1985 (10) TMI 264 - HC - VAT and Sales Tax

Summary

Issues Involved:
The issue involves determining whether the work of excavating gypsum from the earth constitutes a manufacturing process under section 2(k) of the Rajasthan Sales Tax Act, 1954.

Judgment Details:

The Board of Revenue for Rajasthan referred the question of law regarding the manufacturing process involved in excavating gypsum from the earth. The non-petitioner, engaged in this work, claimed the goods purchased were for manufacturing and mining purposes. However, the Commercial Taxes Officer initially held that the non-petitioner was not a manufacturer and thus not eligible for concessional rates under the Act.

The Deputy Commissioner and the single Member of the Board also concluded that excavating gypsum did not constitute a manufacturing process. However, the Division Bench of the Board disagreed, stating that the process of excavating gypsum does involve a manufacturing process to make it marketable.

Upon review, the High Court analyzed the definition of "manufacture" under section 2(k) of the Act. It was observed that the process of excavating gypsum did not result in a new or transformed commodity, as the gypsum essentially remained the same after extraction. The Court emphasized that the process of excavation did not align with the definition of manufacturing as per the Act.

The Court further clarified the distinction between "extracting" and "excavating," highlighting that the two terms have different meanings and implications. The non-petitioner's argument that excavation is a form of extracting was not accepted, as the process did not lead to a new commercial article.

In conclusion, the High Court allowed the revision, setting aside the Division Bench's order and reinstating the initial decisions of the Commercial Taxes Officer and the Deputy Commissioner. The Court held that excavating gypsum from the earth did not constitute a manufacturing process under the Act.