STATE OF GUJARAT Vs. NARESHKUMAR AND BRORS

JUDGEMENT

(1.) THIS reference has been made by the Gujarat Sales Tax Tribunal, Ahmedabad (hereinafter referred to as "the Tribunal"), at the request of the State of Gujarat because the Tribunal allowed Second Appeals Nos. 365, 366, 367 and 368 of 1974 filed by the assessee, M/s. Nareshkumar and Brothers.

(2.) THE assessee is a registered dealer under the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Gujarat Act"), carrying on the business of buying tear-waste of newsprint reels from the printing presses and after cutting them into reams of different sizes selling to printing presses or other dealers dealing in paper. While making the assessments for the four periods, which are financial years 1969-70 and 1st April, 1970, on 5th May, 1970 (both covered under the Bombay Sales Tax Act, 1959) (hereinafter referred to as "the Bombay Act"), and 1st April, 1971, to 30th May, 1971, and 6th May, 1970, to 31st March, 1971 (both covered under the Gujarat Act), the Sales Tax Officer held that the activity of the opponent-assessee amounted to manufacture, and assessed the tax on the sales of reams of different sizes at the rate applicable under the residuary entry by disallowing the deduction of resales of goods purchased from the registered dealers as claimed by the assessee. THE Sales Tax Officer also imposed a penalty under section 36 (3) (a) of the Bombay Act and section 45 (6) of the Gujarat Act.

(3.) THE Tribunal considered that the case of the assessee stood on a firmer ground on the second point and, therefore, proceeded to deal with it first. It is an admitted position that the assessee used to purchase tear-waste of newsprint reels from the printing presses, and that was cut into reams of different sizes. THE Tribunal, therefore, considered that cutting of papers which were in greater lengths to the papers of smaller lengths would not amount to change in the form of the goods. THE Tribunal relied on the decision of this Court in Vaiswaner Trading Co. v. State of Gujarat [1964] 15 STC 586, wherein the assessee purchased pieces of rolled steel sections and then were joined together by revetting. In that case this Court held that by joining together rolled steel sections by process of revetting the length was increased, but it cannot be said to be said to be a change in the form. Relying on this decision, the Tribunal came to the conclusion that there was no change in the form and whatever activity was done by the assessee was resale of the papers purchased by it and, therefore, allowed the appeals.