COMMISSIONER OF SALES TAX Vs. INDIAN METAL TRADERS

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 referred to us for our determination is as follows :

(2.) The facts giving rise to this reference are as follows : The respondents are a registered dealer under the said Act and deal in iron and steel, iron scrap, electric motors and machinery. They also purchase unserviceable ships for scrapping and dismantling. Under an instrument of sale dated 10th November, 1965, the respondents purchased a ship named "Jalapratap" along with its boats and appurtenances from the Scindia Steam Navigation Co. Ltd. This purchase was made by the respondents for the purpose of breaking and scrapping the said ship. On 19th September, 1968, the respondents made an application under section 52 of the said Act to the Deputy Commissioner of Sales Tax for determination of the question as to whether any tax was payable on the purchase of the said ship and if so, to determine the rate of that tax. In this application the respondents stated that they had purchased the said ship under the said instrument of sale and that the said ship was purchased for "breaking and scrapping purposes" as mentioned in the bill of entry. The Deputy Commissioner of Sales Tax held that purchase tax was payable on this transaction under entry 22 of Schedule E to the said Act. The Deputy Commissioner rejected the contention urged on behalf of the respondents that the provisions of section 13 of the said Act were not applicable as it could not be said that the said ship was used by the respondents in the manufacture of goods. The respondents then preferred an appeal before the Sales Tax Tribunal. Before the Tribunal the respondents did not dispute that the process of breaking, dismantling or scrapping came within the definition of "manufacture" under clause (17) of section 2 of the said Act. It was, however, contended by the respondents before the Tribunal that it could not be said that the said ship was used in the manufacture of goods and this contention was accepted by the Tribunal. The Tribunal, therefore, allowed the appeal of the respondents and held that the purchase of the ship by the respondents did not attract the levy of the purchase tax under the provisions of section 13(a) of the said Act. The question posed for determination before us arises out of the said decision of the Tribunal.

(3.) When the reference first came before us for hearing we found that the statement of facts then furnished was not sufficient for the determination of the question raised, as the statement of facts did not show as to what was the nature of the dismantling process involved, nor did it show as to what were the goods, if any, which were obtained from the dismantling of the said ship or as to what was the process or activity which was necessary to be done in connection with the ship in order to obtain these goods. By our order dated 10th January, 1975, in this reference we directed the Tribunal to furnish a fuller statement of facts incorporating the aforesaid particulars. When the matter went back to the Tribunal, both the sides agreed that the particulars of the goods which were obtained from the breaking up and dismantling of the ship were available on the record. From the statement of the case it appears that what was obtained from the breaking up and dismantling of the said ship was iron or steel scrap, iron or steel plates, wooden planks and rivets, bolts, boilers, fans and some other articles, a list of which has been annexed to the statement of the case as annexure A. before the Tribunal both the sides have agreed that information regarding the process or activity which was necessary to be done in connection with the ship in order to obtain these goods was not available on the record. The submission made before the Tribunal on behalf of the respondents herein was that the process could be assumed to be one of extraction. The fact, which we have set out earlier are, it may be pointed out, from the statement of the case which has been furnished by way of an additional statement of facts by the Tribunal.