Octroi liability on goods transformed in factory use extends to uncrushed salt brought in for crushing.

Uncrushed salt brought into octroi limits for crushing in a factory was treated as goods brought in for consumption or use within those limits under the Saurashtra Terminal Tax and Octroi Ordinance, 1949. The words "consumption" and "use" were given a wide meaning, covering a process that transforms a commodity into a commercially different article even if it is not physically destroyed. As crushing changed the salt's commercial character, the entry was not a mere transit movement through the area but a taxable use within the charging provision. Uncrushed salt brought for crushing was therefore liable to octroi.

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Issues: Whether uncrushed salt brought into the octroi limits for crushing in the factory and thereafter exported as crushed salt was liable to octroi as goods brought within the limits for consumption or use therein.

Analysis: Under the Saurashtra Terminal Tax and Octroi Ordinance, 1949, octroi could be imposed on goods brought within the octroi limits for consumption or use therein. The relevant rules also made salt for factory liable to octroi. The words "consumption" and "use" were construed in their wider legal sense, as explained in earlier decisions, so that a commodity may be consumed even when it is not physically destroyed but is transformed into a commercially different article. Uncrushed salt, when crushed in the factory, ceases to remain the same commercial commodity and the process gives rise to a different product. The salt is therefore not merely carried through the area but is put to a use within the octroi limits that falls within the charging provision.

Conclusion: The uncrushed salt brought into the octroi limits for crushing was liable to octroi; the appeals were against the assessee.

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