Law: Sales Tax Act, (III of 1951)

Section: 17(4),27

(a) Sales Tax Act (III of 1951)---Ss. 17(4) & 27 Notification No. SRO 51(R), dated 1 7 1961 Steel files used in the manufacture of surgical instruments do not constitute raw material and are thus not entitled for refund of sales tax under section 27. By their very nature, steel files belong to the category of items which is classified as tools and equipment and which even in the ordinary parlance is distinguished from the category of "raw material". "Raw material" means "material suitable for manufacture or development". Raw material therefore, is that material which serves as the starting point of the manufacturing process and out of which something is made. Steel files, which are merely used for giving shape to surgical goods, cannot be regarded as "raw material" although in the process of rubbing they completely wear out. Steel files perhaps wear out more quickly than other tools and equipment. This, however, cannot be regarded as a reason for treating them as "raw material". (b) Word and phrases "Raw material" Meaning. Tax Reference No. 102 of 1971 and Webster's New International Dictionary, IInd Edn. ref. JUDGMENT MUHAMMAD AFZAL LONE, J. Through this reference application filed by the Commissioner of Income tax under section 17(4) of the Sales Tax Act, 1951 the following question of law said to have arisen out of the Tribunal's order dated 24 5 1978 is sought to be referred to the High Court for its opinion: "Whether on the facts and in the circumstances of the case, the Tribunal was justified to hold that steel files used in the manufacture of surgical instruments constitute raw material and are thus entitled for refund of Sales Tax under section 27 of the Sales Tax Act, 1951." 2. The circumstances under which the reference application was filed, are that the respondent who is a manufacturer of surgical instruments claimed refund of sales tax, paid on steels files, on the plea that these constituted raw material for the goods manufactured by him and were exempted from sales tax under Notification No. SRO 51(R), dated 1 7 1961 issued under section 7 of the Sales Tax Act. This claim was refused by the Sales Tax Officer. With this refusal the Appellate…

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