1957 (1) TMI 30 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether breaking boulders into stone constitutes "manufacture" under the Madhya Pradesh Sales Tax Act?
2. Whether the transactions in question are taxable sales under the Act?

Analysis:
1. The case involved a reference under section 23(1) of the Madhya Pradesh Sales Tax Act to determine if breaking boulders into stone qualifies as "manufacture" under section 2(i)(a) of the Act. The assessee, a railway contractor, engaged in breaking boulders into metal (gitti) for sale as construction material. The key contention was whether this process constituted manufacturing, with reference to the definition introduced by Act 20 of 1953. The court examined whether the act of breaking boulders into gitti transformed the stones into a different marketable commodity, emphasizing the essence of manufacture as changing one object into another for marketability.

2. The court considered whether the metal produced by the assessee qualified as "goods" under the Sale of Goods Act or the Constitution, and if the process of shaping stones into metal met the definition of manufacture in section 2(i) of the Act. Drawing parallels to cases involving the fashioning of timber or slate for sale, the court concluded that the process of shaping stones into metal constituted a manufacturing process. The court highlighted the skill and labor involved in fashioning stones into a new article with a different price, meeting the essential conditions of a manufacturing process.

3. The court affirmed that the process of shaping stones into metal indeed amounted to a manufacturing process, bringing the assessee within the ambit of the Act's definition of manufacture. The introduction of the definition of "manufacture" by Act 20 of 1953 was noted to clarify the essential meaning of the term as used in the Act. Additionally, the court confirmed the existence of taxable sales based on the discussions in the order of the President, leading to affirmative answers to both questions referred for opinion.

4. In conclusion, the court provided affirmative answers to the questions referred, indicating that breaking boulders into stone constituted manufacture under the Madhya Pradesh Sales Tax Act. The opinion was to be communicated to the concerned Tribunal, and no costs were awarded in the circumstances of the case. The reference was thus answered in the affirmative, settling the issues raised before the court.