COMMISSIONER OF SALES TAX Vs. PAPER PROCESS WORKS

JUDGEMENT

(1.) This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the said Act"). The question, which has been referred for our determination in this reference, is as follows :

(2.) It is common ground that the respondent-assessee is a registered dealer. The assessee purchased paper in larger reels or rolls and these rolls were cut by the assessee into smaller paper reels by a slitting process. The process carried out by the assessee, as explained before the Sales Tax Tribunal, was as follows : Machine-made paper is manufactured in reels only. The size of the reels of such paper varies according to the size of the machine on which paper is manufactured. Such size is technically known as deckle width of the machine which varies from 60" to 200". As the paper of the aforesaid deckle width cannot be conveniently handled for the purposes for which the paper is manufactured, these reels are slit into smaller width by the paper mills themselves. Theses reels were of a maximum width of 33" to suit the slitting machine for the purpose of making smaller reels from the bigger reels. The assessee purchased these bigger reels. The open end of the paper reel was unbound and drawn through the rotary slitters which are adjusted to obtain the requisite size for smaller reels. The rotary slitters cut the paper which in the same process is rewound on the paper tubes which are inserted on the rewinding shaft. The cutting of the paper into smaller size and rewinding thereof on the paper tubes is one continuous process as a result of which smaller reels of paper are obtained.

(3.) The assessee made an application on 4th December, 1975, to the Commissioner of Sales Tax under section 52 of the said Act posing for determination of the Commissioner the question whether cutting of the paper purchased in larger rolls into smaller reels as required by customers would amount to manufacture under section 2(17) of the said Act. There was a second question also posed which we do not propose to set out as it is merely ancillary. Along with that application an invoice bearing No. SP/1 dated 16th October, 1975, was sent to the Commissioner. That invoice is not on record, but, by consent, copies of a few similar invoices have been tendered and form part of the supplemental paper-book. The Deputy Commissioner, who disposed of the application, took the view that the said activity carried on by the assessee amounted to manufacture under section 2(17) of the said Act and held that the sale effected by the assessee under the said invoice dated 16th October, 1975, was liable to be assessed to sales tax in the sum of Rs. 430.50.