1966 PLP 408 (PTD)

Sales Tax Act (111 of 1951), Ss. 2(11) & 3(1)(a)‑Words "manufacture" and "manufacturer"‑Meaning‑Process of dyeing, calendering and markin of cloth‑Held, constitutes "manufacture of goods" and hence assessable to sales tax. Mc Nicol and another v. Pinch (1906) 2 K B 352; Malik Shamas Din & Brothers v. The Income‑tax and Sales Tax Officer and another P L D 1959 Lah. 955; G. R. Kulkarani v. The State A I R 1957 Madhya Pradesh 45; State of Bihar v. ?Messrs Chrestair Mica Industries Ltd. A I R 1957 Pat. 184 and Halsbury's Laws of England, 3rd Ed., Vol. 29, p. 23 ref. Muhammad Aqil v. Pakistan and others P L D 1959 Kar. 83 and Law v. Graham and another (1901) 2 K B 327 distinguished. Asrarul Husain, Rafiqul Huq, Altaf Husain and Abdul Azim for Applicant. A. S. CHOWDHURY, J.‑The Appellate Tribunal, Dacca Bench, has referred the following question to this Court under subsection (1) of section 17 of the Sales Tax Act (hereinafter called "the Act") for our opinion: "Whether in the facts and circumstances of the case dyeing, calendering and marking of grey markin cloths done by/or at the instance of the assessee rendered the assessee a manufacturer or producer within the meaning of section 2 (if) of the Sales Tax Act?" The assessee Muhammad and Ahmad Co. Dacca, purchased grey markin from Textile Mills and had them dyed, calendered and then sold in market. Before selling the same, the assessee put his own mark on them. On these facts which are not denied, the Sales Tax Officer treated the assessee as a manufacturer within the meaning of subsection (ii) of section 2 of the Act and assessed sales tax on the goods sold by him. On appeal, the Appellate Assistant Commissioner maintained the order of Sales Tax Officer. The assessee appealed in vain to the Sales Tax Appellate Tribunal who maintained the order of the Appellate Assistant Commissioner. The Tribunal, however, referred the question quoted above to this Court for its opinion on the prayer of the assessee. The answer to the question referred to us depends on the further question as to whether or not the goods sold were manu factured by the assessee‑Company. It is true that the markin itself was purchased by the assessee but the findings of fact recorded by the Appellate Tribunal are to the effect that the markin was dyed and calendered and as a result thereof, the same became more durable. The Tribunal observed as follows: "After dyeing and calendering the markin not only became coloured but its texture underwent an improvement. It became more durable and assumed a better and improved look." The word "manufacture" has not been defined in the Act but subsection (ii) of section 2 referred to above, defines `manu facturer' and broadly speaking it means a person who engages, whether exclusively or not, in the production or manufacture of goods. In illustrating "manufacturers" it is laid down therein that it includes a printer, publisher, lithographer or engraver (or a person engaged in the ginning of cotton) and also any[ person (not being an employee) who manufactures goods,1 whether or not the materials of which the goods are manufactured are owned by him. Mr. Asrarul Husain appearing for the assessee appellant contends that although the marking purchased by the assessee was dyed but it remained nevertheless markin and there was no manufacture of the goods and as such the assessee was not liable to pay any sales tax. Mr. Afzalul Huq, who appears for the respondent, on the other band submits that the assessee is a manufacturer and as such is liable to pay tax under clause (a) of subsection (1) of section 3 of the Act. In support of his contention Mr. Husain learned counsel for the appellant has placed his reliance on the case of Muhammad Aqil v. Pakistan and others (P L D 1959 Kar. 83). In that case the Court was called upon to decide as to whether the assessee was to take out a licence on the ground that he himself did not produce tanned leather in his factory but received the same from others and it was subsequently dyed and glazed by the use of power machines. It was held in that case that it was not necessary for the petitioner to take out a licence for the purpose and the word used under item 23 which came for consideration of the Court was "produce" and not "manu facture". In the case before us we are required to consider the word‑"manufacture". That being so, this case is not applicable to the present case. Mr. Husain has also placed his reliance on the case of Mc Nicol and another v. Pinch ((1906) 2 K B 352). In that case, the question was whether the process converting 330 saccharin into 550 saccharin was a manufacture of saccharin within the relevant Statute. The majority opinion was that the saccharin having remained the same, it could not be said to be a manufacture of this article inasmuch as increasing percentage of saccharin could not be considered as its bringing into being as saccharin. In the case before us the provisions with which we are concerned are different in its terms from those considered in the English case cited before us, Riddley, J. however dissented from the majority view and even in that case felt that where any process of art is used by the same substance, it is manufacture. Even in that case the learned Judge observed: "Take the case of the manufacture of steel; and let it be steel before it goes into the works; apply some process to it and it becomes a particular sort cf steel. But it is steel both before and after, although steel of differed qualities. Is not that the manufacture of steel? I should have thought so." We would like to say with respect that it is a very weighty observation applicable to the facts of the case before us. Mr. Husain has lastly placed his reliance on the case of Law v. Graham and another ((1901) 2 K B 327). In that case the question was as to whether the respondents were liable to conviction for not having affixed at the entrance of the factory in the required form the prescribed abstract of the relevant Acts. The defence was that the premises was not being used as a factory, for, no process of any kind of manufacturing an article was carried on therein beyond washing of bottles and bottling beer. Mr. Hussain claims that in that case the respondent's were washing bottles by rotary brush driven by a small gas‑engine and also for bottling beer. Since these did not constitute manufacture of goods, dyeing or calendering of the markin in this case ought not to be considered manufacture of goods. In that case section 93 of the Factory and Workshop Acts, 1878 came to be considered. The language of that section is different from that of subsection (ii) of section

2. It is true that in clause (c) it is mentioned that a premises would be a factory if a mechanical power is used in aid of a manufacturing process carried on there. We are of opinion that the facts in this case are also clearly distinguishable from those with which we are concerned, inasmuch as pouring of beer which was already a finished article into bottles which were in existence would not be a manufacturing process at all. That not being a manu facturing process, the use of gas engine for the said purpose could not be said to be using mechanical power in aid of a manu facturing process. We have already noticed that there is no definition of the word "manufacture" in the Act with which we are concerned. It is necessary for us to consider the dictionary meaning of the word. On a reference to the Oxford English Dictionary, it is found that the meaning of the word is "The action or process of making articles or material (in modern use, on a large scale) by the application of physical labour or mechanical power." The word also means "An article or material produced by the application of physical labour or mechanical power." In the case of Malik Shamas Din and Brothers v. The Income‑tax and Sales Tax Officer and another (P L D 1959 Lah. 955) the question raised was whether felling down trees and cutting them up into pieces and transporting them to the market for sale would make the assessees manufacturers within the meaning of that word as defined in the Sales Tax Act and it was held that the process to which the assessees resorted to make the trees marketable by turning them into so‑called timber was one of manufacture within the meaning of the Act. Mr. Afzalul Huq, therefore, claims that in this case the markin has been dyed and calendered and made marketable and therefore on the analogy of the Lahore case the same would constitute manufacture. In the case of G. R. Kulkarni v. The State (A I R 1957 Pat. 184) which was referred to in the Lahore case it was held by a Division Bench, Madhya Pradesh High Court consisting of Hidayatullah, C. J. and Chaturvedi, J. that the essence of manufacture is the changing of one object into another for the purpose of making it marketable. In the instant case the markin after going through a process of dyeing and calendering ceased to remain the same object and it changed into a different object for which it became marketable as a different and new object. In the case of State of Bihar v. Messrs Chrestair Mica Industries Ltd. (A I R 1957 Madhya Pradesh 45) it was held: "The essential point is 'that something is brought into existence which is different from that originally existing, in the sense that the thing produced is by itself a commercial commodity and is capable as such of being sold or supplied. It is not necessary that stuff or material of the original articles must lose its character or identify or it should become transformed in its basic or essential properties." We are, therefore, not impressed by the argument of Mr. Husain that markin in this case continued to be markin. It was not only dyed in the factory but it went also through a process of calendering and after this it must be held that the article now brought into existence is different from what it was when it was merely markin pure and simple. The article in its present condition has acquired more vendibility and that it is not necessary for it to lose its character in order to be classified as manufactured goods as claimed by Mr. Husain. On a reference to Halsbury's Laws of England at p. 23 3rd Ed., Vol. 29 it is found that one test for manufacture is whether a vendible article is produced, improved, restored or preserved. It cannot be denied that in the instant case after dyeing and calendering markin was greatly improved and was made vendible product in its present condition. The Tribunal has found that the markin not only became coloured but its texture underwent an improvement and that it became more durable and assumed a better and improved look. This would undoubtedly constitute what is called 'manufacture' of the goods and is therefore assessable. For the reasons stated above, we answer the question in the affirmative. The respondent will be entitled to his costs. HASAN, J.‑I agree. S. Q. Reference answered in the affirmative.