by the dealer with regard to the exemption, but was not accepted on the short ground that the said packing material was not used as raw material in the manufacture of soap by the purchaser. The purchaser is carrying on the business of manufacturing soap. The packing material was used by the purchaser as wrapper. The assessing authority was of the view that under the said notification the purchases of only such goods would be exempted which are used by such institutions in the manufacture of goods. The packing paper has not been used in the manufacture of product i.e. soap or in the manufacturing pro­cess, but was used for packing purposes. Therefore, it could not be exempted from purchase tax. The said order of the assessing authority is dated 27th of November, 1993 and has been confirmed in first appeal on 7th June, 1994 and in second appeal by the tribunal as well, by the order under Revision. In the memo of revision, the following question has been sought to be raised: “Whether on the facts and in the circumstances of the case, the Tribunal is legally justified in sustaining the order of the Assessing Authority, in dis-allowing the claim of exemption on the amount of Rs. 2, 72, 326.00 being the sale consid­erations of sale of packing paper to M/s. Kundan Gramodyog Sansthan Lucknow who has issued the certificate for exemption?” Shri Piyush Agrawal in support of the revision has urged mainly the follow­ing two points: (1) That on a plain reading of the said notification No. 7037 dated 31st of January, 1985, serial No. 3, it is evident that the words 'connected with' does not include only the raw materials but they include all other materials which are needed later or sooner to a manufacturer of a product during the manufac­turing process or thereafter for preparing his product saleable and market­able. (2) That the dealer sold the goods to the seller, who is holding a certifi­cate issued by the authority concerned entitling it to make the purchases of such articles connected with the goods to be manufactured by him, without payment of any tax. The genuineness and correctness of the said certificate having been not questioned by the department at any stage, the dealer is entitled for exemption as he is in no manner responsible, if the purchasing dealer of the said purchases did not require it in connection with the produc­tion of soap. In other words, it was submitted that there was no 'wrong', or 'false' misrepresentation so far as the dealer is concerned, while entering into the transaction in question with M/s. Kundan Gramodyog Sansthan, U.P. Lucknow. The dealer should not be compelled to suffer, for no fault of his, submits the learned Counsel for the dealer.
(3.) THE learned Standing Counsel, on the other hand, supports the order of the tribunal and submits that since the soap having been manufactured without aid and help of packing material, the purchases of wrapper paper as packing material from the dealer by the institution is not materially connected with the manufac­ture of soap.;