Gauhati High Court
North East Pure Drink Pvt. Ltd. vs State Of Assam And Ors. on 1 June, 2004
Equivalent citations: [2005]140STC185(GAUHATI)
JUDGMENT B.K. Sharma, J.
1. The petitioner is a private limited company engaged in the business of manufacturing and selling of soft drinks in agreement with "Pepsi". It is registered under the Central Sales Tax Act, 1956 and the Assam General Sales Tax Act, 1993. The petitioner is aggrieved by the order of penalty imposed on it by the order of the Superintendent of Taxes, Guwahati, Unit-B and the order of affirmation of the same passed by the Commissioner of Taxes, Assam on the revision petition filed by the petitioner.
2. The petitioner imported Visicoolers (a type of refrigerator) and stabilizers from M/s. Allwyn (a unit of M/s. Voltas Ltd.), Herderabad, Andhra Pradesh, worth Rs. 1,07,33,212 by using delivery note forms (form XXIV under the Assam General Sales Tax Rules, 1993) making declaration to duly account for the disposal of the same and to pay taxes on sales thereof according to the provisions of the Assam General Sales Tax Act, 1993 and the Rules framed thereunder. The petitioner issued Central sales tax declaration in form "C" covering the purchases in question for import involving a total amount of Rs. 54,78,022 out of the total import worth Rs. 1,07,33,212 and thereby availed the benefit of purchase of goods at the concessional rate of rupees 4 per cent in respect of the import of the goods.
3. The petitioner was issued with a notice under No. 12153 dated January 27, 2000 to show cause in writing as to why a penalty should not be imposed as per the provisions of Section 10A of the Central Sales Tax Act, 1956 for committing the offences punishable under Section 10(b), (d) of the aforesaid Act. In response to the notice the petitioner appeared before the Superintendent of Taxes on February 16, 2000 and submitted show cause reply. While admitting the fact of import of Visicoolers and issue of Central sales tax declaration in form "C" against the purchase of the same to the tune of Rs. 54,78,022 out of the total purchase to the tune of Rs. 1,07,33,212, the petitioner, inter alia, contended that the Visicoolers were installed at the distributors point on payment of token amount of security ranging from Rs. 500 to 1000 with the condition that the storage would be restricted to Pepsi products only and that the distributors were to use Visicoolers as the soft drinks are required to be sold cold and that it is an integral part of ultimate "manufacture" of goods since without the same, the marketing of soft drinks is not commercially viable. It was also submitted on behalf of the petitioner that as per the specification of plants, machineries, spare parts and accessories for different manufacturing units, the item Visicoolers is not required to be incorporated in the Registration Certificate, although it is a "plant" which is required for manufacturing of soft drinks.
4. The Superintendent of Taxes rejected the contentions of the petitioner holding that the petitioner fabricated the whole matter to cover up the odds. The Superintendent examined different statements, documents available on records and as submitted by the petitioner and found that the petitioner towards importing the Visicoolers and stabilizers made declaration to duly account for the disposal of the same and to pay taxes on sales thereof according to the provisions of the Assam General Sales Tax Act, 1993 and the Rules framed thereunder. The petitioner did not obtain delivery permits in form "B" and got the consignment notes countersigned before taking delivery of the consignment of goods. It issued Central sales tax declaration in form "C" as noted above. The Superintendent held that the issue of such Central sales tax declaration in form "C" was not in consonance with the prescription laid down in Clause (b) of Sub-section (3) of Section 8 of the Central Sales Tax Act, 1956. Moreover the items were not covered by the certificate of registration granted to the petitioner under the Act. The Superintendent found and held that the petitioner falsely represented when purchasing goods that such goods were covered by the certificate of registration and that after purchasing the same for any of the purposes as specified in Sub-section (3) of Section 8 of the Central Sales Tax Act, 1956, the petitioner failed to make use of the goods for any such purposes. The entire episode was held to be pre-conceived and was prompted by the motive to derive wrongful gain and to cause wrongful loss of revenue. Thus the petitioner was held to have committed offences punishable under Section 10(b), (d) of the Central Sales Tax Act. Consequently the petitioner was imposed with the penalty of Rs. 8,80,396 under Section 10A of the Central Sales Tax Act.
5. Being aggrieved the petitioner preferred a revision before the Commissioner of Taxes, Assam urging various grounds such as, there was no mis-representation at the time of purchasing the Visicoolers as the supplier had collected the copy of the registration certificate under the Central sales tax in absence of "C" form before dispatch of goods ; bona fide belief towards making use of "C" forms ; the goods purchased were used "in manufacturing/processing of goods for sale", because the commercial production would have been inexpedient in absence of use of such goods ; the petitioner being entitled to purchase goods specified in Rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957 and the goods so purchased, even if not included, should be deemed to have been included in the registration certificate, no mala fide intention in obtaining and issue of "C" forms, etc.
6. The Commissioner of Taxes, Assam, by his order dated September 4, 2000 rejected the revision petition of the petitioner and upheld the order passed by the Superintendent of Taxes. In the order it noted, that the petitioner had already paid an amount of Rs. 4,00,000 before filing of the revision petition and another Rs. 1,00,000 after filing of the revision petition out of the total penalty amount of Rs. 8,80,396. The Commissioner noted in his order that the Visicoolers with stabilizers were supplied by the petitioner to its authorised distributors free of cost after taking a nominal security, solely for the purpose of keeping the products in chilled condition. The Commissioner held in the impugned order that the manufacturing process cannot be extended up to marketing stage. It rejected the claim of the petitioner that Visicoolers is an equipment used in the manufacture of the product, It also noticed towards arriving at such a finding that Visicooler or refrigerator was not included in the certificate of registration and thus the petitioner had no authority to use form "C" in importing Visicoolers with stabilisers. As regards the bona fideness in the action and absence of any mens rea the Commissioner found that the petitioner did not give any explanation as to why form "C" was used in importing the items which was not included in the certificate of registration. According to the Commissioner, the deposits made by the petitioner to the tune of Rs. 4,00,000 even before making and filing the revision petition and another amount of Rs. 1,00,000 during pendency of the revision petition was a pointer to the fact that the petitioner had accepted the offence committed by it. With such reasonings the revision petition was rejected by the impugned order dated September 4, 2000 upholding the order of the Superintendent of Taxes.
7. It is the legality and validity of the aforesaid two orders which have been challenged by invoking the writ jurisdiction of this Court by way of filing the present writ petition. In the writ petition, the grounds urged before the Superintendent and the Commissioner have been reiterated. According to the writ petitioner, the said two authorities failed to deal with the matter in its true perspective. Dr. B.P. Todi, learned Senior Counsel appearing on behalf of the petitioner made submissions in tune with the grounds that were urged before the said two authorities. He placed reliance on certain decisions to bring home his points of arguments. The decisions are as reported in [1965] 16 STC 259 (SC) (Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes), [1965] 16 STC 563 (SC) (J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer), 11990] 77 STC 203 (SC) (Collector of Central Excise v. Eastend Paper Industries Ltd.), [1971] 27 STC 199 (MP) (Pannalal Umesh Kumar of Ghoghar v. Commissioner of Sales Tax), [1990] 78 STC 283 (Gauhati) (Braja Lal Banik v. State of Tripura), [1970] 25 STC 211 (SC) (Hindustan Steel Ltd. v. State of Orissa) and [1997] 104 STC 89 (SC) (Commercial Taxes Officer v. Rajasthan Electricity Board).
8. The respondents by filing an affidavit have justified the impugned orders and Mr. H.K. Mahanta, learned State Counsel made his submissions on that basis. He submitted that the use of Visicoolers and stabilizers were/are no way connected with the kind of manufacturing process, the petitioner undertakes towards final product of soft drink called "Pepsi".
9. The facts leading to the passing of the impugned orders are not in dispute. The questions that emerge for decision are--(a) whether the Visicoolers and stabilizers imported by the petitioner were for use of it in the manufacture or processing of "Pepsi" for sale within the meaning of Section 8(3) of the Central Sales Tax Act, 1956 and (b) whether the declaration made by the petitioner in form "C", thereby availing the benefit of purchase at the concessional rate of tax was an action taken on good faith without there being an element of mens rea. As regards the first question, it was argued on behalf of the petitioner that the Visicoolers purchased and imported by it were for use in the manufacture or processing of goods for sale within the meaning of Section 8(3) of the Central Sales Tax Act, 1956 and thus it rightly paid tax at concessional rate by making the declaration in form "C". It is in this context the decisions in Indian Copper Corporation Ltd. [1965] 16 STC 259 (SC), J.K. Cotton Spinning & Weaving Mills Co. Ltd. [1965] 16 STC 563 (SC), Eastend Paper Industries Ltd. [1990] 77 STC 203 (SC) and Rajasthan Electricity Board [1997] 104 STC 89 (SC) were referred to.
10. In the case of Indian Copper Corporation Ltd. [1965] 16 STC 259 (SC), the assessee mined copper and iron ore from its own mines, transported the ore to its factory and manufactured finished products from the ore for sale. The assessee had for the purpose of its business to purchase diverse categories of goods from outside the State. Some of those goods were used in its factory in the process of manufacture and in the copper and kyanite mines ; other goods were purchased for use in its offices, factory and mines and in the hospitals set up for affording medical facilities to its employees. The question was whether the goods such as locomotives and motor-vehicles and its accessories, household, laboratory, hospital and general furnishings and fittings, medical supplies, stationery, tyres and tubes for motor vehicles, cane baskets, etc., should be specified under Section 8(3)(b) of the Central Sales Tax Act, 1956 in the registration certificate issued to the assessee. The apex Court held that the petitioner in that case being engaged both in mining operations and in the manufacturing process and both being interdependent, it would be impossible to exclude vehicles which are used for removing from the place where the mining operations are concluded to the factory where the manufacturing process starts. It observed that the process of mining ore and manufacture with the aid of ore copper goods is an integrated process and there would be no ground for exclusion from the vehicles those which are used for removing goods to the factory after the mining operations are concluded. Likewise, the cane baskets used by the sanitary department for collecting refuse to protect the health and cleanliness of the colony and the workmen employed in the manufacture of goods, cannot, on the test be specified in the certificate of registration and that the baskets used for such purpose cannot be said to be not intended for use in the process of manufacturing or mining operations.
11. I fail to see any reason as to how this case can help the case of the petitioner. In that case the petitioner was engaged in both mining operations and manufacturing process. Both the processes being interdependent, the vehicles that were used for removing the goods from the factory after the mining operations were over to the factory where manufacturing process started could not have been excluded from the purview of manufacturing process. Same is the case in respect of cane baskets which were used for collecting refuse and carrying ore and other materials used in mining or in the manufacture of goods.
12. In the case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. [1965] 16 STC 563 the apex Court interpreting the expression "in the manufacture of goods" in Section 8(3)(b) of the Central Sales Tax Act, 1956, observed that it normally encompasses the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, fall within the expression "in the manufacture of goods". In that case the High Court negatived the contentions of the company that the Sales Tax Officer had no jurisdiction to revise the certificate of registration issued after due enquiry, and rejected the petition holding that drawing instruments, photographic materials, colours, chemicals, electricals, machinery and building materials, such as cement, and lime, are not comprehended in the expression "in the manufacture or processing of goods for sale" within the meaning of Section 8(3)(b) read with Rule 13 framed under Section 13 of the Act. It observed that if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment. In the same breath, it hastened to add that the same does not mean that every category of goods "in connection with" manufacture of, or "in relation to" manufacture, or which facilitates the conduct of the business of manufacture will be included within Rule 13.
13. In the instant case also, the petitioner placed reliance on Rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957 in its plea that it had imported Visicoolers and stabilizers as was permitted by Rule 13 and accordingly issued "C" form towards purchase of the goods under bona fide belief that the same were required for manufacture. However, the issue involved in the case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer [1965] 16 STC 563 (SC) was altogether different having no nexus whatsoever, with the issue involved in this case.
14. In the case of Rajasthan Electricity Board [1997] 104 STC 89, the apex Court affirming the decision of the High Court, held that the motor vehicles, etc., soaps, paints, raincoats and battery cells, to the extent mentioned by the High Court, were integrally related to the distribution of electricity and their non-use would make distribution of electricity commercially inexpedient. In that case the High Court held that the Rajasthan Electricity Board, which was engaged in the business of generation and distribution of electricity, could purchase, in the course of inter-State trade, at concessional rate of tax under Section 8(1) of the Central Sales Tax Act, 1956, and that the Board was entitled to have its certificate of registration altered to include "tools and plants, including vehicles and other transportable goods, including their spare parts, tubes and tyres". The items indicated by the High Court were integrally connected with the generation and distribution of power and the view of the High Court was affirmed by the apex Court having regard to such kind of a situation.
15. Likewise in the case of Eastend Paper Industries Ltd. [1990] 77 STC 203, the apex Court was seized with the question as to whether wrapping paper was in the process of manufacturing, where the company was involved in manufacturing of paper, packed and wrapped in paper. It was held that wrapping paper was essential for the goods to be marketable, to be wrapped in paper and that the processes incidental or ancillary to wrapping are to be included in the process of manufacture, and manufacture in the sense of bringing the goods into existence as these are known in the market is not complete until these are wrapped in wrapping paper. The apex Court observed "manufacture is the process or activity which brings into existence new, identifiable and distinct goods. Goods have been understood to be articles known as identifiable articles, known in the market as goods and marketed or marketable in the market as such."
16. Coming to the instant case, can it be said that Visicoolers and stabilizers are integrally and inseparably connected with the manufacture of "Pepsi" and that the use of the Visicoolers bring into existence a new, identifiable and distinct goods. In this connection, some of the decisions of the apex Court are referred and discussed below to arrive at a conclusion relating to the issue involved in this proceeding.
17. In the case of Union of India v. Delhi Cloth and General Mills Co. Ltd. as reported in AIR 1963 SC 791 dealing with the word "manufacture" observed, the word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some changes in a substance", however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol-26, from an American Judgment. The passage runs thus :
"'Manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation ; a new and different article must emerge having a distinctive name, character or use."
18. Referring to various definitions of the term "goods", the apex Court observed that to become "goods" an article must be something that can ordinarily come to the market to be bought and sold. The consideration of the meaning of the word "goods" provides strong support for the view that "manufacture" must be the "bringing into existence of a new substance known to the market".
19. In the case of Sterling Foods v. State of Karnataka as reported in [1986] 63 STC 239 (SC) ; (1986) 3 SCC 469 dealing with the question as to whether the assessee was entitled to exemption from tax under Section 5(3) of the Central Sales Tax Act in respect of purchase turnover of shrimps, prawns and lobsters the apex Court held that the purchases being of the same commodities, the assessee was entitled to exemption. In that case, in the context of the provisions of the Karnataka Sales Tax Act, 1957 the question that arose for determination was as to whether shrimps, prawns and lobsters, when subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing, retain their original character and identity or become another distinct commodity. The court observed that the test is as to whether the processed commodity is regarded in the trade by those who deal in it as distinct in identity from the original commodity or it is regarded, commercially and in the trade, the same as the original commodity. It was pointed out that it is not every processing that brings about change in the character and identity of a commodity. The nature and extent of processing may vary from one case to another and indeed there may be several stages of processing and perhaps different kinds of processing at each stage. With each process suffered, the original commodity experiences change. But it is only when the change or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct commodity that it can be said that a new commodity, distinct from the original, has come into being. The court observed that the test is whether in the eyes of those dealing in the commodity or in commercial parlance the processed commodity is regarded as distinct in character and identity from the original commodity. In the instant case the use of the Visicoolers is not in the manufacturing process of "Pepsi". It is an admitted position that the manufacture of "Pepsi" was complete and the use of the Visicoolers as contended on behalf of the petitioner was for the purpose of making the "Pepsi" commercially expedient and marketable.
20. In the case of Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63, the apex Court held that pineapple fruit purchased for preparing pineapple slices for sale in sealed cans is not "consumed in manufacture of other goods". This was relied upon in the aforesaid case of Sterling Foods [1986] 63 STC 239 (SC); (1986) 3 SCC 469 towards holding that the generally prevalent test is whether the article produced is regarded in the trade by those who deal in it, as distinct in identity from the commodity involved in its manufacture. The same reasoning found favour of the apex Court in the case of Chowgule & Co. Pvt. Ltd. v. Union of India as reported in [1981] 47 STC 124 ; (1981) 1 SCC 653. Likewise in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Coco Fibers as reported in [1991] 80 STC 249 ; (1992) Supp (1) SCC 290, the court dealing with the meaning of "manufacture" held that by process of manufacture something is produced and brought into existence which is different from that, out of which it is made in the sense that the things produced is by itself a commercial commodity capable of being sold or supplied. The question before the court was whether any manufacturing process is involved in converting the husk into fibre, and whether the fibre is different from the husk as a commercial commodity. Taking recourse to the dictionary meaning of the word "manufacture" and relying upon its earlier decision as reported in [1989] 74 STC 401 (SC) ; (1989) 3 SCC 488 (Ujagar Prints v. Union of India), the court concluded that the green husk which is soaked into saltish sea water for days together and after decomposition, on being subjected to beating either by manual or mechanical process, fibre is produced in the process, which is a distinct commodity known in the commercial parlance. It observed that no one in the market would sell or supply husk when fibre is asked for.
21. In the case of State of Maharashtra v. Shiv Datt & Sons as reported in [1992] 84 STC 497 (SC) ; (1993) Supp 1 SCC 222, it was held that sale of recharged batteries by dealer who purchased them as dry batteries from the manufacturer, no "manufacture" is involved in re-introducing electrolyte (thrown away by manufacturer to facilitate transportation). To accept the proposition of involvement of manufacture in such a situation, the court observed that in that case if a dealer purchases certain goods and merely adds some decorative materials thereto, there will be a "manufacture". For instance, if a car is purchased and some lights or some special gadgets are added thereto, the interpretation will result in rendering the resale of the same car the resale of a different commodity.
22. In the case of Union of India v. J.G. Glass Industries Ltd. as reported in [1999] 114 STC 387 ; (1998) 2 SCC 32, the apex Court on an analysis of case laws held that a twofold test emerges for deciding whether the process is that of "manufacture". First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist ; secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity is already in existence will be of no commercial use but for the said process. In that case the apex Court was concerned with the question as to whether printing names or logos on the plain bottles change the character of the commodity. It found that the plain bottles were themselves commercial commodities and could be sold and used as such and thus held that the process of printing names or logos on the bottles, the basic character of the commodity did not change. It observed that the process of printing, the bottles would serve no purpose or were of no commercial use.
23. In the case of Indian Poultry v. Sales Tax Officer as reported in [1999] 113 STC 507 (SO ; (1999) 9 SCC 162, rearing of chicks until they become marketable broilers has been held to be manufacture of goods within the meaning of the Madhya Pradesh General Sales Tax Act, 1958. In the case of Collector of Customs and Central Excise v. Paper Products Ltd. as reported in [2000] 119 STC 552 (SC) ; (2000) 2 SCC 134 the question was whether there is an act of manufacture when a job-worker prints a name on a film which is then utilised for the purposes of packaging. Referring to the decision in J.G. Glass Industries Ltd. [1999] 114 STC 387 ; (1998) 2 SCC 32 the apex Court held that the question was covered by the said judgment. In the case of B.P.L. India Ltd. v. Commissioner of Central Excise as reported in (2002) 5 SCC 167, the apex Court held in reference to Section 2(f) of the Central Excise Act that it is well-settled that the questions as to when a manufacture of product take place is a mixed question of law and fact and that the nature and extent of processes may vary from case to case, It observed that when a change takes place and new and distinct article comes into existence known to the consumers and the commercial community as a commercial product, which can be no longer regarded as the original commodity, such a change constitutes a process of manufacture. In that case the apex Court relied on its earlier decision in Delhi Cloth and General Mills AIR 1963 SC 791. Same view has been expressed in the case of State of Maharashtra v. Mahalaxmi Stores as reported in [2003] 129 STC 79 (SC); (2003) 1 SCC 70. Crushing of boulders into gitty, held, does not result in a new commercial commodity and hence does not amount to "manufacture".
24. In the case of Empire Industries Ltd. v. Union of India as reported in [19871 64 STC 42 ; (1985) 3 SCC 314, the apex Court observed as follows :
"Whatever may be the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes such a process which will be part of "manufacture". Any process or processes creating something else having a distinctive name, character and use would be manufacture."
25. Applying the above test of "manufacture", can it be said that use of the Visicoolers by the distributors as supplied to them by the petitioner results in transformation in any manner of the "Pepsi" bottle into a new and distinct product than the original one. There is no dispute that the petitioner is engaged in manufacture of "Pepsi" and the manufactured products are sold to its distributors. Nothing has been brought to the notice of the court that the supply of Visicoolers to the distributors is an integral part of such distribution. Even if it is held to be so, such distribution of Visicoolers to the distributors can only be for the purpose of marketing the products unconnected in any manner with the "manufacture" itself of "Pepsi". The distributors themselves do not go for retail sales. After the distribution to the distributors, they go for retail sales to the retailers who in turn go for sale of the "Pepsi". As to in what manner the "Pepsi" is sold cannot be said to be connected with any manufacturing process of the final product of "Pepsi". Sale of "Pepsi" in its cold form does not result in any kind of variation so as to term the original "Pepsi" to be a distinct and separate commodity losing its original character. Otherwise, shrimps, prawns and lobsters subjected to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing will also be regarded as not retaining their original character and identity or become another distinct commodity. Likewise, printing of names and logos on empty bottles will also be regarded as a process of "manufacture". Similarly, pineapple fruit purchased for preparing pineapple slices for sale in sealed cans will have to be regarded as "consumed in manufacture of other goods".
26. In all the above referred cases the real test and principle involved relating to "manufacture" is as to whether by the process or processes in question, a new commodity distinct and different from the original commodity comes into existence. Apart from the fact that the Visicoolers themselves are not used by the petitioner for manufacturer of "Pepsi", the use of the same by the distributors and its marketing by them does not involve in any kind of emergence of a new and distinct commodity loosing its original character. "Pepsi" remains "Pepsi" without any variation of its original character by the use of Visicoolers and does not transform to a distinct and different commodity. Even if, the soft drink "Pepsi" is required to be sold cold, apart from the fact that the distributors themselves do not go for such sale making use of the conditioning made by the Visicoolers, the retailers can adopt their own methodology to make it cold for the purpose of sale. This process does not involve any kind of participation on the part of the manufacturer and even if there is any, same cannot be said to be a process of "manufacture" as has been interpreted and explained by the apex Court in the aforesaid decisions.
27. The reliance placed by the petitioner in Rule 13 of the aforesaid rules of 1957 is also misplaced. The goods referred to in Clause (b) of Sub-section (3) of Section 8 of the Central Sales Tax Act, 1956 which a registered dealer may purchase shall be the goods intended for use by him as raw materials, processing materials, machinery, plant, equipment, tools, stores, spare parts, accessories, fuel or lubricants in the manufacture or processing of goods for sale as enumerated in Rule 13 cannot encompass the use of Visicoolers by the distributors as supplied by the petitioner. Such use cannot be said to be in the "manufacture or processing of goods" for sale. It is an admitted position that before distributing the Visicoolers to different distributors/dealers, the soft drink manufactured by the petitioner-company was/is already sold to them. Thus the supply of Visicoolers is nothing but a market promotion scheme and not a manufacturing process.
28. Thus the first issue is decided against the petitioner which necessarily will lead to the second issue as to whether the declaration made by the petitioner in form "C" availing the benefit of tax exemption was an action taken on good faith without there being an element of mens rea. Both the authorities have decided the issue against the petitioner. Such concurrent finding of facts cannot be interfered with lightly in exercise of power of judicial review under Article 226 of the Constitution of India, unless it is established that such findings are perverse and based on no evidence/materials. It is on record that the petitioner as per their own documents submitted before the Superintendent of Taxes made declaration to duly account for the disposal of the Visicoolers and to pay taxes on sales thereof according to the provisions of the Assam General Sales Tax Act, 1993. The petitioner did not obtain delivery permits in form "B" and get the consignment notes countersigned before taking delivery of the same as required under the notification issued under Section 46(1) of the Assam General Sales Tax Act, 1993. The petitioner issued CST declaration in form "C" availing the benefit of purchase at the concessional rate of tax. Sub-clause (3) of Section 8 of the Central Sales Tax Act, 1956, provides that the goods to the class or classes specified in the certificate of registration of a dealer registered under the Act are admissible for purchase at the concessional rate of tax for the purposes mentioned therein one of which is for use by the dealer in the manufacture or processing of goods for sale.
29. As noticed by the Superintendent of Taxes, in order to achieve eligibility for availing the benefit of concessional rate of tax, some of the relevant factors are that the goods must be covered by the certificate of registration ; that the finished products meant for resale are eligible for purchase at the concessional rate of tax ; that the raw materials and other materials which are directly connected with the manufacturing and processing activities are eligible for purchases and that the goods purchased for any of the purposes specified in Clause (b) of Sub-section (3) of Section 8 of the Central Sales Tax Act shall be utilised for those purposes only. As noticed above, Rule 13 of the 1957 Rules is also clear in this respect. The petitioner being registered under the Act was, thus, found to have falsely represented while purchasing the goods that the certificate of registration covers such goods and that such goods would be utilised for any of the purposes as specified in Sub-section (3) of Section 8 of the Central Sales Tax Act, 1956. Admittedly and as enumerated above, the petitioner did not make use of the goods for any such purposes. On the basis of such finding of fact the Superintendent of Taxes held the entire episode to be pre-conceived and with a motive to derive wrongful gain which naturally would cause wrongful loss of revenue.
30. As has been held above, the "manufacture" of goods and "marketing of finished products" are two different issues having independent bearing so far as the production and sales are concerned. The Superintendent of Taxes found that the petitioner itself admitted that the Visicoolers are used in the process of selling of soft drinks at the distributors point unconnected in any manner in the manufacture of goods. The eligibility of a concessional rate of tax by way of utlising CST declaration in form "C" in purchasing goods are neither directly connected with the process of manufacture of the finished products nor it can be mingled with the sale/marketing by the dealer. On that score the Superintendent of Taxes held that such goods are not utilised for any manufacturing/processing purposes and handing over of such goods to the distributors amounted to a breach of a condition laid down in the CST declaration in form "C". The petitioner also misrepresented at the time of issue of such CST declaration in form "C" that such goods were covered by its certificate of registration and also that it was entitled to purchase the same at the concessional rate of tax, With such finding of facts having regard to the attending circumstances and relevant considerations, the contention of the petitioner that the action was bona fide without there being any element of mens rea was rejected. Issuance of "C" forms in respect of items not covered by certificates amounted to false representation.
31. The Commissioner of Taxes also rejected the contention of the petitioner by his order dated September 4, 2000. It was noticed that the items Visicoolers and stabilisers were not covered by the certificate of registration and the same were not used for any of the purposes as mentioned in Clause (b) of Sub-section (3) of Section 8 of the Central Sales Tax Act, 1956 read with Rule 13 of the 1957 Rules. The Commissioner found that the contents of the letter dated August 18, 2000 issued by the Pepsi Food Ltd., also suggested that the use of Visicoolers is not essential even for marketing of the product. Upon evaluation of the material facts available on record, the Commissioner upheld the finding of facts recorded by the Superintendent and rejected the revision application. It also noticed as to how the petitioner before filing of the revision application had already deposited an amount of Rs. 4,00,000 and another Rs. 1,00,000 after filing of the revision application. The apex Court in the case of Commissioner, Sates Tax, U.P. v. Eicher Goodearth Ltd. [2001] 121 STC 270 ; (2001) 9 SCC 265, noticing the findings of fact reached by the Tribunal held, interference with the same by the High Court by way of reversing such finding was not justified. It observed that there was no justification for the High Court to go into the questions of fact and reverse the findings of the fact-finding authority.
32. There cannot be any second opinion that the writ court in exercise of its power of judicial review under Article 226 of the Constitution of India is not to determine the question of fact in the kind of proceeding as in the instant case. The finding of facts arrived at by both the authorities cannot be said to be perverse or based on no evidence/materials. The concurrent findings of fact cannot be lightly interfered with in absence of any materials warranting the same. The object of Section 10(b) of the Central Sales Tax Act, 1956, is to protect the revenue by preventing misuse of registration certificate and construing the same in the manner as the petitioner had urged would defeat the object. The very fact that the Visicoolers and stabilisers purchased under "C" form was not entered in the registration certificate gives rise to an irresistible inference that the false representation by furnishing the declaration in form "C" was knowingly or intentionally made. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all relevant and attending circumstances. In the instant case the discretion has been applied judicially and having regard to the attending circumstances and the fact-situation, the authorities arrived at a definite finding about the "false representation" on the basis of cogent materials on record and imposed the penalty under Section 10(b) of the Central Sales Tax Act, 1956. It is not the case of the petitioner that their action was unintentional, rather it tried to justify the action by projecting its case that the use of Visicoolers and stabilisers was in the process of manufacture of goods.
33. Above being the position on the basis of finding of facts arrived at by the authorities with due application of sound discretion, the decisions relied on by Dr. Todi, learned Senior Counsel for the petitioner, viz., [1971] 27 STC 199 (MP) (Pannalal Umesh Kumar of Ghoghar v. Commissioner of Sales Tax), [1970] 25 STC 211 (SC) (Hindustan Steel Ltd. v. State of Orissa) and [1990] 78 STC 283 (Gauhati) (Braja Lal Banik v. State of Tripura) to bring home his argument that the action of the petitioner was bona fide and there was no element of mens rea are not applicable and misplaced. Needless to say that the ratio of any decision must be understood in the background of the facts of that case. A case is only an authority for what it actually decides and not what logically follows from it.
34. For the foregoing reasons and discussions I do not find any merit in the writ petition and the same is dismissed. However, there shall be no order as to costs.
35. Writ petition stands dismissed.