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1995 (2) TMI 401 - HC - VAT and Sales Tax
Issues involved:
The issue involves the interpretation of whether the process of crushing boulders into stones of smaller sizes commercially known as 'gitti' amounts to "manufacture" under section 2(17) of the Bombay Sales Tax Act. Summary: The controversy in this case revolves around whether the conversion of boulders into "gitti" constitutes manufacture. The Tribunal held that crushing stones into "gitti" does not amount to manufacture as no new commercial commodity emerges. The key question is whether the "gitti" produced is distinct from the original boulders. The definition of "manufacture" under section 2(17) of the Act is crucial, and the Supreme Court's interpretation emphasizes that the process must impact the nature of the goods to be considered manufacture. The Court analyzed various precedents to determine the scope of "manufacture." It was established that for a process to be considered manufacture, it must result in a new distinct article commercially different from the original commodity. Applying this test, the Court concluded that crushing boulders into "gitti" does not alter the nature of the stone, as both remain the same commodity falling under the same entry in the Act. The Court referred to the Supreme Court's decision in a similar case involving timber to support its conclusion that despite crushing, "gitti" remains stone. While acknowledging conflicting decisions from other High Courts, the Court aligned with the Supreme Court's interpretations in previous cases. Consequently, the Court answered the reference in favor of the assessee, stating that the process of crushing boulders into "gitti" does not amount to manufacture under the Act. In conclusion, the Court found that the crushing process did not change the essential nature of the stone, and therefore, it did not constitute manufacture. The decision was based on the interpretation of relevant legal provisions and established precedents, leading to the judgment in favor of the assessee.
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