STATE OF TAMIL NADU Vs. BHARAT DAIRY FARM

JUDGEMENT

(1.) WOULD the conversion of cream into butter by stirring, amount to a process of manufacture attracting the levy of purchase tax under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act")" This is the only question which requires our consideration in these revision petitions filed by the Revenue against the orders of the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, dated November 28, 1979, passed in C.T.A. Nos. 252 and 309 of 1979 and C.T. M.P. Nos. 230 and 212 of 1979. The circumstances in which this question arises are as follows :

(2.) THE assessee in both these revision petitions is one and the same dealer, Bharat Dairy Farm. THE assessee sold butter converted from cream purchased by it. THE sale of butter was reflected by the assessee in its returns and the accounts. THE assessment in T.C.R. No. 586 of 1981 relates to the assessment year 1976-77 while the assessment in T.C.R. No. 857 of 1981 relates to the assessment year 1977-78.

(3.) FOR the assessment year 1977-78, the assessee had filed the Al return showing sales turnover of butter and curd from April 1, 1977 to July 24, 1977, at Rs. 4, 710/- and from July 25, 1977 to March 31, 1978, as Rs. 34, 593. According to the assessing authority, the purchase of cream amounting to Rs. 1, 13, 499/-, which was not supported by any purchase bills, had been suppressed. Since the sales of butter and curd were exempted from tax with effect from July 25, 1977, the taxable turnover of the assessee was worked out at Rs. 6, 280/- by adding to the turnover furnished by the assessee of Rs. 4, 710/-and amount of Rs. 1, 570/- by way of one-third for "defects and probable omissions". The turnover liable to tax under Section 7A of the Act in respect of the purchases of cream was calculated at Rs. 1, 13, 499/-. Thus, the total taxable turnover was worked out at Rs. 1, 19, 779/- and penalty, both under Section 12(3) and Section 22(2) of the Act was also levied. The assessing authority did not accept the argument of the assessee that the cream which had been converted into butter by stirring, was not a commodity different than butter and that since no manufacturing process was involved in converting cream into butter, levy under section 7A of the Act was not warranted. The assessing authority held butter and cream to be separate commodities.