JUDGMENT The judgment of the Court was delivered by G. T. NANAVATI, J. - The following question is referred to this Court for its decision under section 69 of the Gujarat Sales Tax Act, 1969, at the instance of the assessee : "Whether, on the facts and in the circumstances of this case, and on a correct interpretation of the relevant provisions of section 2(26) of the Gujarat Sales Tax Act, 1969, and rule 3(xvii) of the Gujarat Sales Tax Rules, 1970, the Tribunal was right in law in holding that the sale of M.S. round bars in dispute, as made by the applicant, was not a mere 'resale' of the relevant goods and that, therefore, the applicant was not entitled to deduct the same from its turnover of sales, in terms of clause (ii) of section 7 of the Act ?" The applicant is engaged in the business of manufacturing and selling various products made out of iron and steel. It is a registered dealer under the Act. The applicant purchased iron scrap from registered dealers and manufactured iron ingots out of the scrap. Out of those ingots, the applicant manufactured M.S. round bars. On February 22, 1977, the applicant sold those bars to M/s. Mohta Steel. Then on June 21, 1975, the applicant applied to the Deputy Commissioner of Sales Tax, Ahmedabad, under section 62(1)(e) of the Act for determination whether the sale of M.S. round bars made by it to M/s. Mohta Steel was liable to payment of sales tax and at what rate. The contention of the applicant before the Deputy Commissioner was that its activity of converting iron scrap into iron ingots and then into M.S. round bars did not amount to or result in "manufacture" as defined by clause (16) of section 2 of the Act read with clause (xvii) of rule 3 of the Gujarat Sales tax Rules, 1970, and that the sale made by it in favour of M/s. Mohta Steel amounted to a "resale" as defined by clause (iii) of section 2(26) of the Act, for the reason that nothing was done to the goods which took them out of the description of item "iron and steel" in entry 3 of Schedule II, Part A to the Act. Following the Supreme Court decision in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319; AIR 1976 SC 800 , the Deputy commissioner held that as the goods originally purchased by the applicant were iron scrap falling under sub-entry or sub-item (i) of entry 3 of Schedule II, Part A to the Act, and the resultant goods, viz., M.S. round bars answered the description of another sub-entry or sub-item, viz., sub-item No. (iv) of entry 3 of Schedule II, Part A, the sale in favour of M/s. Mohta Steel was not a resale of iron scrap within the meaning of section 2(26) read with clause (xvii) of rule 3 of the Rules. Against the said determination, the applicant preferred an appeal to the Gujarat Sales Tax Tribunal. Same arguments which were advanced before the Deputy Commissioner were repeated before the Tribunal. The Tribunal, agreeing with the Deputy Commissioner, dismissed the appeal. The applicant then applied to the Tribunal under section 69(1) of the Act to refer to this Court the question of law which we have set out above. For deciding the question, it will first be necessary to refer to the definitions of the two terms "manufacture" and "resale". The Tribunal, agreeing with the Deputy Commissioner, dismissed the appeal. The applicant then applied to the Tribunal under section 69(1) of the Act to refer to this Court the question of law which we have set out above. For deciding the question, it will first be necessary to refer to the definitions of the two terms "manufacture" and "resale". The Act defines "manufacture" as under : "'manufacture' with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing, or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." The word "resale" is defined as under : "'resale' for the purposes of sections 7, 8, 10, 13, 15, 19A and 19B means a sale of purchased goods : (i) in the same form in which they were purchased, or (ii) without doing anything to them which amounts to, or results in, a manufacture, or (iii) being goods specified in entries 1 to 3 in Part A of Schedule II and in entries 1 to 6 in Part B of Schedule II without doing anything to them which takes them out of the description thereof in those entries, and the word 'resale' shall be construed accordingly." The State Government, in exercise of its power, has prescribed certain manufactures and manufacturing processes for the purposes of clause (16) of section 2 with the result that such manufactures and manufacturing processes are not to be considered as manufactures for the purposes of clause (16) of section 2. Sub-rule (xvii) of rule 3, which is relevant for our purposes, reads as under : "3, Process not included in 'manufacture' For the purposes of clause (16) of section 2, 'manufacture' shall not include the following manufactures and manufacturing processes, namely : (xvii) any activity carried out in relation to any of the declared goods in any entry in Schedule II as a result of which, the resultant product is not taken out of the description thereof in that entry :" On a plain reading of the definition of "resale", it can be said that if the purchased goods are sold in the same form in which they were purchased, their sale has to be considered as a resale. If the purchased goods are sold not in the same form or condition but without doing anything to them, which amounts to or results in manufacture as defined by section 2(16), then such a sale has to be regarded as a resale. While defining the term "manufacture", the Legislature has provided that it shall not include such manufactures or manufacturing processes as may be prescribed. Rule 3 prescribes certain manufactures and manufacturing processes which are to be excluded for the purposes of section 2(16). Therefore, if the purchased goods are subjected to any such thing even then sale of the resultant products will have to be considered as a resale of the purchased goods, as if they are sold without doing anything to them which otherwise would have amounted to or resulted in manufacture. If the purchased goods are the goods specified in any of the entries referred to in sub-clause (iii) and are subjected to some activity, but if it is not such as would take them out of the description thereof in those entries, then sale of such goods also will have to be regarded as a resale. What is contended by the learned advocate for the applicant is that even after what the applicant did to the purchased goods, viz., iron scrap, and which turned them into a new marketable commodity, it cannot be said to have done anything amounting to or resulting in manufacture in view of its special definition, particularly when it is read with rule 3 of the Rules. He submitted that even after the purchased goods were turned by the applicant into M.S. round bars, the resultant product, viz., M.S. round bars did not go out of the description of iron and steel in entry 3 and, therefore, though a new commercial commodity had come into existence, the change in form did not amount to manufacture as contemplated by section 2(26); and, therefore, the Deputy Commissioner ought to have held that the sale of such M.S. round bars amounted to a resale and entitled to a deduction from the total turnover of sales. He submitted that the words "description thereof" in clause (xvii) of rule 3 on their true interpretation mean description of the main item in that entry and not description of the declared goods or the resultant product. He submitted that the words "description thereof" in clause (xvii) of rule 3 on their true interpretation mean description of the main item in that entry and not description of the declared goods or the resultant product. In support of his submission, he has heavily relied upon the decision of the Bombay High Court in Shree Ram Steel Rolling Mills v. State of Maharashtra [1983] 53 STC 202. In order to appreciate his submissions, it will be necessary to take a note of the scheme of the Act. This Court in Prabhat Solvent Extraction Industries Pvt. Ltd. v. State of Gujarat [1982] 49 STC 322, has observed that the scheme of the Act, broadly speaking, is to provide, as far as possible, a single point levy. In order to ensure, inter alia, single point levy, sections 7, 8 and 10 provide for certain deductions to be made from the dealer's gross turnover of sales of specified goods so as to arrive at the taxable turnover of sales of such goods. Another Division Bench of this Court in Morvi Vegetable Products Ltd. v. M. C. Padia, Sales Tax Officer, Morvi (Special Civil Application No. 916/73, decided on 9/10th July, 1974) has observed that various deductions which are contemplated by sections 7 to 10 are provided with a view to see that so far as possible there is only a single point levy of sales tax on the goods purchased or sold in the State. The purpose of confining the tax, so far as possible, to a single point levy, is obviously to ensure that the goods do not carry with them any unnecessary burden of tax, and the State would, at the same time, avail of the necessary revenue. So far as iron and steel is concerned, they are regarded as goods of special importance in inter-State trade and commerce as can be seen by the provisions made to that effect in section 14 of the Central Sales Tax Act, 1956. Section 15 of that Act puts restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. Section 7 itself provides for deduction from turnover of resales of goods by a dealer from a registered dealer. Therefore, if sale made by a dealer amounts to a resale, then it is not to be included in his taxable turnover. Section 7 itself provides for deduction from turnover of resales of goods by a dealer from a registered dealer. Therefore, if sale made by a dealer amounts to a resale, then it is not to be included in his taxable turnover. That would mean that the sale of goods manufactured and sold by a dealer out of the goods purchased by him from a registered dealer is to be deducted from his total turnover, if that sale amounts to a resale as defined by the Act. In this context, we have to decide whether M.S. round bars which the applicant has manufactured and sold amounted to a resale or not. It would depend upon whether as a result of the thing done to iron scrap purchased by the applicant, the resultant product, viz., M.S. round bars were taken out of the description of the declared goods, viz., iron and steel in entry 3. The entry at the relevant time read as under : ------------------------------------------------------------------------ Description of goods Rate of Rate of sales tax purchase tax ------------------------------------------------------------------------ Iron and steel, that is to say, - 4 paise in 4 paise in the rupee the rupee (i) pig iron and cast iron including ingots, moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skull scrap; (ii) .......... (iii) .......... (iv) steel bars (rounds, rods, squares, flats, octagons and hexagons, plain and ribbed or twisted in coil form as well as straight lengths) : ......... ------------------------------------------------------------------------ The item then contained various other sub-items but as we are concerned with sub-items (i) and (iv), we have thought it fit not to set out other sub-items. It is not disputed by the learned advocate for the applicant that as a result of what the applicant had done to iron scrap a new commercial commodity, viz., M.S. round bars had come into existence and that but for the statutory deduction available under section 7(ii) read with section 2(26) of the Act, the applicant would have been required to include the sale thereof in its total taxable turnover. What he contended was that as the new commodity which had thus come into existence still answered the description of the declared goods mentioned in entry 3, viz., iron and steel, the sale of such manufactured goods has to be regarded as resale. What he contended was that as the new commodity which had thus come into existence still answered the description of the declared goods mentioned in entry 3, viz., iron and steel, the sale of such manufactured goods has to be regarded as resale. He submitted that entry 3 is in respect of iron and steel and the various categories enumerated therein are for the purpose of removing any ambiguity as regards their true meaning. He further submitted that they are all species of the same genus, viz., iron and steel and, therefore, even if as a result of something done to the goods covered by any sub-item they thereafter answer the description of some other sub-item, it would not amount to manufacture as defined by the Act if it still continues to answer the description of iron and steel as it cannot be said that as a result of the said activity the goods are taken out of the description of iron and steel. On the other hand, it was contended by the learned Government Pleader appearing for the respondent, relying upon the decision of the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319; AIR 1976 SC 800 that each sub-item in entry 3 is a separate taxable commodity for the purpose of sales tax and each of them forms a separate specie for each series of sales although they may all belong to genus iron and steel. He submitted that since each sub-item has to be regarded as a separate item, the moment iron scrap purchased and used by the applicant was turned into M.S. round bars, they went out of the description of the sub-item or the sub-entry and, therefore, such an activity would not be excluded from the meaning of the word "manufacture" as defined by the Act. In Pyare Lal Malhotra's case [1976] 37 STC 319 (SC); AIR 1976 SC 800 , the question which has arisen before the Madras High Court was whether the manufactured goods, viz., steel rounds, flats, angles, plates, bars could not be taxed again if the material out of which they were made had already been subjected to sales tax once as iron and steel. The Madras High Court accepted the contention of the assessee and held that such goods could not be taxed again. The Madras High Court accepted the contention of the assessee and held that such goods could not be taxed again. The Supreme Court overruled that decision and held that each sub-item is a separate taxable commodity and the sale of the such commodity could be made subject to tax. The Supreme Court further pointed out that the purpose of enumeration in a statute dealing with sales tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute a separate class for a series of sales. While dealing with the declared goods "iron and steel", the Supreme Court held that each item mentioned in the list of goods given under the heading "iron and steel" forms a separate species for each series of sales although they may all belong to the same genus "iron and steel". The Supreme Court negatived the contention that as the substance or raw material out of which it was made has also been taxed in some other form, the resulting product could not be taxed again since it was sold as a separate commercial commodity. The Supreme Court was of the view that the object of the Act is to tax the sales of goods of each variety and not the sale of the substance out of which they are made. The Supreme Court also observed that the sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. The Supreme Court also pointed out that where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type. What is to be noted is that the Supreme Court was concerned with taxability of a particular type of declared goods, viz., iron and steel. It was not concerned with the question which arises for consideration in this reference. What is to be noted is that the Supreme Court was concerned with taxability of a particular type of declared goods, viz., iron and steel. It was not concerned with the question which arises for consideration in this reference. The scheme of the Gujarat Act is different and the question which arises for determination is also different. In this case we are concerned with special definitions of the words "resale" and "manufacture" and in that context we have to decide whether an item, in a list of specified items, when undergoes any activity as a result of which it becomes another specified item in that list, it was intended to be excluded from the benefit of the special definition given to the word "manufacture". Thus, we are required to examine a different aspect altogether and therefore the decision of the Supreme Court cannot be applied mechanically to the facts of this case, and in that context, we cannot say that each sub-item of entry 3 is an item by itself and, therefore, in that sense should be regarded as a separate entry. No doubt, each specified item in the said list has to be regarded as a separate commercial commodity but none-the-less each such commodity, if it answers the description of iron and steel, then it cannot be said that the commercial commodity is not entitled to the benefit of exception available under section 2(16) and rule 3. The scheme of the rule appears to be that if as a result of a manufacturing activity or a manufacturing process a commercial commodity undergoes a change and becomes a different commercial commodity even then it is not to be regarded as manufacture of a new commercial commodity for the purpose of clause (16) of section 2. So far as declared goods under any entry in Schedule II are concerned, the scheme appears to be that so long as the manufactured goods or the resultant products are not taken out of the description of the declared goods in the concerned entry, they will be entitled to the benefit of the exception. What was submitted by the learned advocate for the department was that the words "description thereof" in that entry should be interpreted as description of the purchased or used goods in that entry. What was submitted by the learned advocate for the department was that the words "description thereof" in that entry should be interpreted as description of the purchased or used goods in that entry. He further submitted that in view of the decision of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319; AIR 1976 SC 800 , the word "entry" should properly be interpreted is including sub-entry also and, therefore, the phrase "description thereof in that entry" - iron and steel - should mean description of the purchased or used goods in that sub-entry. By way of example, he submitted that if plates are turned into pig iron it will remain even after manufacture within the same entry and therefor would be entitled to the benefit of the exception, but, if plates after they are manufactured into bars go out of the sub-entry dealing with plates, it should be held that the resultant product has been taken out of the description thereof in that entry and thus not entitled to the benefit of rule 3. It is required to be noted that the words used in the rule are "description thereof in that entry". If by the word "thereof" we mean "purchased goods" then that interpretation would not make any sense because description of the purchased goods would remain the same as that of the resultant product after they are subjected to a manufacturing process. If the description of the declared goods, i.e., purchased goods remains the same, then even otherwise also it can be said that there is no manufacture of a new commercial commodity and the sale thereof will not be subject to sales tax. If the description thereof is to be interpreted as description of the resultant product, then also it will not make any sense because then the relevant part of the rule would read like this : the resultant product is not taken out of the description of the resultant product. For these reasons we are of the view that the words "description thereof" in clause (xvii) of rule 3 should be interpreted as description of any of the declared goods in any entry in Schedule II and similar words in section 2(26)(ii) should be interpreted as description of goods specified in any entry in Schedule II. For these reasons we are of the view that the words "description thereof" in clause (xvii) of rule 3 should be interpreted as description of any of the declared goods in any entry in Schedule II and similar words in section 2(26)(ii) should be interpreted as description of goods specified in any entry in Schedule II. On this interpretation, according to us, if any of the species of declared goods, namely, iron and steel is subjected to any activity and if as a result thereof a new commercial commodity comes into existence, it will not be regarded as manufacture if even thereafter the resultant product is not taken out of the description of iron and steel. This interpretation is consistent with the object of the rule and helps in achieving its purpose. Any other interpretation, as we have pointed out above, would result in making the rule redundant. Even if we are to consider the assessee's case with reference to section 2(26)(iii), it will have to be held that since iron scrap, even after they were converted into M.S. round bars, did not go out of the description of the entry "iron and steel", the sale of M.S. round bars will have to be regarded as "resale". The view which we are taking is also supported by the decision of the Bombay High Court in Shree Ram Steel Rolling Mills v. State of Maharashtra [1983] 53 STC 202. We are, therefore, of the opinion that as the description of both the goods purchased as well as the goods sold by the applicant remained the same even after the goods purchased, viz., iron scrap, were turned into M.S. round bars, the applicant was entitled to deduction under section 7(ii) read with section 2(26)(ii) of the Act and rule 3(xvii) of the Rules, or section 2(26)(iii). Accordingly we answer the question referred to us in the negative, that is, in favour of the assessee and against the department. Each party shall bear its own costs. Reference answered in the negative.