JUDGMENT
M.P. Chandrakantaraj Urs, J.
1. This sales tax revision petition is preferred by the assessee, M/s. Hind Nippon Rural Industries Private Limited. It is a registered dealer under the Karnataka Sales Tax Act, 1957. It is claimed for the assessee-company that it is a dealer in granite. It purchases, prepares the granite into finished products and exports the same to foreign countries. In respect of the assessment year 1975-76 (from October 1, 1975 to September 30, 1976) it claimed exemption from payment of purchase tax on its purchase turnover in the sum of Rs. 4,08,306 being the cost of a crane purchased from M/s. Tractors India Ltd., Calcutta, in order to lift the granite slabs and stones from the quarry. The assessing authority, namely, the Commercial Tax Officer, XV Circle, Bangalore-9, formed the opinion, as is borne out from his assessment order dated December 3, 1977, that the assessee was a dealer who only purchases and sells granite slabs and is not entitled to purchase a crane under C form and claim benefit available under section 8(3)(b) read with rule 13 of the Central Sales Tax Act, 1956 and the Central Sales Tax (Registration and Turnover) Rules, 1957, framed thereunder, respectively (hereinafter referred to as “the Act” and “the Rules”). Therefore, he issued notice to the assessee-company under section 10A of the Act on November 14, 1977, calling upon it to show cause as to why penalty, as provided under section 10A(1) of the Act, should not be levied for violation of the provisions of the Act and the Rules thereunder. On November 21, 1977, the accountant of the assessee-company appeared and pleaded for time to file objections. The case was adjourned to November 25, 1977. On November 25, 1977, he requested for yet another adjournment, inter alia, on the ground that the person-in-charge of the sales tax matters in the company was laid up in a nursing home at Madras due to a heart attack, but the adjournment was refused and assessment in regard to penalty proceedings was completed and a penalty of Rs. 25,000 was levied under section 10A of the Act.
2. Aggrieved by the said order, the assessee-company preferred appeal No. CAP/227/77-78 before the Additional Deputy Commissioner of Commercial Taxes (Appeals), Bangalore City Division, Bangalore. By order dated June 16, 1979, the appeal came to be dismissed recording a finding that the crane was not used in either manufacturing or processing granite slabs or stones and, therefore, the purchase of crane was impermissible under C form and, therefore there was violation of the provisions of section 10(a) and (b) of the Act. The second appeal in STA 449 of 1979 also did not meet with success. The Karnataka Appellate Tribunal by its order dated September 3, 1982, dismissed that appeal. Therefore, the present revision petition.
3. The question raised by the petitioner is whether, on the facts and in the circumstances of the case, the Tribunal was correct in finding the assessee-company guilty of an offence under the provisions of section 10 of the Act.
4. The facts abovestated by us are not in dispute. All the three authorities, the assessing authority, first appellate authority and the Tribunal, have proceeded on the assumption that the assessee-company is only a dealer who purchases and sells granite slabs and blocks and no more. Therefore, they came to the conclusion that it was not a person entitled to the use of crane in mining, manufacturing or processing granite. On account of recording a finding to that effect, the cases cited before them were distinguished and held untenable. The plea as well as the appeals were dismissed.
5. Before us Sri Shivaram, the learned counsel appearing for Sri Srinivasan, learned counsel for the appellant, has strenuously contended that the assessing authority and the other appellate authorities totally misdirected themselves in recording a finding that it was only a dealer, who bought and exported granite slabs and blocks without subjecting it to any processing despite the material available to them on record.
6. Sri Dattu, learned counsel for the respondent, State of Karnataka, stated that the balance sheet for the period ending September 30, 1976, formed part of the records and from the balance sheet we can make out that under the heading “current assets” it shows granite blocks, finished granite, semi-finished granite and raw granite. That clearly establishes that the assessee-company had a factory where the granite block purchased underwent some form of processing to render it fit for sale as finished granite block, slab or some other product. He, therefore, commended to this Court that the ruling of the Supreme Court in the case of Chowgule & Co. Pvt. Ltd. v. Union of India [1981] 47 STC 124, clearly applies in interpretation and application of section 8(3)(b) of the Act read with rule 13 of the Rules. In the said case, the Supreme Court, having regard to the language of sub-section (3)(b) of section 8 of the Act and rule 13 of the Rules, clearly held that the mechanical apparatus used by the appellant-company before the Supreme Court to blend different grades of ore at the harbour side was machinery used in processing iron ore to bring it to salable commodity before loading it on the ship. In fact, for the appellant before the Supreme Court, it was contended that the mining in preparation of ironore involved seven stages starting from extraction of ore from the earth to the process of blending of the ore and loading it on the ship at the harbour side. After expressly overruling the decision of the Bombay High Court in the case of Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 STC 500, wherein it was held that blending of various grades of tea in order to produce a different tea was not a process within the meaning of that expression occurring in section 8 of the Act as such blending of different grades of tea resulted in a new grade of tea, which was marketable product and therefore presumed to have undergone a change, and extending the same analogy to the blending of ores at harbour side, the Supreme Court ruled, approving and applying its earlier decision in the case of Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes [1965] 16 STC 259, that it was a process within the meaning of that expression under rule 13 of the Rules as well as sub-section (3) of section 8 of the Act.
7. For the reasons we have already given, there cannot be any doubt that the raw granite slabs or blocks, which the assessee-company buys, are subjected to a from of processing by which the end-product is sold or the raw granite is brought to a state which is salable by it. Therefore, we have no doubt, applying the ratio decidendi in Chowgule & Co’s case , that it was entitled to purchase a crane from Calcutta for using it to lift the blocks of granite to subject them to a process to bring the end-product to sale. In the result, the question raised must be answered in favour of the assessee and held that it had not committed any committed any offence under clause (d) of section 10 of the Act and therefore not liable for imposition of any penalty.
8. Accordingly, the revision petition succeeds and it is allowed and the orders impugned are set aside. Any penalty paid pursuant to the impugned orders is refundable to the assessee or adjustable against his other tax dues, if any.
There will be no order as to costs.
9. Petition allowed.
