CHOWGULE & CO. PVT. LTD. & ANR. versus UNION OF INDIA & OTHERS (AND VICE VERSA)

Citation: [1981] 2 S.C.R. 271 · Decided: 25-11-1980 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Disposed off

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

Judgment (excerpt)

t 
CHOWGULE & CO. PVT. LTD. & ANR. 
v. 
UNION OF INDIA & OTHERS 
(AND VICE VERSA) 
November 25, 1980 
27 1 
(P, N. BHAGWATI, V. D. TULZAPURKAR AND R. S. PATHAK, JJ. ] 
Central Sales Tax Act, 1956, section 
8(3) (b) and rule 13-Whether the 
blending of ore whilst loading it in the ship by means of the Mechanical Ore 
Handling Plant corufl'tuted manufacture or processing of ore for sale within 
the meaning of section 8(3)(b) of the Act and Rule 13-Whether the process 
of mining, conveying the mine ore from the mining 
site 
to the 
river 
side 
carrying out by barges to the harbour and then blending and loading it into the 
ship through the Mechanical Ore Handling Plant conhtituted one integrated 
process of mining and manufacture or process of ore for sale, io that that 
items of goods purchased for use in every phase of these integrated operations 
could be said to be goods purchased for use in mining and manufacturing or 
processing of ore for sale falling within the Scope and ambit of section 8(3) (b) 
and Rule 13. 
The assessee is a Private Limited Company, carrying on business of mining 
iron ore and selling it in the export market after dressing, washing, screening 
· a!ld blending it. 
The extraction of iron ore in some of the mines is carried 
on by mechanised process and at others by manual labour. 
The entire activity 
of the assessee consisted of seven different 
operations, one 
following upOn 
the other, namely, (i) extraction of ore from the mine; (ii) conveying the 
ore to the dressing plant; (iii) washing, screening and dressing the ore; (iv) 
conveying of the ore from the mine site to the river side; (v) transport of. 
the ore from the river side to the harbour by means of barges; (vi) stacking 
of the ore at the harbour in different stock piles according to its physical and 
chemical composition; and (vii) blending of the ore from different stock piles 
with a view to producing ore of the required specifications and loading it into 
the ship by means of the Mechanised Ore Handling Plant. 
Under Section 8 (! ) (b) of the Central Sales Tax Act, 1956 the assessee 
would be liable to pay, in respect of goods purchased for use "in the maunfac­
ture or processing of goods for sale in mining", a lower rate of sales tax at 
3% of his turnover, if it is granted, under section 7(3), a Certificate of Regis· 
tration by Sales Tax Officer specifying the class or classes of goods for the 
purpose of sub-section (1) of section 8 read with Rule 13. 
The assessee, therefore, made an application to the Sales Tax Officer for 
inclusion of 36 items of goods in the certificate of registration on the ground 
that these items of goods were being purchased by it for use in mining ore and 
processing it for sale in the export market, and hence they were goods falling 
within section 8 (3 ) (b) of the Act and Rule 13. 
The Sales Tax Officer granted 
mtiticate only in respect of 11 items and disallowed 25 items. In revision, the 
Assistant Commissioner, Sales Tax, took the same view of 
the 
Sales Tax 
B 
c 
D 
E 
F 
G 
H 
A 
a 
c 
D 
E 
F 
G 
H 
272 
SUPREME COURT REPORTS 
[1981] 2 S.C.R. 
Officer, reviewed all the 25 items disallowed and found that six more items 
to be eligible for certification. 
The further revision before the Government 
carried by the assessee failed. Thereupon the assessee filed 
a writ petition 
in the court of Judicial Commissioner, Goa. 
The 
Judicial 
Commissioner 
agreed \Vitb the views of the Sales Tax Authorities but on his scrutiny found 
that 4 more items, out of 19 items rejected, to be 
eligible for certification. 
Hence, the appeals by special leave, one by the assessee in respect of all the 
15 items and another by the Union of India regarding the 4 items found to be 
in order by the Judicial Commissioner. 
Allowing the appeal of the assessee, dismissing the appeal 
of Union of 
India and remitting the matter to the Tax Authorities for further scrutiny of 
the 14 items pressed by the assessee, the Court 
HELD: (I) Applying the test laid down in Mis. Pio Food Packers [1980) 
3 SCR p. 1271, namely, "Does the processing of the original commodity bring 
into existence a commercially different and distinct commodity?", it is clear 
that the blending of different qualities of ore possessing different chemical 
and physical composition so as to produce ore of the 
contractual specifica-
tions cannot be said to involve the process of manufacture, since the ore that 
is produced cannot be regarded 

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