TaxTMI 
TaxTMI 
1991 (2) TMI 375
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.... dealer under the Act. The applicant purchased iron scrap from registered dealers and manufactured iron ingots out of the scrap. Out of those ingots, the applicant manufactured M.S. round bars. On February 22, 1977, the applicant sold those bars to M/s. Mohta Steel. Then on June 21, 1975, the applicant applied to the Deputy Commissioner of Sales Tax, Ahmedabad, under section 62(1)(e) of the Act for determination whether the sale of M.S. round bars made by it to M/s. Mohta Steel was liable to payment of sales tax and at what rate. The contention of the applicant before the Deputy Commissioner was that its activity of converting iron scrap into iron ingots and then into M.S. round bars did not amount to or result in "manufacture" as defined by clause (16) of section 2 of the Act read with clause (xvii) of rule 3 of the Gujarat Sales Tax Rules, 1970, and that the sale made by it in favour of M/s. Mohta Steel amounted to a "resale" as defined by clause (iii) of section 2(26) of the Act, for the reason that nothing was done to the goods which took them out of the description of item "iron and steel" in entry 3 of Schedule II, Part A to the Act. Following the Supreme Court decision in....
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....3, which is relevant for our purposes, reads as under: "3, Process not included in 'manufacture' For the purposes of clause (16) of section 2, 'manufacture' shall not include the following manufactures and manufacturing processes, namely: (xvii) any activity carried out in relation to any of the declared goods in any entry in Schedule II as a result of which, the resultant product is not taken out of the description thereof in that entry:" On a plain reading of the definition of "resale", it can be said that if the purchased goods are sold in the same form in which they were purchased, their sale has to be considered as a resale. If the purchased goods are sold not in the same form or condition but without doing anything to them, which amounts to or results in manufacture as defined by section 2(16), then such a sale has to be regarded as a resale. While defining the term "manufacture", the Legislature has provided that it shall not include such manufactures or manufacturing processes as may be prescribed. Rule 3 prescribes certain manufactures and manufacturing processes which are to be excluded for the purposes of section 2(16). Therefore, if the purchased goods are subj....
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.... of such goods. Another Division Bench of this Court in Morvi Vegetable Products Ltd. v. M.C. Padia, Sales Tax Officer, Morvi (Special Civil Application No. 916/73, decided on 9/10th July, 1974) has observed that various deductions which are contemplated by sections 7 to 10 are provided with a view to see that so far as possible there is only a single point levy of sales tax on the goods purchased or sold in the State. The purpose of confining the tax, so far as possible, to a single point levy, is obviously to ensure that the goods do not carry with them any unnecessary burden of tax, and the State would, at the same time, avail of the necessary revenue. So far as iron and steel is concerned, they are regarded as goods of special importance in inter-State trade and commerce as can be seen by the provisions made to that effect in section 14 of the Central Sales Tax Act, 1956. Section 15 of that Act puts restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. Section 7 itself provides for deduction from turnover of resales of goods by a dealer from a registered dealer. Therefore, if sale made by a dealer amounts to a resale, then it is not ....
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....s their true meaning. He further submitted that they are all species of the same genus, viz., iron and steel and, therefore, even if as a result of something done to the goods covered by any sub-item they thereafter answer the description of some other sub-item, it would not amount to manufacture as defined by the Act if it still continues to answer the description of iron and steel as it cannot be said that as a result of the said activity the goods are taken out of the description of iron and steel. On the other hand, it was contended by the learned Government Pleader appearing for the respondent, relying upon the decision of the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319; AIR 1976 SC 800 that each sub-item in entry 3 is a separate taxable commodity for the purpose of sales tax and each of them forms a separate specie for each series of sales although they may all belong to genus iron and steel. He submitted that since each sub-item has to be regarded as a separate item, the moment iron scrap purchased and used by the applicant was turned into M.S. round bars, they went out of the description of the subitem or the sub-entry and, therefore, suc....
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....entity as goods of a particular type. What is to be noted is that the Supreme Court was concerned with taxability of a particular type of declared goods, viz., iron and steel. It was not concerned with the question which arises for consideration in this reference. The scheme of the Gujarat Act is different and the question which arises for determination is also different. In this case we are concerned with special definitions of the words "resale" and "manufacture" and in that context we have to decide whether an item, in a list of specified items, when undergoes any activity as a result of which it becomes another specified item in that list, it was intended to be excluded from the benefit of the special definition given to the word "manufacture". Thus, we are required to examine a different aspect altogether and therefore the decision of the Supreme Court cannot be applied mechanically to the facts of this case, and in that context, we cannot say that each sub-item of entry 3 is an item by itself and, therefore, in that sense should be regarded as a separate entry. No doubt, each specified item in the said list has to be regarded as a separate commercial commodity but nonet....