1959 (3) TMI 50 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the term "manufacturer" for exemption from sales tax.
2. Determining if petitioners qualify as manufacturers under the exemption clause.
3. Application of the exemption clause to the petitioners' business model.

The High Court of Orissa heard eleven cases involving the interpretation of the term "manufacturer" for sales tax exemption. The petitioners, merchants selling gold ornaments, claimed exemption based on a government notification exempting sales by manufacturers who charge separately for gold value and manufacturing cost. The Sales Tax Officer denied the exemption, considering the petitioners as order-suppliers, not manufacturers. The petitioners supplied gold to artisans who made ornaments, then sold them. The court analyzed the definition of "manufacturer" in the context of sales tax law, emphasizing bringing raw materials into a form for sale. The Sales Tax Officer argued that artisans, not petitioners, were manufacturers. However, the court considered the intent of the exemption clause to promote the jewelry business in Orissa. The court referred to a Hosiery Act definition of "manufacturer" and concluded that petitioners, as first owners of goods made by artisans, qualified as manufacturers under the exemption clause. The court allowed the petitions, directing the revision of sales tax assessment based on the petitioners' entitlement to exemption. Costs were awarded to the petitioners, with a consolidated hearing fee specified. Judge Das concurred with the decision.

In conclusion, the Orissa High Court's judgment clarified the term "manufacturer" for sales tax exemption, emphasizing the role of bringing raw materials into a form for sale. The court considered the petitioners' business model, where artisans made ornaments supplied with gold by the petitioners. By interpreting the exemption clause's intent to promote the jewelry business and referencing a relevant definition from the Hosiery Act, the court held that the petitioners, as first owners of goods made by artisans, qualified as manufacturers. The court allowed the petitions, directing the Sales Tax Officer to revise the assessment based on the petitioners' entitlement to exemption and awarded costs to the petitioners.