The judgment of the court was delivered by

MADON, J. - This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the Commissioner of Sales Tax.

The respondents carry on the business of processing and refining crude oil for the purpose of manufacturing kerosene from it. The crude oil so processed and refined belongs to Burmah Shell Oil Storage and Distributing Company of India Limited (hereinafter for the sake of brevity referred to as "the marketing company"). The respondents after refining the crude oil into kerosene hand over the kerosene to the marketing company. For the purpose of refining crude oil the respondents require sulphuric acid. Accordingly, they entered into an agreement dated 9th June, 1955, with the Dharamsi Morarji Chemical Company Limited (hereinafter for the sake of brevity referred to as "the chemical company") under which the respondents agreed to purchase all their requirements of sulphuric acid from the chemical company upon certain terms and conditions set out in the said agreement. For the purpose of manufacturing and supplying the respondent's requirement of sulphuric acid the chemical company had erected