1984 (11) TMI 313 - HC - VAT and Sales Tax

Summary

Issues:
Whether rearing one-day-old chicks into broilers amounts to 'manufacture' under the Bombay Sales Tax Act, 1959.
Whether rearing hens to obtain eggs and selling them constitutes 'manufacture' under the same Act.

Analysis:
The case involves a reference by the Sales Tax Tribunal regarding the activities of a poultry farm under the Bombay Sales Tax Act, 1959. The Tribunal questioned whether rearing one-day-old chicks into broilers and rearing hens for eggs production qualifies as 'manufacture' under the Act. The Sales Tax Officer initially held the activities as manufacturing, leading to tax assessment and penalties. The Assistant Commissioner and the Tribunal upheld this view based on previous decisions. The Court was tasked with determining if these activities fell within the definition of 'manufacture' as per section 2(17) of the Act.

In the first issue, the Court delved into the definition of 'manufacture' under the Act, emphasizing activities like producing, altering, or processing goods. The Court rejected the argument that rearing chicks into broilers constituted manufacturing. It highlighted that merely rearing chicks until they reach a specific age does not amount to altering, treating, or adapting them. The Court referenced dictionaries to establish that altering involves changing the character of an article, which was not the case here. The Court distinguished the case from precedent where the activity resulted in a new commercial commodity, a key factor in determining 'manufacture.'

Regarding the second issue, the Court examined whether rearing hens for egg production qualified as manufacturing. It noted that eggs are goods produced by hens naturally and biologically, not by the farm owner. The Court dismissed the analogy of a farm owner as a producer similar to an employer overseeing workers, as the natural process of egg-laying by hens does not equate to manufacturing by the farm owner. The Court emphasized that the farm owner's activities post-egg laying, such as collection and sale, do not transform them into the producer of the eggs.

In conclusion, the Court answered both questions in the affirmative, stating that rearing chicks into broilers and hens for egg production did not amount to 'manufacture' under the Bombay Sales Tax Act, 1959. The Court also acknowledged the assistance of an amicus curiae and made no order as to costs since the respondents did not appear.