1978 (4) TMI 208 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of whether the activity of mixing distilled water with methanol and selling the resulting product as 'Methimix' constitutes manufacturing of goods u/s 2(17) of the Bombay Sales Tax Act, 1959.

Summary:
The judgment of the Bombay High Court addressed a reference made by the Commissioner of Sales Tax regarding the classification of the activity of mixing distilled water with methanol and selling it as 'Methimix'. The respondent, a registered dealer, sought clarification on the tax rate applicable to this product. The Commissioner considered it as manufacturing, subject to 12% sales tax, while the Sales Tax Tribunal disagreed, deeming it as resale. The Court analyzed the definition of "manufacture" under section 2(17) of the Act, emphasizing the need for the activity to result in a new commercial commodity. It concluded that the mixing process undertaken by the respondent indeed created a new product, Methimix, qualifying as manufacturing under the Act. The Court distinguished this case from a previous ruling involving hand-blending of lubricating oils, highlighting the creation of a distinct commercial commodity in the present scenario.

In conclusion, the Court answered the reference in the negative, affirming that the activity of mixing methanol with distilled water to produce Methimix constitutes manufacturing under the Act. The matter of the applicable tax rate was left for further consideration by the Tribunal, with costs awarded to the applicant.