1960 PLP 274 (PTD)

AMIN AHMAD, C. J.‑This is a Reference by the Appellate Tribunal, Dacca Bench, under subsection (1) of section 17 of the Sales Tax Act (Act III of 1951) (to be hereinafter referred to in this judgment as the Act only) at the instance of the assessee on two applications for reference to the High Court in respect of the assessment years 1953‑54 and 1954‑55.

2. The point raised for our opinion is whether on the facts and circumstances of the case the assessee is a manufacturer or a producer under subsection (11) of section 2 of the Act of the ballot boxes ordered by the Government.

3. Before we deal with this case and the arguments of the learned Advocates, we think we ought to mention that the paper book which; we are told, was printed by the office of the Appellate Tribunal, Dacca Bench, is full of mistakes and, even before we heard the arguments, the learned Advocate for the Government did not point out the mistakes nor did he correct them. It is very unfortunate that, in spite of our pointing out this in connection with other cases referred to this Court by the same Tribunal, no steps have been taken to see that the paper‑book or at least the letter of reference, if not all the papers included in the paper‑book, is revised and corrected before the same is placed before this Court. The mistakes, we may point out, are instead of Rs 6‑8‑0 in the sixth line of the statement of the case (page 1), it is stated 114s. 12 and, after the last word "sales" in the first page of the paper‑book in the letter of reference, it is printed at the beginning of the second page of the letter of reference "are realised". We do not know if this is a printing mistake when the Tribunal says "sales are realised". The same mistake as to the amount occurs in line 25 on page 3 of the paper‑book wherein the making charge has been stated as Rs. 12 though, we are told, and it also appears from the original letter, dated the 21st of September 1953, produced before us by the learned Advocate for the assessee, it should be Rs. 6‑8‑

0. In cases of Income‑tax references and other references in which the records are kept in Lahore, we know the difficulty of producing the original records ; but, in cases referred to this Court by the Dacca Bench of the Income‑tax Appellate Tribunal, there should not be any such difficulty. We think that the Tribunal, Dacca Bench, can easily forward their original records along with the paper‑books, and this will help all the parties concerned, as, in that case, the paper books, in the absence of the office of the Tribunal correcting the mistakes, if necessary, it may be done here and the Court can also refer to such other papers as may not be included in the paper‑books. We have mentioned this, for, in the present reference, from the printed paper‑book we could not gather all the relevant facts, as they have not been fully stated and the Reference is not complete. Instead of referring it back to the Tribunal and causing delay, we asked the learned Advocates to assist us with some of the relevant papers that they had in their possession, and we are surprised to hear that the authorities allowed the assessees to take them away even before the disposal of the present Reference, and Mr. Aziz, who appear for the assessee, was good enough to place before us the correspondence relating to the transaction‑in question, that is, the making of the ballot boxes by the assessee for the use of the Government, and# as these were admitted to be correct by the learned Advocate for the taxing authorities, we, in disposing of this Reference, scrutinised them, though they are not in the record before us, and we shall presently refer to some of them.

4. The facts that we have been able to gather from the paper book and from the correspondence that passed between the assessee, namely, Messrs Metal Products of 144, Nawabpur Road, Dacca, and the Director of Industries, East Bengal, and produced before us are as follows : The Director of Industries, East Bengal, Dacca, wrote a letter to three firms in reply to their letters of September 1953, addressed to Messrs Mashrique Engineering Works, Messrs Meta Industries and Messrs Metal Products. In this letter, the Director gave specifications of certain ballot boxes to be made by the addressees, the subject mentioned therein being "Manufacturer and supply of ballot boxes" and, in the body of the letter, it was stated : "I have to place with you an order for the manufacture and supply of (1) 70,000, (2) 10,000, (3) 10,000 number of internally locked ballot boxes 9J" x 12" x 104" as per design and sample shown and specifications detailed herein and in the drawings attached herewith @ Rs. 6‑8‑0 (Rupees six and annas eight) only per box, f. o. r. Dacca, under the following terms and conditions". One of the terms was that Mild Steel Black Plain Sheets that would be required for the manufacture of the ballot boxes were to be supplied by the Government against a cash deposit equivalent to the value of the sheets. In the letter, dated the 21st of September 1953, addressed by the Director of Industries, East Bengal, to the assess6e Messrs Metal Products, it was stated "Sub : Manufacture of Ballot Boxes", and the Director of Industries also wrote that it was decided to place an order for fabrication of 10,000 ballot boxes as per specifications at a flat rate of Rs. 6‑8‑

0. By another letter, dated the 5th of October 1953, the said Director wrote to the assessee with the heading "Subject :‑Manufacture and Supply of Ballot Boxes", and the said letter purported to place "an. order for the manufacture and supply of 10,000 (ten thousand) number of internally‑locked ballot boxes 9 ' x 12" x 10 " as per design and sample shown and specifications detailed therein and in the drawings attached thereunder @ Rs. 6‑8‑0 (Rupees Six and annas eight) only per box, f. o. r. Dacca".

5. After the boxes were made, they were made over to the authorities concerned and, despite the objection by the assesee that inasmuch as all the materials were supplied by the Government for whose use the ballot boxes were made and the assessee only supplied the labour and put the ballot boxes into shape, they were not liable to pay any sales‑tax, the Sales‑tax Officer made the assessment on the basis of section 2, subsection (11) of the Act. Against this, an appeal was taken to the Appellate Assistant Commissioner of Sales‑tax but the appeal was dismissed. Against that order the assessee moved the Appellate Tribunal, Dacca Bench, but the Tribunal also dismissed the appeal and confirmed the assessment made by the two authorities below. Thereafter the assessee made the two applications in respect of the years 1953‑54 and 1954‑55, for reference to this Court on three points of law but the Tribunal referred the only point that we have already set out above.

6. Mr. Aziz for the assessee relies on the proviso to sub section (11) of section 1 of the Act, as it was also done, it seems, before the authorities below, and argues that inasmuch as the materials were supplied by the Government and the goods made by the assessee were for the use of the Government, the Govern ment should be deemed to be the manufacturer and not the assessee. It is claimed that all that the assessee did was to put into shape by their labour the materials supplied by the Govern ment and the assessee did so as employees of the Government, i.e., employees for the purpose only of making the ballot boxes with the materials supplied by the Government. 6‑A. Mr. Mesbahuddin, who appears for the Government, points out that the assessee is a licensed manufacturer under section 8 of the Act and admittedly this firm of Messrs Metal Products of 144, Nawabpur Road, Dacca, has got a licence for manufacturing and producing goods. Mr. Aziz does not deny this but what he urges is that this firm of Messrs Metal Products has got the licence as required by section 8 of the Act in respect of all the goods manufactured by it, and not in respect of the ballot boxes in question. Thereafter we put it to Mr. Aziz whether in that event, his client, as a licensed manufacturer, produced the relevant quarterly returns before the sales‑tax authorities to substantiate that these ballot boxes were not included in the return of the material period. We do not find any return from the record to show that they were or they were not included in the return except that Mr. Aziz tells us verbally that they were not included in the return. We cannot o by such an oral statement, and, if what the learned Advocate states is correct, the return should have been placed by the assessee before the taxing authorities.

7. As to the proviso to subsection (11) of section 2 of the Act, it has been argued by Mr. Mesbahuddin that the proviso does not help the assessee inasmuch as, although the goods were manufactured for the use of the Government, these were not for sale by 'the Government and, therefore, the incidence of the tax must fall on the assessee who manufactured or produced the same.

8. The relevant portion of subsection (11) of section 2 of the Act runs as follows; " manufacturer or producer' means a person who engages, whether exclusively or not, in the manufacture of goods, and includes a printer, publisher, lithographer or engraver, and also any person (not being an employee) who manufactures goods, whether or not the materials of which the goods are manufac tured are owned by him; "Provided that where one person manufactures goods for another, wholly or in part, out of materials supplied by that other, and the goods are not for the use of, but are for sale by that other, the person supplying the materials shall be deemed to be the manufacturer . . . . . . ."

9. Mr. Aziz, however, still argues that these ballot boxes were not sold by the assessee to the Government. "Sale" is defined in subsection (.15) of section 2 of the Act as follows; 'sale', with all its grammatical variations and cognate expressions, means every transfer of the property in goods from one person to another in the course of trade or business for cash or for deferred payment or other valuable con sideration."

10. In our opinion, there is no substance in the arguments advanced by the learned Advocate for the assessee. The words "manufacturer or producer" and "sale", as defined in sub sections (11) and (15), respectively, of section 2 of the Act, are very comprehensive and cover almost every type of makers of goods ; even printers and publishers or even manufacturers of unfinished goods are covered by these terms, and the only exception that is provided is the case of an employee manufacturer and that has been provided irrespective of the fact whether the materials out of which the goods are manufactured are owned by the manufacturer or not. For the application of the proviso to subsection (11) of section 2 of the Act, two conditions must co‑exist : firstly, that the materials should be supplied by another, and, secondly, that the manufactured goods are not for the use of, but for the sale by, that other i.e., by the supplier of the materials. So, in our opinion, as, in the present case, these two conditions have not been fulfilled, the assessee cannot rely on the said proviso. Besides, in the relevant correspondence set out above, it was expressly stated that the assessee was to manufacture the ballot boxes for a fixed consideration and never in its reply the assessee protested and said that the assessee was only to supply labour and not to manufacture the ballot boxes. Besides, in the definition of "sale" in subsection (15) of section 2 of the Act, it will also be noticed that "sale" means any transfer of property in goods from one person to another for cash or for any other valuable consideration. There is no gainsaying that the assessee parted with the ballot boxes, after making them, for Its. 6‑8‑0 per ballot box. Therefore, it is covered by the definition of sale.

11. Mr. Aziz has also tried to establish that the tax cannot be charged in view of the provisions of section 3 of the Act. We fail to appreciate his argument in this respect also, for, section 3 clearly states that the tax shall be levied and collected on the value of the goods manufactured or produced.

12. The learned Advocate for the assessee has also at one stage relied on the provisions of section 31 of the Act. This section runs thus; "When the ownership of the business of a licensed manufac turer or a licensed wholesaler is transferred, any tax payable in respect of such business remaining unpaid at the time of the transfer shall be payable by the transferee, as if he were the licensed manufacturer or licensed wholesaler." This argument seems to be entirely misconceived and has absolutely no bearing on the point in issue. The argument relating to this section not only does not help the assessee but also goes against the assessee. Section 31 of the Act only enables an assessee to escape from the payment of sales‑tax in case he transfers the ownership of the business of a licensed manufacturer to another person before the tax is paid and thereafter the transferee is liable to pay the tax instead of the transferor. This presupposes that the assessee is the owner of the business of a licensed manufac turer in respect of the ballot boxes and that the assessee has transferred the ownership of the business to someone else ; but that is nobody's case here, and once the assessee admits that he owns the business of a licensed manufacturer which manufactured these ballot boxes, there is no escape from the payment of the sales‑tax unless he can establish that he transferred the ownership of this business to another.

13. So, for the reasons stated above, we answer this reference in the affirmative that, on the facts and circumstances of the case, the assessee is a manufacturer or a producer under section 2 (11) of the Sales Tax Act of the ballot boxes in question.

14. We would have awarded costs against the assessee but we refrain from doing so, as already indicated, we are not at all satisfied with the way in which the papers have been printed in the paper‑book and also that we have not got much assistance from the taxing authorities. CHAKRABORTI, J.‑I agree with my lord the Chief Justice. Reference answered in affirmative.