DEPUTY COMMISSIONER OF SALES TAX (LAW) versus N. KANNAN NAIR & ORS.

Citation: [1988] 3 S.C.R. 489 · Decided: 08-04-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

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Judgment (excerpt)

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DEPUTY COMMISSIONER OF SALES TAX (LAW) 
V • 
N. KANNAN NAIR & ORS. 
APRIL 8, 1988 
[SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.) 
, 
Kera/a General Sales Tax Act, 1963-Section 5A( l)(a)-P. W.D. 
) 
contractor-Undertakes contract for repair of roads-Materials like 
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sand, bricks etc. used by assessee---,Whether assessable to purchase tax. 
The respondent-assessee a P.W.D. contr.actor had undertaken 
certain contract works on behalf of the Public Works Department for 
.repair of roads. 
The assessee was assessed on the purchased turnover of sand, 
bricks etc. which were used for the execution of the work. The assess· 
ment was upheld by the Appellate As!iistant Commissioner. 
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B 
c 
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In the second appeal preferred by the assessee the Tribunal found 
that it was necessary under s. SA of the Kerala General Sales Tax Act, 
1963 to have consumption of the commodity in the manufacture of 
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another commodity, the goods purchased should be consumed, the con-
sumption should be in the process of manufacture and the result must 
be the manufacture of other goods, and held that when a P. W .D. con-
tractor was using articles for constructing a sea wall or repairing public 
roads there was consumption of a commodity for the manufacture of 
another commodity and allowed the appeal. 
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. . The High Court upheld the decision of the Tribunal and rejected 
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the revision preferred by the Revenue, 
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In the Special Leave Petitions to this Court, it was contended on 
· behalf of the Petitioner-Revenue, that if no manufacturing process was 
involved, the case would fall within the scope.of s. SA(I)(a) of the Act 
because the statutory provisions spoke not only of goods consumed in 
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the manufacture of other goods for sale but also goods 'consumed 
otherwise'. 
Dismissing the Special Leave Petitions. 
HELD: Section · S·A (I)(a) speaks of goods consumed in the 
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. 489 
t.r 
A 
B 
c 
490 
SUPREME COURT REPORTS 
I 1988] 3 S.C.R. 
manufacture of other goods for purposes other than sale. [493F] 
In the instant case, the user must be in the other commodity and 
the expression 'consumed otherwise' must be so construed. When a 
P.W.D. contractor is using articles for constructing or repairing a 
public road there was consumption of a commodity for the manufacture 
of another commodity. [493F] 
Deputy Commissioner, Sales Tax (Law) Board of Revenue 
(Taxes) Ernakulam v. Pio Food Packers, [1980] 3 S.C.R. 1271; Ganesh 
Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh, [19691 3 
S.C.R. 490 and Deputy Commissioner of Sales Tax (Law), Board of 
Revenue (Taxes), Ernakulam v. Thomas Stephen & Ors. Ltd., SLP(C) 
Nos. 8747-49/1987, referred to. 
CIVIL APPELLATE JURISDICTION: Special Leave Petition 
(Civil) No. 2867 of 1988 etc. 
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From the Judgment and Order dated 1. 7 .1987 of the Kerala High 
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Court in T.R.C. No. 33of1985. 
V.J. Francis for the Petitioner. 
The Judgment of the Court was delivered by 
SABY ASA CHI MUKHARJI, J. These are petitions for leave to 
appeal under Article 136 of the Constitution from the decision of the 
High Court of Kerala. The revenue is the petitioner before the High 
Court. The respondent is the assessee. The respondent is a P.W.D. 
contractor. He had undertaken certain contract works on behalf of the 
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Public. Works Department. He had executed agreements with the 
P.W.D. for repair of roads. The question involved is, whether the 
materials used by the assessee for the said purpose can be taxed under 
purchase tax under Section 5A of the Kerala General Sales Tax Act, 
1963 (hereinafter called 'the Act'). The relevant provisions of Section 
5A(l), (a), (b), (c), (2) and (3) of the Act are as follows: 
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•· · "5A. Levy of purchase tax: (1) Every dealer who, in 
the course of his business, purchases from' a registered 
dealer or from any other person any goods, the sale or 
purchase of which is liable to tax under this Act, in 
circumstances in which no tax is payable under section 5, 
and either: 
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DY. COMMR. SALES TAX v. N.K. NAIR [MUKHARJI, J.] 
491 
(a) consumes such goods in the manufacture of other foods 
A 
for sale or otherwise; or 
{b) disposes of such goods in any manner other than by 
way of sale in the State; or 
(c) despatches them to any place outside the State except B 
as a direct result of sale or purchase in the course of inter-
state trade or commerce, shall, whatever be the quantum of 
the turnover relating to such purchase 

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