PAWANSUT BANGLE STORES Vs. ASSISTANT SALES TAX OFFICER

JUDGEMENT

(1.) THE petitioner, which is a partnership firm, deals in glass bangles. Some of the bangles purchased by it from the manufacturers are sold in the same condition, while others are, according to the petitioner, painted with liquid gold, and then sold. The petitioner was assessed to sales tax under the Central Sales Tax Act for the assessment year 1960-61. On 20th February, 1965, it was served with a notice stating that a part of the turnover for that assessment year had escaped assessment and it was asked to furnish a return of its entire turnover and to produce its account books. On 23rd March, 1965, the petitioner was required to furnish a list specifying the several purchases of liquid gold from two concerns, M/s. Madan Mohan Dammamal (Private) Ltd., and M/s. Kunjilal Hardayal, both of Firozabad. The list was furnished by the petitioner. On 23rd March, 1965, the petitioner was also informed by the Sales Tax Officer that the assessment on escaped turnover was proposed under the Central Sales Tax Act and not under the U.P. Sales Tax Act. Despite this information, the petitioner wrote on 8th April, 1965, to the Sales Tax Officer enquiring whether the notice dated 20th February, 1965, was issued under the U.P. Sales Tax Act or the Central Sales Tax Act and what was the turnover on which it was proposed to be assessed pursuant to the notice. The Sales Tax Officer, it is said, orally informed the petitioner that the turnover had escaped assessment under the Central Sales Tax Act. The petitioner then filed the instant petition for certiorari for the quashing of the notice dated 20th February, 1965.

(2.) BY Notification No. St-1365/X-990-1956 dated 1st April, 1960, the State Government has specified that the turnover of glass bangles shall be liable to tax at a single point; where the glass bangles are imported from a manufacturer outside U.P., the point of tax will be the sale by the importer, and where the glass bangles are manufactured within U.P., the point of tax will be the sale by the manufacturer.' This, as will be presently shown, is material for the purpose of considering whether the petitioner is liable to be assessed in respect of glass bangles purchased by it and then subjected to a process which results, according to the respondents, in an article which is commercially different from the article purchased.

(3.) I shall deal with the last contention first. The submission of the petitioner is that the notification refers to a class of goods, namely glass bangles, and it cannot be said that what is sold by the petitioner does not fall in this class. The submission is that inasmuch as what was purchased by the petitioner belonged to that class and what was sold by it also belonged to that class, it cannot be said that the petitioner is liable to sales tax. It seems to me that this submission proceeds upon a misconception of the real question which arises here. The question here is whether the petitioner can be said to have manufactured the article sold by it. If it has, it is liable to sales tax by virtue of the notification, the article having been manufactured in Uttar Pradesh and its turnover being liable to tax at the point of sale by the manufacturer. It is quite conceivable that an article belonging to any of the class of goods enumerated in the notification may by a subsequent process be manufactured into another article, the latter article, however, still belonging to the same class as the original article. I may take as an example, the item "motor lubricants" at serial No. 15 of the notification. Engine oil is a motor lubricant. It may be imported from outside Uttar Pradesh, and its sale by the importer will attract sales tax. The purchaser of the engine oil may put it through various chemical processes resulting in its conversion into a fluid employed for a different purpose in the lubrication of a motor car part and commercially recognised as a different article. In that event, the fluid so manufactured, although still falling in the class of "motor lubricants" will yet be liable to sales tax when sold. It is not the class of goods which matters, it is the specific article sold. There may be two specific articles, one derived by manufacture from the other, and yet both may belong to the same class. If the first article has been imported from outside Uttar Pradesh, its sale will attract sales tax at the point of sale by the importer. If the second article has been manufactured from the first article in Uttar Pradesh, its sale will attract sales tax at the point of sale by the manufacturer.