1979 (7) TMI 234 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the assessee is a manufacturer within the meaning of section 2(e-1) of the U.P. Sales Tax Act.

Analysis:
The respondent-assessee's business involves the purchase and sale of coal ash collected from railway yards. The assessing authority and the first appellate court considered the assessee as a manufacturer based on an agreement clause permitting the removal of "ashes of all sizes." The nature of the business, involving sifting of ash and coal particles of different sizes, was deemed to amount to manufacturing.

In contrast, the revising authority held that the assessee does not manufacture any item but purchases coal ash from railway yards. The revising authority emphasized a certificate from the railway administration, concluding that the assessee is not liable to tax. The Commissioner of Sales Tax filed a revision challenging this decision under section 11 of the U.P. Sales Tax Act.

The definition of "manufacture" under section 2(e-1) of the Act was crucial in determining the case. The court referred to a Supreme Court decision emphasizing that if goods, after labor is applied, remain essentially the same commercial commodity, it does not constitute manufacturing. Examples were provided, such as grinding wheat into flour not being considered manufacturing. The court concluded that the activity of the assessee, involving sifting and selling ash and coal pieces, does not meet the definition of manufacture under the Act.

The court reviewed the agreement related to the business, noting the absence of a clear process description. It was observed that the assessing authority made inferences about the process without concrete evidence. Ultimately, the court agreed with the revising authority's view that the activity of the assessee does not qualify as a manufacturing process under the Act.

In conclusion, the revision application was dismissed, and the respondent-assessee was awarded costs. The court's decision was based on the interpretation of the definition of "manufacture" under the U.P. Sales Tax Act and the nature of the assessee's business activities, ultimately determining that the assessee was not a manufacturer as per the statutory definition.