1. Dispute regarding the specification of various goods in a registration certificate under Section 8(3)(b) of the Central Sales Tax Act for use in mining and manufacture. (Para 1 , 2 )
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1964 Supreme(SC) 259
SUPREME COURT OF INDIA
J.C.Shah : K.Subba Rao : S.M.Sikri
Indian Copper Corporation Limited
Versus
Commissioner Of Commercial Taxes, Bihar, Patna
Case No. : 1021 of 1963
Date of Decision : 10/19/64
Advocates Appeared: Chatterjee P.K. : Mitra Arun Chandra : Varma S.P.
Advocates:
ARUN CHANDRA, P.K.CHATTERJI, S.P.Varma
ARUN CHANDRA, P.K.CHATTERJI, S.P.Varma
Goods qualify for specification if directly "intended for use" in manufacture or mining. This includes transport in integrated processes but excludes items that merely facilitate business operations or fulfill statutory welfare obligations, as "intended for use" is distinct from "likely to facilitate" the conduct of business.
Headnote:(A) Central Sales Tax Act, 1956 - Sections 8(1) and 8(3)(b) - Rule 13 - Registration of dealer - Specification of goods in certificate of registration - Goods intended for use in manufacture or processing of goods for sale or in mining - Interpretation of "intended for use" - Whether vehicles used for transporting raw materials from mines to factory and finished goods to storage fall within the scope - Held: Yes, where mining and manufacturing are an integrated process, such vehicles, along with their spare parts and tyres, are intended for use in the process. (Para 14)
(B) Central Sales Tax Act, 1956 - Rule 13 - Hospital equipment, medical supplies, and stationery - Whether statutory obligation to provide health services or the fact that stationery facilitates business makes such goods "intended for use" in manufacture or mining - Held: No. The mere existence of a statutory obligation to maintain hospital facilities does not create a connection between the goods and the manufacturing or mining operations. The expression "intended to be used" cannot be equated with "likely to facilitate" the conduct of business. (Paras 15, 15A, 16)
(C) Central Sales Tax Act, 1956 - Rule 13 - Cane baskets and laboratory fittings - Whether baskets used for carrying ore and laboratory fittings for sampling are intended for use in manufacture or mining - Held: Yes, cane baskets used for carrying ore and laboratory fittings used for sampling and analysis at all stages are included. However, cane baskets used for refuse collection for sanitation purposes are excluded. (Paras 17, 18)
Facts of the case:
An appellant company engaged in mining ore and manufacturing finished products applied for registration as a dealer. It sought to specify various categories of goods—including locomotives, motor vehicles, spare parts, hospital equipment, medical supplies, stationery, cane baskets, and laboratory fittings—in its registration certificate to avail of a lower tax rate. The High Court partially granted the request but excluded vehicles used between the conclusion of mining and the start of manufacturing, vehicles used for finished goods, and all hospital, stationery, and sanitation-related items.
Findings of Court:
The court found that in an integrated process of mining and manufacturing, vehicles used to transport ore to the factory and finished products to storage are intended for use in the process. Laboratory fittings are essential for sampling and analysis throughout the operation. However, hospital equipment and medical supplies, while statutory requirements for worker welfare, are not used in the actual process of manufacture or mining. Similarly, stationery facilitates the business but is not used in the manufacturing or mining process itself.
Issues: Whether locomotives, motor vehicles, hospital equipment, medical supplies, stationery, and cane baskets are "goods intended for use in the manufacture or processing of goods for sale or in mining" under Section 8(3)(b) of the Act read with Rule 13.
Ratio Decidendi: The expression "intended for use in the manufacture or processing of goods for sale or in mining" refers to goods directly involved in those operations. In an integrated mining-manufacturing operation, transport vehicles for raw and finished goods are included. However, goods that merely facilitate the business or fulfill statutory welfare obligations do not meet the criteria, as "intended to be used" is not synonymous with "likely to facilitate" the business.
Result: Appeal partially allowed.
Legal Category Hierarchy
Table of Contents
2. Whether locomotives, spare parts, hospital equipment, medical supplies, stationery, and cane baskets are intended for use in the manufacture of goods or mining operations. (Para 11 , 12 )
3. Integrated mining and manufacturing processes include transport of raw and finished goods; statutory welfare obligations do not equate to use in production or mining operations. (Para 13 , 14 , 15 , 16 , 17 , 18 )
4. Goods intended for use in manufacture or mining include those essential to the integrated production process but exclude those merely facilitating business or fulfilling welfare obligations. (Para 14 , 15 , 16 , 17 )
5. Appeal partially allowed; registration certificate modified to include vehicles, spare parts, tyres, lab fittings, and ore-carrying baskets, while excluding welfare and administrative items. (Para 19 , 20 )
6. Do vehicles used for transporting raw materials to factories or finished goods to storage qualify as goods intended for use in manufacture or processing?
Yes. In an integrated process of mining and manufacture, vehicles used for removing ore to the factory or carrying finished products from the factory to the place of storage are considered intended for use in the manufacturing or processing of goods for sale. (Para 14 )
7. Does a statutory obligation to provide medical facilities make hospital equipment intended for use in manufacture or mining operations?
No. A statutory obligation to maintain health services for workmen does not create a sufficient connection to make hospital equipment, furnishings, or medical supplies goods intended for use in the manufacturing or processing of goods or mining operations. (Para 15 )
8. Does stationery used for record-keeping and government returns qualify as goods intended for use in manufacture or mining?
No. While stationery facilitates the conduct of a business, the expression intended to be used in manufacture or mining cannot be equated with goods that merely facilitate the conduct of the business. (Para 16 )
9. Are cane baskets used for carrying ore and materials considered intended for use in manufacturing or mining operations?
Yes, cane baskets used for carrying ore and other materials are intended for use in the process. However, those used by the sanitary department for collecting refuse to protect colony cleanliness are not. (Para 17 )
J.C.SHAH, J.
(1) THE Indian Copper Corporation Ltd., is a Company incorporated under the laws of the United Kingdom and has its registered office for the purpose of its business in India at Ghatsila, District Singhbhum in the State of Bihar. The Corporation mines copper and iron ore from its own mines, transports the ore to its factory and manufactures finished products from the ore for sale. The Corporation has for the purpose of its business to purchase diverse categories of goods from outside the State of Bihar. Some of those goods are used in its factory in the process of manufacture and in the copper and kyanite mines, other goods are purchased for use in its offices, factory and mines and in the hospitals set up for affording medical facilities to its employees.
(2) ON 30/04/1957 the Corporation applied to the Superintendent of Sales Tax, Jamshedpur, for registration as a dealer under the central Sales Tax Act (74 of 1956) setting out a list of goods for specification in the certificate of registration under S. 8 of the Act. The Superintendent of Sales Tax issued the certificate of registration to the Corporation without specifying certain categories of goods which the Corporation claimed should be specified under S. 8(3)(b) of the Act. The Corporation them petitioned the High court of Patna under Articles 226 and 227 of the Constitution for an order that the Superintendent of Sales Tax be directed to specify in the goods mentioned in paragraph 4 of the petition in the certificate of registration granted to the petitioner, on 24/06/1957 and to forbear from levying or realising tax under the central Sales Tax Act from the Corporation in excess of one per cent under S. 8(1) of the central Sales Tax Act. The goods in respect of which the Corporation claimed specification in the certificate of registration were the following:
(I) Locomotives and motor vehicles;
(II) Accessories and spare parts for motorvehicles and locomotives;
(III) House-hold, laboratory, hospital and general furnishings and fittings;
(IV) Medical supplies;
(V) Stationery;
(VI) Tyres and tubes for motor vehicles; and
(VII) Cane baskets.
(3) THE High court was of the view that the following categories of goods fell within the terms of S. 8(3)(b) of the central Sales Tax Act and could be specified in the certificate of registration:
(I) Locomotives and motor vehicles actually used in carrying and removing raw materials during the process of manufacture;
(II) Locomotives and motor vehicles used both underground and on the surface during mining operations;
(III) Accessories and spare parts for such locomotives and such motor vehicles;
(IV) Tyres and tubes for such motor vehicles; and
(V) Laboratory fittings used for sampling and analysis of the ores and other raw materials in the initial stages of mining operations and in the process of manufacture.
(4) THE petition of the Corporation for specification of the remaining goods was dismissed. Against the order of the High court, with special leave the Corporation has appealed to this court.
(5) THE material provisions of the Act which have a bearing in this appeal may be read. Section 6 authorises the central government to recover tax on all sales effected by a dealer, in the course of inter-State trade or commerce during any year. Section 7, provides for registration of dealers. By the first Ss. it is provided:
"EVERY dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the central government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed."
(6) BY Ss. (3) it is provided:
"IF the authority to whom an application under Ss. (1) or Ss. (2) is made is satisfied that the application is in conformity with the provisions of this A
