AI Structured Summary
Not yet generated for this judgment
Judgment
All these petitions are disposed of by this common order. The controversy is whether the petitioner is a manufacturer eligible for exemption in terms of the Government notification dated 19-6-1991. According to the learned Counsel for the respondent the petitioner cannot be treated as a manufacturer in view of the judgment of this Court in the case of M/s. Poonam Stone Processing Industries, Gulbarga v Deputy Commissioner of Commercial Taxes (Administration), Gulbarga and Others, 1994(38) Kar. L.J. 209, wherein it is held that polishing and sizing of stone will not amount to manufacture.
Various process which are being undertaken have not been examined by the Assessing Authority. Manufacture implies change of commodity in its marketability, shape and other aspects.
According to the Black''s Law Dictionary, definition of "manufacture" is as under:
"In Black''s Law Dictionary the meaning given to the word "manufacture" is the process operation of making wares or any material produced by hand, by machinery or by other agency, anything made from raw materials by hand, by machinery or by art". It is also states that the production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine, would be "manufacture"".
Wild''s Universal English dictionary n. Process of making articles, wares, goods, whether by hand or by machinery, especially on a large scale, with highly organised division of labour.
The Random House Dictionary of the English Language.
n: The making of goods or wares by manual labour or by machinery, especially on a large scale; the making of anything, the manufacture of body cells. The Funk and Wagnall''s Standard Dictionary, International Edition:
n. The production of goods by hand or by industrial art or process; the making or contriving of anything.
v. To make or fashion by hand or machinery, especially in large quantities.
Murray''s Oxford English Dictionary n. The action or process of making by hand; the action or process of making articles or material (in modern use, on a large scale) by application of physical labour or mechanical power.
v. To work up (material) into forms suitable for use; to make or fabricate from material; to produce by labour (now especially on a large scale).
In M/s. Devi Dass Gopal Krishnan v State of Punjab and Others, AIR 1967 SC 1895, the Supreme Court has observed that the first additional point raised is that when iron scrap is converted into rolled steel it does not involve the process of manufacture. It is contended that the said conversion does not involve any process of manufacture, but the scrap is made into a better marketable commodity. That apart, it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity, viz., rolled steel sections. During the process, the scrap iron loses its identity and becomes a new marketable commodity. This process is certainly one of manufacture.
In Shaw Brothers and Company v State of West Bengal, (1963)14 STC 879 (Cal.), it is observed as follows:
"I think... that it is manufacturing a mattress if you take flock out of an old mattress and put it into a new cover".
In B.P. Oil Mills Limited v Sales Tax Tribunal, JT (1998)6 SC 210, processing was considered to be manufacture.
I feel that the judgment in the case of B.P. Oil Mills,supra, is not applicable to the provisions of the sales tax laws where definition of manufacture as under the Uttar Pradesh Sales Tax does not exist. Under the Uttar Pradesh Sales Tax Act, even the process was considered as part of manufacture. In the certificate issued by the District Industries Officer, activity of cutting and polishing have been considered to be that of manufacturing of granite. There are series of decisions interpreting the word ''manufacture'' and in order to see as to whether the petitioner is eligible for exemption, the entire activity has to be examined. If it is merely a process to make a commodity look attractive or more marketable without there being any change in the nature of the commodity then it will not amount to manufacture. It has also not come on record as to whether cutting was done by the petitioner and whether the slabs were purchased. If the commodity which is sold is commercially a different commodity then the process involved could be considered as manufacturing process.
The assessment order dated 27-8-1998 and notice are quashed. The petitioner shall submit a detailed reply to the notice in W.P. No. 24099 of 1994. The Assessing Authority shall examine the nature of the transaction and thereafter shall determine as to whether the process undertaken by the petitioner amounts to manufacture or not. The question of exemption or taxability would depend on such finding.
Petitions stand disposed of with the above observations.