1975 (1) TMI 79 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of whether the activity of purchasing glass bottles, rubber nipples, and plastic caps, putting them together in a carton, and selling them as "auto feeders" amounts to "manufacture" as defined in section 2(17) of the Bombay Sales Tax Act, 1959.

Summary:
The High Court of Bombay considered a reference under section 61(1) of the Bombay Sales Tax Act, 1959, regarding the activity of a party purchasing various items and selling them as "auto feeders." The Commissioner of Sales Tax initially deemed this activity as "manufacture," but the Tribunal disagreed. The Tribunal referred the question to the High Court, seeking clarification on whether the activity constituted "manufacture" under section 2(17) of the Act.

In a related case, the Court established the criteria for determining "manufacture" under section 2(17) of the Act. It emphasized that merely selling goods under a different label does not constitute "manufacture." The key factor is the creation of a commercially distinct commodity through specific activities outlined in the Act, such as producing, making, or processing goods. In this case, the Court found that the activity of combining and selling the items did not align with the activities defined as "manufacture" under the Act.

The Court rejected the argument that labeling the combined items as "auto feeders" constituted adaption, as adaption involves modification or alteration of the original items. Since the purchased items were not altered but merely combined and sold under a different label, the Court concluded that this did not amount to "manufacture" as per the Act. Therefore, the Court answered the reference question in the affirmative, stating that selling items under a different label does not meet the criteria for "manufacture" under section 2(17) of the Bombay Sales Tax Act, 1959.

The Court directed the applicant to pay the costs of the reference, and the reference was answered in the affirmative.