1962 (12) TMI 36 - HC - VAT and Sales Tax

Summary

Issues:
1. Inclusion of sales made in London in the gross turnover for tax liability determination in U.P.
2. Assessability of sales under section 2(h), Explanation II(ii) based on manufacturing criteria.

Analysis:

Issue 1:
The judgment pertains to cases referred under the U.P. Sales Tax Act to determine if sales made in London should be included in the assessee's gross turnover for tax assessment in U.P. The court, in line with a previous judgment, affirmed that sales made in London by the assessee should indeed be included in the turnover for tax liability calculation.

Issue 2:
Regarding the applicability of section 2(h), Explanation II(ii), the key contention was whether the assessee qualifies as a manufacturer of the goods, specifically bristles. The court examined the process undertaken by the assessee, involving boiling, washing, sorting, and bundling bristles for export. It was established that these activities did not transform the bristles into a commercially distinct product. The court emphasized that the definition of "manufacturing" was crucial, highlighting that the process must impart new form, properties, or qualities to the goods. In this case, the actions performed by the assessee did not result in a substantial alteration of the bristles' nature. Drawing parallels with precedents concerning processing of agricultural produce, the court concluded that the bristles' processing did not amount to manufacturing under the specified tax provisions.

Conclusion:
The court ruled that the assessee's activities did not meet the criteria to be considered a manufacturer under the relevant tax provisions. Therefore, the sales of bristles were not to be included in the assessee's turnovers for the assessment years in question. The court directed the dissemination of the judgment to the concerned authorities as per statutory requirements and awarded costs to the Commissioner, Sales Tax, U.P. for the reference.