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Issues: Whether tax could be levied on the entire value of dyes and chemicals used in job work, or only to the extent the goods were actually transferred to the customer, and whether the matter required factual re-examination by the Assessing Officer.
Analysis: The dispute was governed by the principle that under the sales tax regime, tax is attracted only on the value of goods that are transferred in the course of execution of the work, and not on the value of goods merely consumed or wasted unless they, in some form, pass to the customer. The Court followed its earlier decision on the same question and held that chemicals used in the process may be taxable, but the real enquiry is the extent to which dyes and colours are actually transferred to the fabric. Since that determination depends on factual evidence regarding loss, retention, or embedding of the consumables, the matter cannot be finally resolved without a factual assessment by the Assessing Officer.
Conclusion: The levy on the entire value of dyes and chemicals was not sustained as such, and the impugned orders were set aside with a remand to the Assessing Officer for fresh determination of the taxable quantity in accordance with law.
Ratio Decidendi: In job work involving dyes and chemicals, tax is chargeable only on the value of consumables actually transferred to the customer, and the extent of such transfer must be determined on evidence by the assessing authority.
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