COMMERCIAL TAXES OFFICER Vs. LODHA FABRICS

JUDGEMENT

(1.) THE revision petitions mentioned in the Schedule annexed with this order raise a common question of law, so, they are being disposed of by this common order.

(2.) THESE revisions are directed against the orders of the Rajasthan Sales-tax Tribunal, Ajmer whereby the order of the Assessing Authority and of the Appellate Authority imposing penalty under Sec. 5c (2) of the Rajasthan Sales-tax Act, 1954 have been set aside and it has been held that the articles purchased by the assessees are the 'raw materials' and the department is estopped to challenge that the articles mentioned in the registration certificates are not the "raw materials"

(3.) IT would appear that by the introduction of the definition of the expression "'raw materials" and of the provision of Sec. 5-C, a change has been brought about the provision has been made for concessional rate of tax for "raw material". If the conditions of sec. 5c are satisfied, then the rate of tax payable on the sale to or purchase by a registered dealer of any raw material shall be at a concessional rate of 2% of the sale or purchase price of such raw material. IT is true that prior to 2nd March, 1963 under Notification No. F 21 (7) SR/55 dated 14. 4. 55 in respect of an industry - Cloth dyeing and printing : cloth, colours, bleaching materials, paints varnishes and dyes were exempted from the tax and in the heading of Column No. 3 the expression was "goods (raw material etc )' exempted. The exemption would be available on fulfilling of the conditions laid down in the notification. The conditions were that the goods are sold to a bona fide manufacturer of finished products who holds a valid certificate of registration under Sub-sec. (1) of Sec. 6 and the manufacturer gives to the seller, a declaration in writing that the goods would be used in the manufacture of finished products. The question is what change has been brought about with effect from 3. 3. 63. For that, we have to examine the definition of "raw material'. A perusal of the definition would show that in this definition, the legislature has not only given the meaning to expression but has also said what it will include and what it will not include. The definition not only provides the meaning but also includes some articles to fall in that category and also excludes some articles, which would not fall in that category. Apart from the definite inclusions and exclusions, the definition gives meaning of the expression "raw material". The meaning given to the expression is that it shall be an article, which is used as an ingredient in the manufactured goods i. e. in the end product, the article must be used as an ingredient. If the article is not used as an ingredient in the end product, then, such an article would not be a raw material. One of the essential ingredient of the expression 'raw material' is that the article must be an ingredient in the end product. If the article is a constituent or an element of manufactured goods, then such an article would be raw material. The definition does not place any limit that only to the extent it becomes ingredient, it would be raw material and the rest would not be raw material. If in the process of manufacturing goods, only, apart of the article becomes ingredient and the rest goes waste, still the whole of it would be raw material within the meaning of the expression "raw material" as the article has been used as an ingredient of the finished goods. If the article is used in the various processes*, which are essential in the manufacturing of the goods but the same does not become ingredient in the finished product, then, such an article would not be a raw material. But, if the article is used in serious processes and in the finished product, it also becomes an ingredient, then, the conditions provided in the definition would be satisfied and such an article would be raw material. In the definition, the other expression or the words used are 'in any manufactured goods'. These words would mean the end product or the finished goods and in such finished goods, the article must become an ingredient.