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The Commissioner, Trade Tax, U.P. Lucknow v. Decent Industries - SALES/TRADE TAX REVISION No. 971 of 1996 [2004] RD-AH 1380 (9 November 2004)


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Court no. 55

Trade Tax Revision no. 971 of 1996.

Commissioner of Trade Tax, U. P. Lucknow ... Revisionist.


S/S Decent Industries, Aligarh. ....     Respondent.

Hon'ble Rajes Kumar, J.

             The present revision under Section 11 of U. P. Trade Tax Act (hereinafter referred to as ''Act') is directed against the order of Tribunal dated 19.4.1996 relating to the assessment years 1987-88.

Dealer opp. party was involved in converting the higher gauge of Sariya by process of drawing.  Dealer had purchased higher gauge of Sariya after paying tax and claimed exemption on the turnover of drawn Iron Sariya.   Assessing Authority had levied tax on the sale of Iron Sariya treating the process of drawing as manufacture and the dealer as manufacturer.  First Appeal filed by the dealer was allowed and the tax  was deleted.  Commissioner of Sales Tax filed appeal before the Tribunal which was dismissed.

Heard Learned Standing Counsel.  No one appears on behalf of the opp. party inspite of service of notice.

Tribunal held that the dealer was involved in converting the higher gauge of  Sariya into lower gauge of Sariya by process of drawing and the tax was paid on  the purchase of higher gauge of Sariya, therefore, no tax could be levied in view of Circular dated 21.12.1981 and the decision of Apex Court in the case of M/S Telangana Steel Industries and others Vs  State of Andhra Pradesh and others reported in 1994 UPTC page 847 and in view of the decision of Karnataka High Court in the case of Steel Buyers Vs. Asstt. Commissioner (Financial) reported in 84 STC 418.  

In the case of CST Versus Iron Rods Drawing Factory, 2004 NTN (Vol.25) ,752 dealer was involved in the manufacture of iron rods of given diameter from tax paid iron rods. This court held that the process does not amount to manufacture..

In the case of Divisional Deputy Commissioner of Sales Tax and another Vs. Bherhaghat Mineral Industries, reported in 120 STC, 205, Hon'ble Supreme Court held that crushing Dolomite Lumps into Chips and Powder, is not a process of manufacture and it do not brings about a new commercial commodity.

In the case of Commissioner of Sales Tax, U.P. V. Lal Kuan Stone Crusher Pvt. Ltd., reported in 2000 UPTC, 463 (SC): 118 STC, 287, Hon'ble Supreme Court held that crushing of Stone boulders into stone chips and dust for the purpose of sale may remain commercially the same goods and could not be taxed again. Hon'ble Supreme Court has considered the definition of Section 2(e-1) of U.P. Sales Tax Act. Hon'ble Supreme Court and held as follows:

"The purposes of sales tax is to levy tax on sale of goods of each variety and not the sale of the substance of out of which they may have been made. As soon as separate commercial commodities emerge or come into existence they become separately taxable goods for purchases of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to come processing or finishing, they may remain commercially the same goods which can not be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type. We are, fortified in this view by the decision in State of Tamil Nadu v. Pyare Lal Malhotra, (1976) 37 STC 319 (SC) : (1976) 1 SCC 834. what is to be seen in the present case is whether stone Gitti, Chips etc. continue to be identifiable with the stone boulders, which have been bought by the dealer.

In the present case, however, stone, as such, and Gitti and articles of stones and all of similar nature though by size they maybe different. Even if Gitti, Kankar, Stone ballast, etc, may all be looked upon as separation commercial character from stone boulders offered for sale in the market, yet it cannot be presumed that Entry 40 of the notification is intended to describe the same as not stone at all. In fact the term "stone" is wide enough to include the various forms such as gitti, kankar, stone-ballast. In that view of the matter, we think that the view taken by the majority of the Tribunal and affirmed by the High Court stands to reason. We are, therefore, not inclined to interfere with the same."

In the case of State of Maharashtra V. Laxmi  Stores, reported in 2002 UPTC, 453 (SC) : S.T.I. 2002 (45) S.T.I 97 (SC), Hon'ble Supreme Court has held that crushing of big size Stone Boulders into a small size, known as Gitti does not amount to manufacturing within the definition of Section 2 (17) of Bombay Sales Tax Act. Apex Court held as follows :

"The contention of the assessee that converting boulders into ''gitti '' does not involve any manufacturing process within the meaning of the Act, was accepted by the Tribunal. From the order, the aforementioned question was referred to the High Court at Bombay. Following the judgments of Deputy Commissioner of Sales Tax v.Pio Food Packers, 1981 U.P.T.C. 667 (SC): 46 S.T.C. 63 ; Chowgule and Co. Pvt Ltd and another v. Union of India and others, 1981 U.P.T.C. 702 (SC): 47 S.T.C. 124 and Sterling Foods v. State of Karnataka and others, 1986 U.P.T.C. 1236 (SC) : 63 S.T.C.239, the High Court held that the conversion of boulders into ''gitti' did not amount to ''manufacture'. It is this view of the High Court that is assailed in this appeal by the Revenue.

In view of above discussions, I do not find any error in the order of Tribunal.

In the result, revision fails and is accordingly dismissed.




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