ASSESSING AUTHORITY-CUM-EXCISE & TAXATION OFFICER, GURUGAON & ANR. versus M/S. EAST INDIA COTTON MFG. CO. LTD. FARIDABAD

Citation: [1982] 1 S.C.R. 55 · Decided: 23-07-1981 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

-
-
ASSESSING AUTHORITY-CUM-EXCISE & TAXATION 
OFFICER, GURGAON & ANR. 
v. 
M/S. EAST !NOIA COTTON MFG. CO. LTD. 
FARIDABAD. 
July 23, 1981 
[ P.N. BHAGWATI, A.P. SEN AND E.S. VENKATARAMIAH, JJ.] 
55 
Central Sales Tax Act 1956, (74 of 1956) Ss. 8(1), (2), (3)(b), IO, 10-A, & 
Central Sales Tax (Registration and Turnover) Rules 1957, Rules 12, 13-Registe-
tered Dea/er-Certificates of Registration-Manufacture and sale of textiles-Pur-
chase of dyeing colours and other chemicals after issuing 'C' Forms--User of such 
goods.for third parties on job contract basis-Whether such use amounts to manu-
facture. 
Interpretation of Statutes-Taxing Statute-Statute to be construed according 
to plain language-Judicial paraphrase impermissible to Court. 
Words & Phrases-" For use by him in the manufacture or processing of goods 
for sale"-Meaning of-Central Sales Tax Act, 1956, S. 8(3) (b). 
The Central Sales Tax Act 1956 and the Central Sales Tax (Registration, 
and Turnover) Rules 1957, provide that when a manufacturer who holds a Certi-
ficate of Registration under the Act buys goods for use by him in the manufac-
ture of goods for sale he would be charged tax at the lower rate of 3% on his 
furnishing a declaration in Form C to the Seller. 
The assessee carried on business of manufacturing and processing textiles. 
It was registered under the Punjab General Sales Tax Act, 1948 and held a 
Certificate of Registration under section 7 of the Central Sales Tax Act, 1956. 
The business mentioned in the Certificate of Registration was textile manufactur-
ing, sale. purchase, \Vholesale distribution, sales and purchase of yarn waste and 
textile machinery; and also specified for the pnrpose of sub-section( I) of section 8, 
dyeing colours and other chemicals for use in manufacture. The assessee purcha-
sed these goods in the course of inter-state trade and commerce 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 the strength of these declarations the 
selling dea1ers 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 Act. 
A 
B 
c 
D 
E 
F 
G 
The Excise and Taxation Officer-appellant issued a notice calling upon the 
ff 
assessee to show cause why action should not be taken under section 10 of the 
A 
B 
c 
D 
E 
F 
56 
SUREME COURT REPORTS 
[1982] I S.C.R. 
Central Act on the ground that the assessee had been misusing the Certificates 
of Registration by doing sizing, bleaching and dyeing for third parties on job basis. 
The assessee contended in reply that neither the terin and conditions of the Cer-
tificate of Registration nor 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 manufac-
ture or processing of its own goods intended for sale by itself and that it would 
be sufficient compliance with tl::e requirement of section 8 (3) (b) read with the 
Certificate of Registration even if the goods purchased were used by the assessee 
in manufacture or processing of goods for a third party under a job contract so 
long as the manufactured or proct!ssed goods were intended for sale by such third 
party. This contention was not accepted by the appellant who imposed the 
penalty under section lOA of the Act. 
The assessce's writ petition to the High Court was dismissed holding that 
the goods purchased by the assessee against its Certificate of Registration could 
be used by it only in manufacture of textiles intended for sale by itself and if the 
goods purChased were used in manufacture of textiles for a third party on the 
basis of a job contract, it would an1ount to user of the goods purchased for a 
purpose different from that specified in section 8 (3) (b) and the assessee would 
be liable to be proceeded against under section 10 and lOA. 
The asscssee's appeal before the Division Bench of the High Court was 
allowed which held that all that section 8(3) (b) provided was that the goods 
purchased must be used by assessre in manufacture of goods for sale and did not 
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 quali-
fying expression that the sale must be by the assessee manufacturing the goods 
and ther

Excerpt shown. Read the full judgment & AI analysis in Lexace.