1991 (6) TMI 226 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of manufacturing process u/s 2(16) of Gujarat Sales Tax Act, 1969 for transferring and filling liquid petroleum gas (L.P.G.) into cylinders, entitlement to deduction of resales of gas purchased from registered dealers on turnover.

Summary:

Issue 1: Interpretation of manufacturing process under Gujarat Sales Tax Act, 1969
The Gujarat High Court addressed a reference from the Sales Tax Tribunal regarding whether the process of transferring and filling L.P.G. into cylinders constituted a manufacturing activity under the Act. The assessee, a registered dealer, purchased L.P.G. in bulk, filled it into cylinders, and resold it. The Tribunal initially allowed deductions for resale, but the Assistant Commissioner contended it was a manufacturing process. The High Court examined the activity of transferring L.P.G. into small cylinders and considered relevant Supreme Court precedents, concluding that the process did not alter the essential nature of L.P.G. The Court emphasized that even if a process is undertaken, if the commodity remains essentially the same, it does not amount to manufacturing. Referring to a Supreme Court decision involving repacking of milkfood powder, the Court affirmed the Tribunal's decision that the process in question did not constitute manufacturing. The Court ruled in favor of the assessee, holding that the activity did not qualify as a manufacturing process under the Act.

Outcome: The High Court answered the reference in the affirmative, deciding in favor of the assessee and against the Revenue, with no order as to costs.