Judgment

BHAGWATI, J.:- These two appeals by special leave are directed against a judgment of the Judicial Commissioner, Goa, Daman and Diu, partly allowing a writ petition filed by Chowgule & Co. Pvt. Ltd. (hereinafter referred to as the assessee) for quashing an order of the Lieutenant Governor, Goa, Daman and Diu dated 22nd August, 1970. The question which arises for determination in these two appeals is a short one but in order to appreciate the arguments bearing upon it, it is necessary to state a few facts giving rise to the controversy between the parties.

2. 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 and blending it. The assessee owns mines at Sirigao, Pale and various other places in the territory of Goa. The extraction of ore from the mines at Sirigao and Pale is carried on by mechanised process while the extraction of ore from the other mines is done by manual labour. When the ore is extracted from the mines it is carried to the dressing plant where it is washed, screened and dressed and then it is stacked at the mining site from where it is carried by conveyor belts to the river side for being carried by barges to the Marmagoa harbour. Before the ore is carried from the mining site to the river side, its chemical as well as physical composition is ascertained by taking samples and testing them in the laboratories at each major mine and this process is carried on every day round the clock in order to ascertain the chemical and physical composition of the ore which comes to Marmagoa harbour. Since the chemical and physical composition of the ore varies from mine to mine and even within the same mine itself, intramine blending of the ore is carried out at the mining site with a view to arriving at a certain specified chemical and physical composition. When the ore carried by barges arrives at the Marmagoa harbour, it is stacked in different stock-piles according to its chemical and physical composition. Since the assessee sells the ore only in the export market, it has to supply ore to the foreign buyers in accordance with the specifications required by them and therefore it is required to carry out blending of the ore mined by it in such a manner as to produce ore of the required chemical and physical composition. This operation of blending is carried out by the assessee, not before the loading of the ore into the ship, but in the process of loading itself through the mechanical ore handling plant. What is done is to draw different quantities of ore from different stock piles and put them together in the mechanical ore handling plant so that they get blended in the process of loading and the blended ore which is actually loaded into the ship is ore of the contractual chemical and physical composition. The mechanical ore handling plant thus performs a dual function, namely, blending of ore from different stock piles containing ore of different chemical and physical composition and loading of the blended ore into the ship for delivery to the foreign buyers. It will thus be seen that the entire activity of the assessee is broadly divisible into 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. The question is whether goods purchased by the assessee for use in the above operations could be said to be goods purchased for use "i