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1992 (12) TMI 207 - HC - VAT and Sales Tax
Issues:
Interpretation of section 2(17) of the Bombay Sales Tax Act, 1959 regarding the activity of fumigating and treating foodgrains with chemicals. Entitlement to set-off under rule 43 of the Bombay Sales Tax Rules, 1959 for taxes paid on purchases of chemicals transferred to branches outside the State. Analysis: The judgment pertains to an application under the proviso to subsection (1) of section 61 of the Bombay Sales Tax Act, 1959, where the Food Corporation of India sought a direction to the Tribunal to refer questions of law to the High Court. The questions involved the interpretation of section 2(17) of the Act and entitlement to set-off under rule 43 of the Rules. The Food Corporation of India claimed setoff for taxes paid on purchases of chemicals used for fumigating foodgrains, arguing that it amounted to a manufacturing process. However, the Tribunal rejected the claim, stating that treating foodgrains with chemicals did not constitute manufacturing under section 2(17) of the Act. The definition of "manufacture" under section 2(17) of the Act was a crucial point of contention. The Supreme Court's interpretation in a similar case highlighted that the definition should not be broadly construed to include any process that alters goods. The Court emphasized that the process must have an impact on the nature of the goods to qualify as manufacturing. Referring to previous decisions, the Court stressed that there should be an alteration in the nature or character of the goods to fall under the definition of "manufacture." The Court found that the controversy in the present case was settled by the Supreme Court's decision, which clarified that fumigating and treating foodgrains with chemicals did not amount to manufacturing under section 2(17) of the Act. Therefore, the questions of law raised by the Food Corporation of India were deemed academic, and no reference was necessary. Consequently, the application was rejected, and no costs were awarded in the matter.
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