STATE OF GUJARAT Vs. BHIKHUBHAI AND SONS

JUDGEMENT

(1.) THE assessee is a dealer registered under the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act' ). THE assessee, in the course of its business, purchase coal as well as semi-burnt or half-burnt coal commonly known as kolshi. In the present case, we are not concerned with that part of the assessee's business activity which is concerned with the purchase and sale of coal and we need not, therefore, dilate on that aspect. So far as kolshi's constituents are concerned, the Tribunal has described the said article in the course of its order as "nothing but a part of unburnt coal along with the ash of the remaining part of burnt coal". After purchasing kolshi, the assessee subjects the same to the process of sieving and the unburnt portion of the coal is thereby separated from the ash. THE assessee then sells both the articles separately.

(2.) DURING the year 1973-74, which is the relevant year of account, the assessee had purchased kolshi from the registered dealers. In the course of the assessee's assessment to sales tax for said accounting period, the Sales Tax Officer allowed the sales of unburnt coal as well as of ash to be deducted under section 7 (ii) of the Act on the ground that they were resales of goods purchased by the assessee from registered dealers. However, in suo motu revision, the Assistant Commissioner of Sales Tax, after affording to the assessee an opportunity of being heard, revised the assessment under section 67 of the Act and disallowed the deduction in respect of the sales of ash to the tune of Rs. 14,380 on the ground that kolshi and ash were two distinct commercial commodities and that sales of ash could not be regarded as resales of kolshi purchased by the assessee from registered dealers. The Assistant Commissioner of Sales Tax consequently directed that the sales of ash should be included in the assessee's turnover of sales and that sales tax should be levied on such sales at the rate prescribed under entry 13 of Schedule III to the Act.

(3.) AT the instance of the State of Gujarat, the Tribunal has stated a case in respect of the following two questions of law for the opinion of this Court : " (1) Whether, on the facts and in the circumstances of this case, the Tribunal was right in law in holding that the assessee's activity of separating ash from semi-burnt coal by a process of sieving, did not amount to or result in the 'manufacture' of ash within the meaning of the definition of 'resale' given in clause (ii) of section 2 (26) of the Gujarat Sales Tax Act, 1969 ? (2) Whether, on the facts and in the circumstances of this case, the Tribunal was right in law in holding that the opponent's sales of ash to the extent of Rs. 14,381 were resales of goods purchased from registered dealers, and therefore, entitled to deduction from the opponent's turnover of sales under clause (ii) of section 7 of the Gujarat Sales Tax Act, 1969 ?"