1. This is a revision petition filed by the State wherein the decision of the Sales Tax Appellate Tribunal holding that beedi tobacco was not raw tobacco within the meaning of Section 5(viii) is attacked as erroneous. The respondents are beedi manufacturers. They purchased beedi tobacco from sellers at Bombay and they manufactured beedis therewith. under Section 5(viii) of the Madras General Sales Tax Act, raw tobacco, whether cured or uncured, is liable to tax at the point of first purchase effected in the State of Madras. under Section 5(vii) the sale of manufactured products, such as cigars, cheroots, beedis, snuff, chewing tobacco or "any other product manufactured from tobacco" is liable to tax at the point of first sale effected in the State of Madras. There is a proviso to Section 5(viii) which confers upon the dealer who has been taxed under Section 5(vii) a rebate to the extent to which he has also been taxed under Section 5(viii) on the raw tobacco. The contention advanced by the respondents before the department and the Tribunal was that the tobacco purchased by them was not raw "tobacco coming within the scope of Section 5(viii). It was a manufactured form of tobacco which could attract tax only on the sale of the manufactured product under Section 5(vii). This contention was examined by the Tribunal. Certain affidavits from persons who sold the tobacco to the respondents were placed before the Tribunal and they purported to establish the following. The tobacco sold to the respondents was not raw tobacco but tobacco processed by the seller. The processing that was done was stated to be that the raw tobacco was dried under shade after sprinkling with sugar water. After it was dried, it was beaten with sticks and pounded into powder form, The stems and other impurities were removed by winnowing and sieving. The resultant tobacco in the powdered form was packed in bags and sold. This is the tobacco which was purchased by these respondents and the assertion made by the sellers in the affidavits was that the tobacco so sold was not raw tobacco but processed tobacco.

2. In dealing with the question, the Tribunal relied upon certain observations by this Court in Bell Mark Tobacco Company v. State of Madras [1961] 12 S.T.C. 126. We shall presently refer to the scope of this decision. The Tribunal also purported to rely upon the Report on the Marketing of Tobacco in India and reached the conclusion that the processes employed in converting the tobacco into powdered form were not necessary for the preservation of the tobacco, but were stages of preparation incidental to and indeed necessary for the purpose of manufacturing the beedis. That these processes were done not by the growers of the tobacco themselves but only by the beedi manufacturers or the distributing merchants was also stressed by the Tribunal. Applying the decision in Bell Mark Tobacco Company case, [1961] 12 S.T.C. 126 to the facts herein, the Tribunal reached the conclusion that the tobacco as purchased by the respondents was not raw tobacco. Nevertheless, the Tribunal thought that it was necessary that the matter had to be remitted to the authorities below for the purpose of verification of the facts alleged in the affidavits of the sellers. For all practical purposes, the Appellate Tribunal decided in what circumstances tobacco would cease to be raw tobacco within the meaning of Section 5(viii) of the Act and would become a product manufactured from tobacco within the meaning of Section 5(vii). It is to this decision of the Tribunal that objection is taken by the State. The contention of the State is that even accepting that the processes set out in the affidavits of the sellers were in fact employed, it will not have the result of converting the raw tobacco into "any other product manufactured from tobacco".

3. In the Bell Mark Tobacco Company case, [1961] 12 S.T.C. 126 the question that arose was whether tobacco sold as chewing tobacco came within the scope of Section 5(vii) of the Act. The decision finally held that though chewing tobacco was mentioned as one of the items in Section 5(vii) attracting tax liability at the point of first sale, read in the context of the provision, it represented tobacco which had been subjected to some process of manufacture and would not take in tobacco sold as chewing tobacco but which tabacco had not been so subjected to any manufacturing process. It was found that the tobacco purchased by the assessees in that case was soaked in jaggery water, dried in the shade and subjected periodically to the process of bulking. Even after the purchase, the assessees subjected the tobacco to a similar process. It was found as a matter of fact that the tobacco purchased by the assessees had not been subjected to any manufacturing process prior to their purchase, but the processes to which the assessees subjected the purchased tobacco before they sold it was a manufacturing process. While the general principle that was laid down in this decision was that the expression "chewing tobacco" used in Section 5(vii) as one of the products manufactured from tobacco would take in only such chewing tobacco as had been subjected to a process of manufacture, where tobacco, though sold under the name of chewing tobacco, had not been subjected to any process of manufacture, it would not come within the scope of Section 5(vii). On the facts of the case before them, the learned Judges took the view that some manufacturing process had in fact been employed so that the chewing tobacco sold by them was taxable under Section 5(vii).

4. In another decision of this Court, Pachiappa Chettiar v. State of Madras [1962] 13 S.T.C. 202 the same question arose. There also the question related to chewing tobacco. It was established that raw tobacco taken out of the warehouse was taken out of the bundles and kept in a heap and was periodically sprinkled with palm jaggery water to keep it moist. The tobacco so treated was taken out, cut into pieces, wrapped in paper and sold. The question posed before this Court was whether the thundu tobacco, which was so sold, was chewing tobacco produced as a result of any manufacturing process. The earlier decision in Bell Mark Tobacco Company case, [1961] 12 S.T.C. 126 was considered and reference was made to the following observations in that case:

No doubt, soaking in jaggery water and the process of bulking were processes common both to the seller and to the assessee who purchased the tobacco. In other words, the assessee subjected the tobacco he had purchased to the same process. Had he stopped with that alone, it might be possible to contend that what he sold subsequently was not a manufactured product. Taking, however, the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it, it was quite clear that what was eventually sold by the assessee was a manufactured product, manufactured from the tobacco that the assessee had purchased. Soaking in jaggery water is not the only process to be considered. The addition of flavouring essences and shredding of the tobacco should establish that what the assessee sold was a product substantially different from what he had purchased.

5. These observations clearly indicate that merely soaking the tobacco in jaggery water or sugar water and drying the tobacco in the shade did not convert raw tobacco into some other product. There were certain additional processes employed in that case which had the effect of bringing the product within the scope of the expression "product manufactured from tobacco". In Pachiappa Chettiar v. State of Madras [1962] 13 S.T.C. 202 which was decided by us, we specifically held that the Bell Mark Tobacco Company case, [1961] 12 S.T.C. 126 was an authority for the position that up to the stage of these processes of soaking in jaggery water and bulking, no manufacturing of the raw tobacco into some other product was involved.

6. It should follow on the authority of the above two decisions that in the present case where the only process that was employed was soaking raw tobacco in sugar water and drying it and powdering it would not convert the raw tobacco into a different manufactured product. We are unable to agree with the learned counsel for the respondent that the Bell Mark Tobacco Company case, [1961] 12 S.T.C. 126 supports his claim that the resultant product was no longer raw tobacco.

7. A decision of the Allahabad High Court in Badri Prasad Prabha Shanker v. Sales Tax Commissioner, U.P., [1963] 14 S.T.C. 208 has been relied upon by the respondent. That decision states that in order that the process to which an article is subjected should be a manufacturing process, it is not essential that the article must change its nature. It is enough if it becomes a different commercial article. Whether it is a commercially different article was also held to be essentially a question of fact. In that case, tobacco was crushed and sieved and there was a finding that it had become a commercially different article. The learned Judges had to consider whether a notification of the State Government granting exemption under the U. P. Sales Tax Act applied. The goods which were so exempted from the payment of sales tax in the notification was described as "tobacco leaves whether green or dried, not having been subjected to any process of manufacture." The learned Judges had to interpret this item and they reached the conclusion already stated. Whether or not the tobacco had been subjected to a process of manufacture within the meaning of the notification was the matter that called for decision therein. In the present case however what we have to decide is whether notwithstanding the processes which were adopted, the tobacco continued to be raw tobacco within the meaning of Section 5(viii) or became a product manufactured from tobacco. We are not satisfied that there is any principle derivable from the Allahabad decision which can apply to the facts of the present case. We may also point out that the learned Judges of the Allahabad High Court took note of the fact that the notification which they had to construe had in fact been subsequently amended to include crushed and sieved tobacco within the scope of the exemption. Whether or not that circumstance controlled the conclusion which they reached is not necessary to be considered.

8. We are accordingly satisfied that even accepting the affidavits of the sellers at their face value, the processes employed in dealing with the raw tobacco before purchase by the respondents did not convert the raw tobacco into any other form, thereby taking it out of the scope of Section 5(viii) and bringing it under Section 5(vii). The contentions of the respondents accordingly fail. In so far as this point is concerned, the order of the Tribunal will be set aside and that of the authority below restored.

9. In the circumstances, there will be no order as to costs.