1975 (1) TMI 78 - HC - VAT and Sales Tax

Summary

Issues:
Whether the activity of polishing or coloring old furniture before sale amounts to 'manufacture' under the Bombay Sales Tax Act, 1959.

Analysis:
The judgment by the Bombay High Court pertains to a reference made by the Commissioner of Sales Tax regarding the classification of a respondent who deals in old furniture. The respondent purchases second-hand furniture, polishes and colors them if necessary, and then sells them. Initially assessed as a manufacturer, the respondent appealed the decision. The Sales Tax Tribunal ruled in favor of the respondent, stating that the activity did not amount to manufacturing under the Act. The main issue was whether the polishing and coloring of old furniture constituted 'manufacture' as per section 2(17) of the Act.

The definition of 'manufacture' under the Act includes processes like producing, making, altering, ornamenting, finishing, or processing goods. The court analyzed whether the respondent's activity of polishing and coloring old furniture could be considered as finishing or treating under this definition. The court referred to a previous judgment to emphasize that for an activity to qualify as manufacturing, a new commercial commodity must come into existence. Despite the broad definition of 'manufacture,' the court concluded that the respondent's activity did not result in the creation of a new commercial commodity. Even after polishing and coloring, the furniture remained old or second-hand, thus failing to meet the criteria for manufacturing.

In light of the above analysis, the court answered the referred question in the affirmative, stating that the respondent's activity did not amount to 'manufacture' under the Act. The court upheld the Tribunal's decision, affirming that the respondent could not be classified as a manufacturer for the purposes of the Act. The applicant was directed to pay the costs of the reference, and the reference was answered in the affirmative.