State Of Maharashtra: Central Provinces Manganese Ore Company LTD. vs Central Provinces Manganese Ore Company LTD. : State Of Maharashtra

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1976 Supreme(SC) 417

SUPREME COURT OF INDIA
A.N. RAY, C.J.I., M.H. BEG AND P.N. SHINGHAL, JJ.
State of Maharashtra Appellant
Versus
The Central Provinces Manganese Ore Co. Ltd., Respondent.
The Central Provinces Manganese Ore Co. Ltd., Appellant
Versus
State of Maharashtra, Respondent.
AND
Civil Appeals Nos. 450-453 of 1976:
Civil Appeals Nos. 446-449 and 450-453 of 1976,
D/- 29-10-1976.
Advocates appeared
Mr. V. P. Raman, Addl. Sol. Genl. for India, (M/s. S. B. Wad & M. N. Shroff, Advocates with him) for Appellant in C. As. Nos. 446-449 and Respondents in C. As. Nos. 450-453 of 1976; Mr. G. L. Sanghi, Sr. Advocate and Mr. A. S. Bobde, Sr. Advocate (M/s. M. L. Vaidya, V. A. Bobde, A. G. Maneses, J. B. Dadachanji, K. J. John, O. C. Mathur and Ravinder Narain, Advocates with them), for Respondents in C. As. Nos. 446-449 of 1976 and for Appellants in C. As. Nos. 450 to 453 of 1976.

Advocates:
A.G.MENESSES, A.S.Bobde, G.L.SANGHI, J.B.DADACHAN, K.J.JOHN, M.L.VAIDYA, M.N.SHROFF, O.C.MATHUR, Ravindra Narayan, S.B.VAD, V.A.BOBDE, V.P.Raman

Headnote:
Central Provinces and Berar Sales Tax Act, 1947 - Section 23 (1) - Central Provinces and Berar Sales Tax Act 1947 - Section 2 - Sales Tax Act - Section 2 (g) – Constitution of India, 1950 - Article 286 - Transfer of property – Claim of compensation - Company is a registered dealer under the Act - It used to enter into contracts at places outside Madhya Pradesh for of what came to be known, in the special parlance of this companies business as Oriental Mixture – But contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures - Term Oriental Mixture was evidently employed by Company itself to describe a particular type of conglomerate which the unloading at one place of various types of manganese ore produced - Required average consistency or strength of manganese ore specified in contracts which did not contain a reference to any Oriental Mixture was said to be obtained in course of this mechanical process of transportation when various grades of manganese ore were heaped together - These grades of manganese ore were transported in railway wagons, from one or more mines and it appears that the order in which trucks were loaded in goods trains and unloaded was also so arranged that mixture came into existence as described in mere process of unloading at Port – But this procedure did not seem to involve a process of Manufacture as that term is ordinarily understood to which assessed could be said to have subjected its manganese ore - Case of assessed company was that Oriental Mixture as a taxable commodity came into existence only after ores got mixed up in the process of unloading and not before so that it could not be taxed as goods in existence in Madhya Pradesh at time when contracts relating to these goods were made – Held, In case of manure mixtures made out of different ingredients at a mixing works it can perhaps be said that a chemical process is gone through - In any case the product which came into existence was known and sold as a separate commercial commodity in market - It required a process to be gone through at what were known as mixing works of company to convert it into that commodity - On other hand in case before us it seems to us that what has been manufactured by assessed is the name Oriental Mixture only if the term manufacture can be employed at all for anything done by assessed - What is to be determined is whether there has been the manufacture of a new product which has a separate commercially current name in market - Mere giving of a new name by seller to what is really same product is not manufacture of a new product - There is it appears to us no new process of manufacture of goods at all by assessed before us - High Court had also made a passing reference a case decided by the Bombay High Court where different brands of tea, purchased in bulk and without application of any mechanical or chemical process were mixed so as to conform to a particular mixing formula but this mixture was held not to constitute a fresh commodity as neither processing nor alteration of the ingredients of the tea in any manner had taken place - Court think that the similarity of the process to which goods sold were subjected in this case seems to make the reasoning adopted in this case more properly applicable to cases before us than any other found in other cases mentioned - Court are unable to see how without subjecting the various grades of ores mixed up in the process of transporting so as to conform to specifications given in contract to a process of manufacture a new commercial product as it is know in market could not result - Ingredients were not even shown to have got so mixed up as to become inseparable - As already mentioned above this is a case in which the term Oriental Mixture was nothing more than a name given by appellant company itself to goods which were in the State of Madhya Pradesh at relevant time and sent from there specially in order to satisfy specifications given in contracts - Goods get mixed up in process of unloading - Mere fact that the specifications in contracts are satisfied when they get mixed up is not a good enough ground for holding that a new product has been manufactured - They could not more constitute a new commodity than parts of some machinery sent by its manufacturer to a purchaser outside a State so that buyer has to just fit in the various parts together becomes a new commodity when the parts are fitted in - Mere fitting up of parts or a mixture of goods without employing any mechanical or chemical process of manufacture could not court think result in a new commodity - Order accordingly

Judgment

BEG, J.:- The eight appeals before us by special leave arise out of four Sales Tax References under Section 23 (1) of the Central Provinces and Berar Sales Tax Act, 1947, (hereinafter referred to as the Act). Six common questions arose here relating to assessments for different periods on identically similar facts stated below. Five of these were decided by a Division Bench of the Bombay High Court. As it answered the main question determining liability to pay the sales tax under the Act against the State, there are four appeals against it by the State. The sixth question, which was one of law only, was referred by the Division Bench to a Full Bench, and, this was determined in favour of the State. There are, therefore, four appeals by the assessee against the Full Bench decision.

2. M/s. Central Provinces Manganese Ore Co. Ltd., the assessee, has its Head Office in London. It carries on business on an extensive scale. It owns 22 manganese ore mines in Madhya Pradesh from where manganese ore, after being excavated, is sent mostly abroad through different ports. The Company is a registered dealer under the Act. It used to enter into contracts at places outside Madhya Pradesh for the despatch of what came to be known, in the special parlance of this companys business, as "Oriental Mixture". But, the contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures. The term "Oriental Mixture" was evidently employed by the Company itself to describe a particular type of conglomerate which the unloading at one place of various types of manganese ore produced. The required average consistency or strength of manganese ore specified in the contracts, which did not contain a reference to any "Oriental Mixture", was said to be obtained in the course of this mechanical process of transportation when various grades of manganese ore were heaped together. These grades of manganese ore were transported, in railway wagons, from one or more mines, and, it appears that the order in which trucks were loaded in goods trains and unloaded was also so arranged that the mixture came into existence, as described above, in the mere process of unloading at the Port. But, this procedure did not seem to involve a process of "Manufacture", as that term is ordinarily understood, to which the assessee could be said to have subjected its manganese ore.

3. The case of the assessee company was that the "Oriental Mixture" as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that it could not be taxed as "goods in existence" in Madhya Pradesh at the time when contracts relating to these goods were made. This is the crucial and simple question, largely one of fact which resulted in considerable argument before the High Court and before us also. Other questions appear to be subsidiary. Nevertheless, we have to consider them before coming to the crucial question which is : Is the process described above one of "manufacture" so that a new kind of goods, known as "Oriental Mixture" came into existence at the port where manganese ore trucks were unloaded ?

4. As the High Court pointed out, the periods involved in the four references before it were not governed by the provisions of the Constitution. They related to the following periods :

1. Reference No. 17 of 1964 for the period 1st January, 1947 to 30th September, 1947.

2. Reference No. 18 of 1964 for the period 1st October, 1947 to 31st December, 1948.

3. Reference No. 19 of 1968 for the period 1st January, 1949 to 31st December, 1949.

4. Reference No. 20 of 1964 for the period 1st January, 1950 to 25th January, 1950.

We, therefore, agree with the High Courts view that Article 286 of the Constitution, which is not retrospective in operation, could not help the assessee merely because it was there at the time of assessment.

5. The next question to be considered, which