( 1 ) AT the instance of the State the following questions have been referred to us under sec. 69 (1) of the Gujarat Sales Tax Act 1969 (hereinafter referred to as the Gujarat Act) for our opinion: 1 Whether on the facts and circumstances of this case the Tribunal was right in law in holding that mixture of Sopari Variyali Dhana-Dal sweet flavoured powder etc. as affected by the opponent and sold under the popular name of the relevant Pan-Masala did not amount to manufacture within the meaning of that expression as defined in sec. 2 (16) of the Gujarat Sales Tax Act 1969 accordingly in allowing the opponent to deduct the sales thereof as resales of goods purchased from registered dealers in terms of clause (ii) of sec. 7 of the said Act?

( 2 ) WHETHER on the facts and circumstances of this case the Tribunal was right in law in holding that the opponents sales of Pan-masala containing the mixture of Sopari Chuno and tobacco were sales of a form of tobacco within the meaning of Item no. 4 of the first Schedule to the Central Excises and Salt Act 1944 and that therefore they were sales of tobacco within the meaning of Entry 43 of Schedule I to the Gujarat Sales Tax Act 1969 and that. therefore they were free from all taxes ? 2 A few facts need be stated as found by the Tribunal in order to appreciate the contentions urged on behalf of the State Government in support of this reference. The opponent-assessee is a registered dealer under the Gujarat Act and is a carrying on business to sell Pan-Bidi match-boxes cigarettes etc in the city of Ahmedabad. The assessee also sells what is popularly known as Pan Masala which is a mixture of Sopari (betal-nut) Variyali Dhana-Dal and sweet flavoured powder. The assessee also sells another type of Pan-Masala which is again a mixture of tobacco Chuna and Sopari.

( 3 ) IN the course of the assessment for the period commencing from Kartik Sud 1 to Aso Vad 30 of S. Y. 2030 the Sales Tax Officer found that since there is mixing of these different articles so far as the first type of Pan-Masala is concerned or some treatment so far as the second type of Pan-Masala is concerned there was some activity of processing or adapting and therefore the assessee was held to be liable to pay sales tax and general sales tax under Entry 13 of Schedule Ill to the Gujarat Act on the sales of these two types of Pan-Masala. For purposes of assessing the liability the Sales Tax Officer estimated the sales off Pan-Masala of both the varieties at 20% of sales of all the goods of the assessee and accordingly worked out the turnover of sales of Pan-Masala of both the varieties in sum of Rs. 17 360 and brought the said amount to tax under the aforesaid entry. The Sales Tax officer also imposed a penalty under sec. 45 (6) read with sec. 45 (2) (c) of the Gujarat Act with which however we are concerned in this reference.

( 4 ) THE assesse being aggrieved with the order of the Sales Tax Officer carried the matter in appeal before the Assistant Commissioner of Sales Tax (Appeals ). The Assistant Commissioner of Sales Tax partially allowed the appeal by reducing the estimates of the sales of Panmasala of both the varieties from 20% to 10% and accordingly estimated the turnover of the sales in that behalf in sum of Rs. 8 673 and brought it to tax under the aforesaid Entry 13 of Schedule III to the Gujarat Act.

( 5 ) THE assessee therefore carried the matter in second appeal before the Gujarat Sales Tax Tribunal. The Tribunal on consideration of the relevant evidence in that behalf found that the constituent ingredients in both the varieties of Pan Masala retain their original characteristics and form and the mere fact that in the first variety of Pan Masala there was a blending of different articles or there was treatment of tobacco by application of Chuno in the second variety would not have 2ny material bearing on the question since the original constituent articles retain their original form and characteristic