Ayili Stone Industries vs The Additional Commissioner Of Commercial Taxes

K. Sreedhar Rao, J.—Though these matters are listed for hearing, by consent of parties the appeals are heard on merits. The substantial question of law that arises for consideration in these appeals is as under:

Whether the rough granite purchased by a dealer and the sale, the same after cutting and polishing into granite tiles, whether such a process amount to manufacture and that the said product constitute a different commodity to attract sales tax u/s 5 of the Karnataka Sales Tax Act, 1957?

The Counsel for the appellant/asses see relied upon a decision of the Supreme Court in Aman Marble Industries Pvt. Ltd. Vs. Collector of C. Ex., wherein in Para No. 4 it has been observed as under:

In Rajasthan State Electricity Board Vs. Associated Stone Industries and Another, such a question fell for consideration before this Court although in a different context, and this Court held as follows.--

This apart, excavation of stones from a mine and thereafter cutting them and polishing them into slabs did not amount to manufacture of goods. The word ''manufacture'' generally and in the ordinary parlance in the absence of its definition in the Act should be understood to mean bringing to existence a new and different article having a distinctive name, character or use after undergoing some transformation. When no new product as such comes into existence, there is no process of manufacture. Cutting and polishing stones into slabs is not a process of manufacture for the obvious and simple reason that no new and distinct commercial product came into existence as the end product still remained stone and thus its original identity continued.

And this position was further reiterated as follows.--

It is also not possible to accept that excavation of stones and thereafter cutting and polishing them into slabs resulted in any manufacture of goods.

This Court in the case of M/s. Foredge Granite Private Limited v. State of Karnataka and Another, in S.T.R.P. No. 58 of 1991, disposed of on 12-12-2004, in Para No. 3 has observed as under:

The stones are larger granite blocks purchased by its petitioner, even when cut to the sizes to the requirement of the customers including as regards its thickness or polishing it continues to be a granite block. May be a smaller or thinner size, but it would continue to be a granite block however polished it may be. Even though it may be used as a building material, the granite block does not cease to be a granite block. Therefore, no manufacturing activity is involved. The finding recorded in this regard is perfectly in order.

In view of the above decisions, cutting the granite blocks into small sizes and polishing them as tiles does not amount to manufacturing process to attract sales tax u/s 5 of the Act. However, whether the transaction attracts resale tax u/s 6-B can be looked into and considered by the Assessing Officer after giving opportunity to the parties. Accordingly, the substantial question of law is answered in favour of the assessee. Consequently the appeals are allowed.