1973 (4) TMI 95 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the conversion of turmeric and black pepper into powder constitutes manufacturing or processing under the West Bengal Sales Tax Act, 1954.

Analysis:
The petitioner challenged the order of the Additional Commissioner, Commercial Taxes, questioning whether converting turmeric and black pepper into powder qualifies as "manufactured or processed by him" under the Act. The petitioner's business involved purchasing whole turmeric and black pepper, crushing them into powder, and selling the powdered form. The dispute arose as the Commercial Tax Officer held that the sale of powdered turmeric and black pepper attracts tax under the Act. The Additional Commissioner considered powdering turmeric and black pepper as an act of manufacture, making the petitioner liable for tax. However, the Assistant Commissioner opined that converting the whole spices into powder does not constitute manufacturing but processing, still attracting tax liability under the Act.

The petitioner contended before the High Court that crushing whole turmeric and black pepper into powder does not amount to manufacturing or processing, thus not making him a dealer under the Act. The Act imposes tax on the sale of notified commodities, with the term "manufacture" not defined. The court interpreted "manufacture" as the process of making articles by physical labor or mechanical power, emphasizing a transformation of raw materials into a distinct commercial product. It cited precedents to highlight that if the goods remain essentially the same after labor is applied, it does not constitute manufacture. The court concluded that the process of converting turmeric and black pepper into powder does not meet the threshold of manufacturing.

The respondent argued that even if the process does not amount to manufacturing, it falls under the definition of "processing" under the Act. The term "processed" was not defined in the Act, leading the court to rely on its ordinary meaning. Referring to a previous judgment, the court noted that converting camphor powder into cubes was considered processing. It concluded that the continuous and regular action leading to a specific result constitutes processing. The court agreed with the respondent that converting turmeric and black pepper into powder qualifies as processing, making the petitioner liable for tax under the Act.

In the final judgment, the High Court dismissed the petitioner's application, ruling that the conversion of turmeric and black pepper into powder falls under processing, making the petitioner a dealer under the Act. The court discharged the rule and vacated any interim order, with no costs imposed.