Manufacturing-use exemption construed broadly for sales tax purposes; goods used in an integral production process may qualify for relief.

Goods sold to registered dealers for use in manufacturing goods for sale were treated as eligible for exemption where the use formed part of a process integrally connected with production. The court applied a broad construction of the manufacturing requirement, holding that the exemption could not be denied merely because water was not an essential ingredient in every industry, if the tube-wells and pumps were in fact used in manufacture. The assessing authority had applied an unduly narrow test, so the assessment was set aside and the matter remitted for fresh decision on the proper legal standard and the factual question of use in manufacture.

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Issues: Whether sales of tube-wells and pumps to registered dealers were exempt under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 when the goods were intended for use in the manufacture of goods for sale.

Analysis: The exemption turned on whether the goods sold were for use by the registered dealer in the manufacture of goods for sale. The reasoning adopted from the Supreme Court authority construed the expression broadly to cover the entire manufacturing process and processes integrally connected with the ultimate production of goods, where without such process manufacture would be commercially inexpedient. On that approach, the objection that water was not an essential ingredient for industries other than paper could not by itself defeat the exemption if the tube-wells and pumps were in fact used in manufacture.

Conclusion: The claim to exemption could not be rejected on the narrow ground taken by the assessing authority, and the matter had to be reconsidered on the proper legal test.

Final Conclusion: The assessment order was set aside and the matter was sent back for fresh decision in accordance with law, leaving the assessee entitled to exemption if the factual requirement of use in manufacture was established.

Ratio Decidendi: Goods sold for use in a process integrally connected with the manufacture of goods for sale fall within the statutory exemption for goods used in manufacture.

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