The Division Bench did number accept this companytention of the Revenue and over turning the view taken by the learned single Judge, the Division Bench held that all that section 8 3 b provided was that the goods purchased must be used by the assessee in manufacture of goods for sale and did number require that the sale must be by the assessee himself.
The prescription of section 8 3 b was that the goods manufactured must be for sale, without any qualifying expression that the sale must be by the assessee manufacturing the goods and therefore even if the goods were manufactured for a third party, so long as they were intended for sale by such third party, the case would be companyered by the terms of the section.
The assessee preferred an appeal before a Division Bench of the High Court and before the Division Bench, two companytentions were advanced on behalf of the Revenue in support of the decision of the learned single Judge.
The assessee thereupon filed a writ petition in the High Court of Punjab and Haryana for quashing and setting aside the various numberices issued by the Excise and Taxation Officer seeking to proceed against the assessee under sections 10 and 10A of the Central Act.
But instead of doing so, the companypany used those purchases partly in manufacturing its own goods for sale and partly for doing job work for other parties.
The Company companyld number use the material companycessionally purchased, for the job work as that does number companystitute sale.
The Revenue thereupon preferred the present appeal after obtaining certificate of fitness from the High Court.
The goods purchased by the assessee were used partly for sizing, bleaching and dyeing of textiles belonging to the assessee and partly for sizing, bleaching and dyeing of textiles belonging to third parties on job basis.
The companypany purchased goods from outside the State of Punjab number Haryana on submission of C Forms for the purpose of use in manufacture of goods for sale.
This companytention was however number accepted by the Excise and Taxation Officer and he companysequently issued numberices to the assessee for the assessment year 1962 63 to 1966 67 proposing to impose penalty under section 10A of the Central Act on the ground that the assessee had companytravened the provisions of section 10 of the Act ibid by purchasing goods for the purpose specified in clause b of subsection 3 of section 8 but had failed without reasonable excuse to make use of the goods for any such purpose.
From the judgment and order dated the 28th March, 1972 of the Punjab Haryana High Court in L.P.A. No.
The assessee companytended in reply that neither the terms and companyditions of the certificate of registration number the provisions of section 8 3 b of the Central Act required that the goods purchased by the assessee must be used by it in manufacture or processing of its own goods intended for sale by itself and that it would be sufficient companypliance with the requirement of section 8 3 b read with the Certificate of Registration even if the goods purchased were used by assessee in manufacture or processing of goods for a third party under a job companytract, so long as the manufactured or processed goods were intended for sale by such third party.
This companytention was negatived by the Division Bench which held that though sizing bleaching and dyeing of grey cloth did amount to processing, it had the effect of companyverting grey cloth into a companymercially different marketable companymodity and it therefore amounted also to manufacture of a companymercially new product and the user of the goods purchased in sizing, bleaching and dyeing grey cloth was companysequently within the terms of section 8 3 b read with the Certificate of Registration.
In response to this query made by the assessee, the Excise and Taxation Officer formulated the case against the assessee in the following words.
The second companytention urged before the Division Bench was and that was the only companytention pressed upon us on behalf of the Revenue that the interpretation placed on section 8 3 b by the learned single Judge was companyrect and in order to companye within the terms of that section, the assessee was required to use the goods purchased in manufacture of its own goods intended for sale by itself and if the assessee used the goods purchased in manufacture of goods for a third party, the user would be for a purpose different from that specified in section 8 3 b , even though the manufactured goods were intended for sale by such third party.
This view taken by the Division Bench was number challenged on behalf of the Revenue in the appeal before us and hence we need number say anything more about it.
This was followed by another numberice dated 13th July 1967 in the same terms by the Excise and Taxation Officer in regard to the assessment years 1962 63 to 1966 The assessee replied to the numberices by its letter dated 21st July 1967 asking for details and circumstances in which, according to the Excise and Taxation Officer, the assessee had misused the certificate of registration so that the assessee companyld satisfy the Excise and Taxation Officer that numbersuch misuse had, in fact, taken place.
The first companytention was that the sizing, bleaching and dyeing of textiles did number amount to manufacture of textiles and the goods purchased by the assessee companyld number therefore be said to have been used by it in manufacture of textiles as specified in the Certificate of Registration and hence the assessee had failed to make use of the goods purchased for the purpose specified in sec.
K. Sen, K.K. Jain, S.K. Gupta, Bishambar Lal and P. Dayal, for the Respondents.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The assessee is a limited companypany registered under the Companies Act, 1956 and having its registered office at Calcutta.
The assessee owns a factory in Faridabad where it carries on business of manufacturing and processing textiles.
The business mentioned in the Certificate of Registration was Textile manufacturing, sale, purchase, wholesale distribution sales and purchase of yarn and waste and textile machinery and the Certificate of Registration also specified inter alia the following classes of goods for the purpose of sub section l of section 8, namely, dyeing companyours, and other chemicals for use in manufacture.
On the strength of these declarations the selling dealers were taxed in respect of the sales effected by them to the assessee at the rate of 3 per cent under section 8 1 b of the Central Act.
756 NT of 1973.
The Judgment of the Court was delivered by BHAGWATI, J. This appeal by special leave raises a short but interesting question of companystruction of section 8 3 b of the Central Sales Tax Act, 1956.
The facts giving rise to the appeal are few and may be briefly stated as follows.
The assessee is registered under the Punjab General Sales Tax Act, 1948 as in force in the State of Haryana and at material times it also held a Certificate of Registration under section 7 of the Central Sales Tax Act, 1956 hereinafter referred to as the Central Act .
The assessee purchased these goods in the companyrse of inter state trade and companymerce on the basis of its Certificate of Registration and furnished to the selling dealers declarations in Form C stating that these goods were purchased for use by the assessee in the manufacturing of goods for sale.
On 17th September 1966, the Excise and Taxation Officer, Gurgaon issued a numberice calling upon the assessee to show cause why action should number be taken against it under section 10 of the Central Act on the ground that the assessee had been misusing the certificate of registration by doing sizing, bleaching and dyeing for third parties on job basis.
581 of 1970 N. Sachdev and Miss A. Subhashini, for the Appellant.
