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Issues: (i) Whether the preparation of butter from purchased cream, excluded from the definition of manufacture, entitled the assessee to claim set-off under the resale provisions and Rule 43 of the Bombay Sales Tax Rules, 1959. (ii) Whether the Deputy Commissioner could validly exercise suo motu revisional powers under section 57 of the Bombay Sales Tax Act, 1959 in respect of the set-off already allowed in the earlier assessment orders.
Issue (i): Whether the preparation of butter from purchased cream, excluded from the definition of manufacture, entitled the assessee to claim set-off under the resale provisions and Rule 43 of the Bombay Sales Tax Rules, 1959.
Analysis: The definition of manufacture in section 2(17) of the Bombay Sales Tax Act, 1959, read with Rule 3(xv) of the Bombay Sales Tax Rules, 1959, specifically excludes the preparing of butter from cream. On that basis, the process of converting cream into butter was not manufacture. The goods purchased were therefore treated as resold within the meaning of section 2(26), even though not in the identical physical form, because the statutory concept of resale extends to sales of purchased goods without doing anything that amounts to or results in manufacture. Rule 43, which grants drawback or set-off in respect of tax already suffered on purchases for resale, together with the single point levy principle underlying the Act, supported relief to avoid double taxation.
Conclusion: The assessee was entitled to set-off under Rule 43, and the answer to this issue was in the negative against the Revenue.
Issue (ii): Whether the Deputy Commissioner could validly exercise suo motu revisional powers under section 57 of the Bombay Sales Tax Act, 1959 in respect of the set-off already allowed in the earlier assessment orders.
Analysis: The revisional power under section 57 could not be exercised beyond the statutory period of five years in relation to the set-off already granted in the assessment orders of 1972 and 1973. Those orders had attained finality so far as the Revenue was concerned, and the revisional interference in 1980 was therefore beyond jurisdiction in respect of the earlier allowed set-off.
Conclusion: The revisional orders were not sustainable to the extent they ed the set-off already allowed in the earlier years, and this issue was answered partly in the negative against the Revenue.
Final Conclusion: The reference was answered in favour of the assessee on the substantive set-off question, with only limited negation of the revisional power in relation to the earlier final assessment orders.
Ratio Decidendi: Where a statute expressly excludes a process from manufacture, the resulting sale may still qualify as a resale of the purchased goods for set-off purposes if the transaction falls within the statutory resale framework, and revisional power cannot be used beyond the prescribed limitation period to disturb final assessment relief already granted.
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