1993 (11) TMI 217 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of whether the process undertaken by the assessee can be termed as 'manufacture' within the meaning of section 2(k) of the Rajasthan Sales Tax Act.

Summary:
The assessees excavated silica-sand from mines, crushed and graded it for various industries. Claimed to be manufacturers to avoid tax liability. Assessing authority initially allowed deduction, but later disallowed it. Appeals were accepted based on manufacturing status and avoidance of double taxation. Sales Tax Tribunal found assessees to be manufacturers eligible for tax shifting. Revenue argued against excavation being a manufacturing process citing precedent. Court analyzed definitions of 'manufacture' and 'production', emphasizing transformation into a new commodity. Tribunal's findings on the process of extracting, grinding, screening, and grading silica-sand supported assessees' manufacturing status. Court distinguished the case from a previous ruling on gypsum extraction, affirming the assessees' manufacturing classification. No interference warranted in Tribunal's decision. Revisions were dismissed.

This judgment clarifies the distinction between mere extraction and true manufacturing processes, emphasizing the transformation of goods into new commodities for tax purposes. The Court upheld the Sales Tax Tribunal's decision that the assessees, by processing silica-sand extracted from mines, qualified as manufacturers under the law, entitling them to tax benefits.