1963 (10) TMI 19 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the assessee is a manufacturer of linseed oil and liable to pay tax on sales?
2. Whether linseed oil qualifies as an edible oil under the U.P. Sales Tax Act?

Analysis:
1. The primary issue in this case is whether the assessee, a dealer in linseed oil, should be considered a manufacturer and thus liable to pay tax on sales. The Judge (Revisions) determined that the assessee, despite not physically producing the oil at its own premises, should be categorized as a manufacturer. The Court agreed with this view, emphasizing that the act of converting oil-seeds into oil constitutes manufacturing. The Court distinguished the mill owner, who merely provided labor services, from the assessee, who orchestrated the production process. The principle of qui facit per alium facit per se was invoked to establish that even if the crushing was done by a third party, the law deems the assessee as the manufacturer.

2. Regarding the classification of linseed oil as an edible oil for tax purposes, the Court referenced previous case law and legal definitions. Drawing parallels to a case involving gold ornaments, where the party commissioning the production was deemed the manufacturer, the Court concluded that the assessee should be considered the manufacturer of linseed oil. The definition of "manufacturer" from the Finance Act was also cited to support the interpretation that a manufacturer engages in the business of producing goods. The Court affirmed that linseed oil qualifies as an edible oil under the U.P. Sales Tax Act, aligning with precedent set in Chandausi Oil Mills v. Sales Tax Commissioner [1961] 12 S.T.C. 310.

In conclusion, the Court ruled in favor of the assessee, affirming their status as a manufacturer of linseed oil and the classification of linseed oil as an edible oil under the U.P. Sales Tax Act. The judgment highlighted the key distinction between the assessee's role in orchestrating the oil production process and the labor services provided by the mill owner. The decision was supported by legal principles and precedents, ultimately leading to a favorable outcome for the assessee.