DEPUTY COMMISSIONER OF SALES TAX Vs. PIO FOOD PACKERS

JUDGEMENT

(1.) S.5A of the General Sales Tax Act, 1963 reads:

(2.) The relevant clause in the Section which has application is S.5A(1)(a); and the conditions to be established before liability can be attracted are: (1) that the goods purchased have been consumed; (2) that such consumption was in process of manufacture; and (3) that the manufacture was of other goods for sale. It is necessary to concentrate on the expressions underlined namely "consumption", "manufacture" and "other goods". The last of these is to be noticed only to emphasise that the resultant product must be distinct and different from the goods consumed in the process of manufacture. The expression "consume" has been defined in the Reader's Digest's Great Encyclopaedic Dictionary, Volume I, as to ''use up", "to make away with" etc. "Use", itself is defined in Volume II, page 965 as "use up" or "exhaust". Other well known dictionaries also give practically the same meaning for the term. The expression came in for judicial notice in Anwarkhan Mahboob Co. v. State of Bombay ( AIR 1961 SC 213 ) in connection with the explanation to Art.286(1) of the Constitution, It was observed:

(3.) We may start with the case strongly pressed by the Government Pleader, viz., the Supreme Court's pronouncement in Ganesh Trading Co, v. State of Haryana (32 STC 623), where the question for consideration was whether paddy and rice can be regarded identical good for the purpose of imposition of Sales Tax. The question arose with respect to an exemption notification under which the exemption was available if the very paddy in respect of which purchase tax was levied was sold, and not, if that paddy is converted into rice and sold. The argument was that paddy and rice being identical goods, the dehusking of paddy will not result in a loss of identity and convert the rice into a different commodity. The Supreme Court stated that the essence of the matter was to find out whether in commercial circles paddy is considered as identical with rice. It referred to its decision in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer. Akola (12 STC 286) where the question arose whether betel leaves could be considered as vegetables. Although the dictionary meaning indicated that it was, the Supreme Court ruled that it was not, as the term had to be understood in its popular sense, that is, sense which people conversant with the subject matter with which the statute was dealing, would attribute to it. It was stressed before the Supreme Court that the meaning in commercial circles was not material and that what is of the essence is the identity of the goods. The decision in State of Madhya Bharat v. Hiralal (17 STC 313) was cited in support, where the question arose whether scrap iron locally purchased, and imported iron plates, were the same as bars, flats and plates into which they were converted in the mills and sold in the market. It was ruled that the products did not cease to be "iron and steel" to which category the scrap iron originally purchased and the imported iron plates belonged, and which was the relevant item for purposes of taxation. Reliance was placed on the decision in Tungabadra Industries Ltd. v. Comml. Tax Officer (11 STC 827). There it was ruled that groundnut oil, refined and hardened, and even treated with the addition of hydrogen atoms still continued to be groundnut oil; the essential nature of the goods had not changed, despite this objective technical process. In the light of the decision, as stated in Ganesh Trading Company's case (32 STC 623), the identity of the goods is one of the essential elements to be borne in mind in dealing with the nature of the transaction.