POLSON MODEL DAIRY Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE following questions have been referred to this Court for its decision by the Gujarat Sales Tax Tribunal, Ahmedabad, under section 61 of the Bombay Sales Tax Act, 1959, hereinafter referred to as "the Act". " (1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that exercise of powers under section 57 of the Bombay Sales Tax Act, 1959, by the Deputy Commissioner of Sales Tax to disallow the set-off allowed by the Sales Tax Officer was proper, legal and valid ? (2) Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the relevant provisions of the Bombay Sales Tax Act, 1959, and the Bombay Sales Tax Rules, 1959, the Tribunal is right in law in not accepting the plea of the applicant that it was entitled to claim set-off either under rule 41 or rule 43 of the Bombay Sales Tax Rules, 1959, in respect of the tax paid on the purchases of cream which is converted into butter for sale ?"

(2.) THE applicant, M/s. Polson Model Dairy, was at the relevant time engaged in the business of selling butter both locally as well as in the course of inter-State trade and commerce, and part of the butter was also despatched by the applicant on consignment basis to its branches outside the State of Gujarat for the purpose of sale. THE butter so sold by the applicant was obtained and prepared from cream which it purchased either locally from registered dealers, as well as unregistered dealers, or prepared out of milk purchased by it. THE reference to this Court has been made in respect of assessments regarding three calendar years, namely, 1967, 1968 and 1969.

(3.) THOUGH the ordinary purpose of manufacture is to bring into existence a different commercial commodity, the term "manufacture" has been defined with reference to certain activities to be carried out in respect of any goods, and it specifically excludes such manufactures or manufacturing process as may be prescribed. The term "prescribed" means prescribed by Rules as per clause (21 ). In the context reference to rule 3 which excludes certain manufacturing process would be necessary. Rule 3 excludes 19 types of manufacturing process from the meaning of the term "manufacture" and clause (xv) thereof excludes "the preparing of butter from cream or ghee from butter" from the meaning of "manufacture". So, as per the meaning specifically assigned to the term "manufacture" and manufacturing process the preparation of butter from cream would not be included in such a process and the question of granting any set-off available in the case of "manufacture" under rule 41, would not arise. Clause (26) of section 2 of the Act gives the meaning of the term "resale". " (26) 'resale', for the purposes of sections 7, 8, 9, 10, 12 and 13, means a sale of purchased goods - (i) in the same form in which they were purchased, or (ii) without doing anything to them which amounts to, or results in a manufacture, or (iii) being goods specified in any entry in Schedule B, without doing anything to them which takes them out of the description thereof in that entry, and the word "resale" shall be construed accordingly;".