1994 (9) TMI 296 - SC - VAT and Sales Tax

Supreme Court seeks clarity on sales tax interpretation, refers conflicting views to larger bench.

The Supreme Court addressed a conflict regarding the interpretation of the phrase 'either consumes such goods in the manufacture of other goods for sale ... Interpretation of the words 'either consumes such goods in the manufacture of other goods for sale or otherwise'-which occur in section 6-A of the Andhra Pradesh General Sales Tax Act, 1957, as well as several other State enactments imposing purchase tax. Held that:- It is true that the Andhra Pradesh Legislature has intervened and amended the aforesaid clause in section 6-A by introducing the word 'them' before the word 'otherwise' thus making its meaning clear. The said amendment is indicative of legislative intent that the view taken in Ganesh Prasad Dixit [1969 (2) TMI 128 - SUPREME COURT OF INDIA] is the correct one. Be that as it may, it is not brought to our notice that other State Legislature have brought about similar amendments. The controversy, therefore, survives and is bound to arise under one or the other State enactment. Issues:- Interpretation of the words 'either consumes such goods in the manufacture of other goods for sale or otherwise' in section 6-A of the Andhra Pradesh General Sales Tax Act and similar State enactments.- Conflict between the decisions of two Benches of the Supreme Court on the interpretation of the said words.- Need for resolution of the conflict by a larger Bench.Analysis:The judgment deals with a conflict arising from the interpretation of the words 'either consumes such goods in the manufacture of other goods for sale or otherwise' in section 6-A of the Andhra Pradesh General Sales Tax Act and similar State enactments. The conflict stems from differing views expressed by two Benches of the Supreme Court regarding the meaning of these words. One view, as expressed in Ganesh Prasad Dixit case, suggests that the clause means either consuming goods in the manufacture of goods for sale or consuming goods otherwise. On the other hand, the conflicting view, as articulated in the Pio Food Packers case, interprets the clause as either consuming goods in the manufacture of goods for sale or consuming goods in the manufacture of goods not meant for sale ('otherwise').The judgment highlights the conflicting interpretations provided by the two Benches of the Supreme Court and acknowledges the need for resolution due to the direct conflict between these decisions. Despite a subsequent case preferring the view taken in the Pio Food Packers case, the Court expresses a preference for the interpretation in the Ganesh Prasad Dixit case. However, to address the conflict, the matter is referred to a larger Bench for resolution. The judgment also notes that the Andhra Pradesh Legislature has amended the clause in question to clarify its meaning, indicating a legislative intent in favor of the interpretation in the Ganesh Prasad Dixit case.In the specific case before the Court, involving a construction company purchasing raw materials like sand and stone for building flats and buildings, the issue of whether the purchases are subject to purchase tax under section 6-A of the Andhra Pradesh Act arises. The respondent argues that since the construction of buildings does not amount to the 'manufacture of goods,' the clause in question should not apply. The Andhra Pradesh High Court, considering the conflicting decisions, opted to follow the decision in the Pio Food Packers case based on its later date. However, the Supreme Court deems it necessary to resolve the conflict promptly and refers the matter to the Chief Justice for appropriate orders.