1993 (4) TMI 286 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether dehusking tamarind seeds constitutes a manufacturing activity attracting purchase tax under section 6 of the Karnataka Sales Tax Act, 1957.

Analysis:
The petitioner argued that dehusking tamarind seeds into tamarind pappu does not result in the manufacture of a different product, emphasizing that both products serve the same purpose of providing starch. The government advocate, however, relied on a previous court decision that classified tamarind pappu as a distinct commodity from tamarind seeds. The petitioner's counsel highlighted subsequent decisions clarifying the test for manufacturing activity.

In the case of Deputy Commissioner of Sales Tax v. Pio Food Packers, the Supreme Court emphasized that for a manufacturing activity to occur, the goods purchased must be consumed in the manufacturing process, resulting in the creation of a new product with a different commercial identity. The court outlined that mere processing that does not change the essential identity of the original commodity does not constitute manufacturing.

Applying the principles from previous judgments, the court examined whether the dehusking of tamarind seeds into tamarind pappu amounted to a manufacturing process. The petitioner presented analytical reports certifying that both tamarind core kernel and dehusked kernel contain starch, with only a color difference. The court concluded that qualitatively, both products were identical, and dehusking was merely a change in form, not a manufacturing activity.

The government advocate referenced a decision where the manufacture of bone-meal from raw bones was considered a manufacturing process due to the creation of a new commercial identity as fertilizer. However, the court distinguished this case, emphasizing that the conversion of tamarind seeds into powder form also did not result in the manufacture of a new article.

Ultimately, the court allowed the revision petition, setting aside the assessment order that applied section 6 of the Act to tamarind seeds. The assessing authority was directed to modify the assessment order based on the court's observations, highlighting that dehusking tamarind seeds did not constitute a manufacturing activity attracting purchase tax.