COMMISSIONER OF SALES TAX Vs. PUROHITS HOTEL

JUDGEMENT

(1.) This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the said Act"), made at the instance of the Commissioner of Sales Tax. The question referred to us for our consideration is as follows : "Whether having regard to the facts and circumstances of the present case, the Tribunal was correct in law in holding that there was a resale of ice and hence, purchase tax levied would have to be set aside ?" The facts giving rise to this question are as follows : The assessees run hotel where meals and snacks are served. In respect of the assessment periods from 21-10-1960 to 8-11-1961 to 28-10-1962 and 29-10-1962 respectively, in the course of the assessment of the assessees, the Sales Tax Officer found that the assessees had, inter alia, purchased ice, sauce and butter from unregistered dealers. In the assessment proceeding before the Sales Tax Officer the assessees claimed a set-off in respect of the purchase tax leviable on these items on the ground that the same had been used in the manufacture of goods which had been sold by the assessee. This claim was rejected by the Sales Tax Officer, although a similar claim in respect of papad purchased from unregistered dealers was allowed. The Sales Tax Officer levied purchase tax on the purchase of ice, sauce and butter made by the assessees from unregistered dealers during the aforesaid assessment periods. The assessees preferred appeals against the assessment orders passed by the Sales Tax Officer in respect of the aforesaid three periods. The contention of the assessees before the Assistant Commissioner of Sales Tax, who disposed of these appeals, was that the Sales Tax Officer had erred in not allowing the set off claimed by the assessee as we have already set out earlier. The Assistant Commissioner of Sales Tax accepted the contention of the assessees as far as the purchases of the butter from unregistered dealers were concerned, but rejected the assessee's claim to a set off in respect of the other two items. The assessees then referred second appeals to the Sales Tax Tribunal. It is interesting to note that in the grounds contained in the memorandum of appeal, the assessees, inter alia, contended the such was supplied with certain dishes and presumably to urge on this basis that it was used in the manufacture of those dishes. The next ground of appeal shows that on the presumption that sauce was not used in the manufacture of goods for sale, it was alternatively contended by the assessees that the sauce purchased was resold and hence no purchase tax should have been levied on the purchases of sauce. As far as the purchases of concerned, the only contention raised in the memoranda of appeal was that ice was used mainly in preparing cold water and cooling soft drinks. This would show that all that the assessees contended, as far as the purchases of ice were concerned, was that the assessees were entitled to a set off in respect of the amount levied as purchase tax on the purchases of ice as aforestated as the ice purchased had been used in the manufacture of goods for sale.

(2.) At the hearing before the Tribunal the Department conceded that as far as the amount levied as purchase tax on the purchases of sauce was concerned, the assessees were entitled to a set off as the sauce purchased had used in the manufacture of goods for sale. However, curiously enough, as far as the amount levied as purchase tax on the purchases of ice from unregistered deaders was concerned, the Tribunal did not all go into the question as to whether the ice purchased had been used in the manufacture of goods for sale as contended by the assessees, but came to the conclusion that the ice purchased from unregistered dealers as aforesaid had been resold by the assessees with the result that no purchase tax on the purchases of the same, should have been initially levied at all. It is this decision of the Tribunal which is sought to be impugned by the Department by way of the question raised before us.

(3.) Section 13 of the said Act at the relevant time provided that where a dealer purchased any goods specified in Schedules B, C, D or E from a person or a Government who or which was not a registered dealer, then unless the goods so purchased were resold by the dealer within a period of three months or such extended period as referred to therein from the date of his purchase, there would be levied subject to certain provisions with which we are not concerned here a purchase tax on the turnover of the purchases at certain rates. The facts found clearly show that the assessees are registered dealers and that ice, with which we are concerned in this reference, is covered by entry 38 of Schedule C to the said Act. The set-off was claimed under Rule 41 of the Bombay Sales Tax Rule, 1959 on the ground that the assessees had used the ice purchased as aforesaid in the manufacture of taxable goods for sale. Sub-s.(26) of section 2 of the said Act, inter alia, provides that the expression "re-sale" for the purpose of section 13 means a sale of purchased goods in the same form in which they were purchased or without doing anything to them which amounts to or results in a manufacture.